Multiple Choice Question for Eco -121
1. Microeconomics deals with
a. Individual behavior
b. Economy as a whole
c. Government decision
d. None of above
2. Macroeconomics deals with
a. Individual behavior
b. Economy as a whole
c. Government decision
d. None of above
3. Demand Curve shows relationship between
a. Price and quantity supply
b. Price and quantity demand
c. Quantity demand and quantity supply
d. None of above
4. Demand curve has negative slope because
a. Positive relationship between demand and price
b. Positive relationship between price and supply
c. Negative relationship between demand and price
d. Negative relationship between price and supply
5. Which one of the following is the exception of law of Demand
a. Normal goods
b. Substitutes goods
c. Necessities
d. Giffen goods
6. Any point outside of production possibility frontier is
a. Unattainable point
b. Inefficient
c. Efficient
d. All of above
7. At production possibility curve, each point shows
a. maximum output which a country can produce
b. inefficient level of output
c. unattainable level of output
d. None of above
8. Price elasticity of demand is zero for the
a. Necessities goods
b. Luxury goods
c. Normal goods
d. None of above
9. Price elasticity of demand is infinite elastic for the
a. Necessities goods
b. Luxury goods
c. Normal goods
d. Inferior goods
10. When price increases, total expenditures also increases for the
a. Necessities goods
b. Luxury goods
c. Inferior goods
d. Giffen goods
11. When price increases, total expenditure decreases for the
a. Necessities goods
b. Luxury goods
c. Inferior goods
d. Giffen goods
12. When price increases, total expenditure remain same for the
a. Necessities goods
b. Luxury goods
c. Normal goods
d. Giffen goods
13. Value of cross price elasticity is Positive if
a. Goods are substitutes
b. Goods are compliments
c. Inferior goods
d. Giffen goods
14. Value of cross price elasticity is Negative if
a. Goods are substitutes
b. Goods are compliments
c. Inferior goods
d. Giffen goods
15. According to law of Diminishing Marginal Utility, when a firm employee and additional
labor, the Marginal Productivity will
a. Decreases
b. Increases
c. Remain same
d. None of above
16. If input increases by 10% and output increases more than 10% , it shows
a. Decreasing return to scale
b. Increasing return to scale
c. Consent return to scale
d. None of above
17. If input increases by 10% and output increases less than 10% , it shows
a. Decreasing return to scale
b. Increasing return to scale
c. Consent return to scale
d. None of above
18. If input increases by 10% and output increases less than 10% , it show
a. Decreasing return to scale
b. Increasing return to scale
c. Consent return to scale
d. None of above
19. According to the economies of scale, the cost of production in long un
a. Increases
b. Remain same
c. Decreases
d. All of above
20. According to the diseconomies of scale, the cost of production in long un
a. Increases
b. Remain same
c. Decreases
d. All of above
21. In order to calculate Accounting profit, we consider
a. Explicit cost only
b. Implicit cost only
c. Explicit and implicit cost both
d. None of above
22. In order to calculate Economic profit, we consider
a. Explicit cost only
b. Implicit cost only
c. Explicit and implicit cost both
d. None of above
23. One of the basic assumption for market equilibrium is
a. AC > AR
b. MC> MR
c. MC = MR
d. MC> AC
24. In perfect completion and Monopoly, price is equals to
a. Marginal revenue
b. Marginal cost
c. Average revenue
d. Average cost
25. In shut down condition, a producer cannot even cover
a. Fixed cost
b. Average variable cost
c. Average total cost
d. None of above
26. Price discrimination is feature of
a. Monopoly
b. oligopoly
c. Perfect competition
d. None of them
27. Who is called as the ‘founder father of modern economics’?
a. Adam Smith.
b. John Maynard Keynes.
c. F. Hayek.
d. Samuelson.
28. Free entry and free exit is a feature of :
a. Perfect Competition
b. Monopoly
c. Oligopoly
d. Monopolistic Competition
29. Colgate and Pepsodent toothpaste are
a. Substitutes Goods
b. Heterogeneous Goods
c. Capital goods
d. None of the above.
30. Market is a place where
a. Too many buyers and sellers interact with each other
b. There is no buyer and seller
c. There is no commodity
d. None of the above
31. Which of the following does explain law of diminishing marginal productivity:
a. When marginal productivity decreases but positive then total productivity
increases
b. When marginal productivity at zero then total productivity becomes maximum
c. When marginal productivity become negative then total productivity starts
decreasing
d. All of above
32. Which one of the following is likely to have elastic demand:
a. Pepsi.
b. Water.
c. Heart medication
d. All of the above
33. Economies of scale explain that:
a. Short-run average fixed cost curve declines so long as output increases.
b. Marginal cost curve must intersect the minimum point of the firm's average total cost
curve.
c. In long run the average total cost will decrease.
d. Short-run average variable cost curve is U-shaped.
34. Economies of scale arise when cost of production falls as output increases.
○ True ○False
35. A good with a vertical demand curve has a demand with zero elasticity
○ True ○False
36. Accounting profit considers both explicit and implicit costs.
○ True ○False
37. If two commodities are compliments then their cross price elasticity will be +1
○ True ○False
38. Demand is said to be more elastic demand when even a small change in the price of
a commodity leads to a considerable change in quantity demanded.
○ True ○False
39. The MR = MC is one of the feature of perfect competitive market.
○ True ○False.
40. If two commodities are substitutes, then if the price of one commodity increases then
demand of other commodity will also increase.
○ True ○False.
41. The firm will shut down if it cannot even cover the average variable costs.
○ True ○False.
42. Barrier to enter in the market is a feature of monopoly.
○ True ○False.
43. In first degree Price discrimination monopolist charge maximum price which a
consumer can pay.
○ True ○False.
