Online MCQ Assignment Answer

QN1: Economics is the study of

a. production technology
b. consumption decisions
c. how society decides what, how, and for whom to produce
d. the best way to run society

Answer

Answer: c. how society decides what, how, and for whom to produce

QN2: The opportunity cost of a good is

a. the time lost in finding it
b. the quantity of other goods sacrificed to get another unit of that good
c. the expenditure on the good
d. the loss of interest in using savings

Answer

Answer: b. the quantity of other goods sacrificed to get another unit of that good

QN3: A market can accurately be described as

a. a place to buy things
b. a place to sell things
e. the process by which prices adjust to reconcile the allocation of resources
d. a place where buyers and sellers meet

Answer

Answer: e. the process by which prices adjust to reconcile the allocation of resources

QN4: In a free market ___ ___

a. governments intervene
b. governments plan production
c. governments interfere
d. prices adjust to reconcile scarcity and desires

Answer

Answer: d. prices adjust to reconcile scarcity and desires

QN5: In the mixed economy

a. economic problems are solved by the government and market
b. economic decisions are made by the private sector and free market
c. economic allocation is achieved by the invisible hand
d. economic questions are solved by government departments

Answer

Answer: a. economic problems are solved by the government and market

QN6: Normative economics forms ___ based on ___

a. positive statements, facts
b. opinions, personal values
c. positive statements, values
d. opinions, facts

Answer

Answer: b. opinions, personal values

QN7: Microeconomics is concerned with

a. the economy as a whole
b. the electronics industry
c. the study of individual economic behaviour
d. the interactions within the entire economy

Answer

Answer: c. the study of individual economic behaviour

QN8: Macroeconomics is the study of ___

a. individual building blocks in the economy
b. the relationship between different sectors of the economy
c. household purchase decisions
d. the economy as a whole

Answer

Answer: d. the economy as a whole

QN9: Data are important in economics because ___ and ___

a. they suggest relationships for explanation, allow testing of hypotheses
b. they can be used for tables, they can be graphed
c. they can be used in computers, governments use them
d. they provide interesting information, can be summarised

Answer

Answer: a. they suggest relationships for explanation, allow testing of hypotheses

QN10: Time series data show information

a. about the same point in time over different places
b. about different points in time over the same variable
c. about different variables over different places
d. about different points in time over different places

Answer

Answer: b. about different points in time over the same variable

QN11: The retail price index is used to ___

a. construct price lists
b. compare shop prices
c. measure changes in the cost of living
d. none of the above

Answer

Answer: c. measure changes in the cost of living

QN12: A real value can be derived from a nominal value by

a. adjusting for changes over time
b. adjusting for data collection errors
c. adjusting for population changes
d. adjusting for changes in prices

Answer

Answer: d. adjusting for changes in prices

QN13: If your income during one year is £10,000 and the following year it is £12,000, then it has grown by

a. 20%
b. 2%
c. 12%
d. 16%

Answer

Answer: a. 20%

QN14: A straight-line diagram can be drawn knowing the ___ and ___

a. ertical axis and horizontal axis
b. intercept and slope
c. scale and slope
d. intercept and scale

Answer

Answer: c. scale and slope

QN15: On a graph, a positive linear relationship

a. moves down to the right
b. moves up to the left
c. moves up to the right
d. moves down to the left

Answer

Answer: c. moves up to the right

QN16: If the diagram of a line shows that lower values on the vertical scale are associated with higher values on the horizontal scale, this is an example of___

a. a nonlinear relationship
b. a positive linear relationship
c. a scatter diagram
d. a negative linear relationship

Answer

Answer: d. a negative linear relationship

QN17: When we know the quantity of a product that buyers wish to purchase at each possible price, we know

a. Demand
b. Supply
c. Excess demand
d. Excess supply

Answer

Answer: a. Demand

QN18: The equilibrium price clears the market; it is the price at which ___ ___

a. Everything is sold
b. Quantity demanded equals quantity supplied
c. Excess demand is zero
d. b & c

Answer

Answer: a. Everything is sold

QN19: When a market is in equilibrium

a. Quantity demanded equals quantity supplied
b. Excess demand and excess supply are zero
c. The market is cleared by the equilibrium price
d. All of the above

Answer

Answer: d. All of the above

QN20: ___ and ___ do not directly affect the demand curve

a. the price of related goods, consumer incomes
b. consumer incomes, tastes
c. the costs of production, bank opening hours
d. the price of related goods, preferences

Answer

Answer: c. the costs of production, bank opening hours

QN21: A demand curve can shift because of changing

a. incomes
b. prices of related goods
c. tastes
d. all of the above

Answer

Answer: d. all of the above

QN22: A supply curve is directly affected by

a. technology
b. input costs
c. government regulation
d. all of the above

Answer

Answer: d. all of the above

QN23: If a price increase of good A increases the quantity demanded of good B, then good B is a

a. substitute good
b. complementary good
c. bargain
d. inferior good

Answer

Answer: a. substitute good

QN24: An increase in consumer income will increase demand for a ___ but decrease demand for a ___

a. substitute good, inferior good
b. normal good, inferior good
c. inferior good, normal good
d. normal good, complementary good

Answer

Answer: b. normal good, inferior good

QN25: The price elasticity of demand measures ___

a. the responsiveness of quantity demanded to a change in price
b. how far a demand curve shifts
c. a change in price
d. a change in quantity demanded

Answer

Answer: a. the responsiveness of quantity demanded to a change in price

QN26: If demand is ___ then price cuts will ___ spending

a. inelastic, increase
b. elastic, increase
c. elastic, decrease
d. none of the above

Answer

Answer: b. elastic, increase

QN27: Positive cross-elasticities suggest that goods are ___ and negative cross-elasticities that goods are ___

a. substitutes, inferior
b. normal, complements
c. substitutes, complements
d. normal, inferior

Answer

Answer: c. substitutes, complements

QN28: A measurement showing how quantity demanded varies with income is the

a. price elasticity of demand
b. cross-price elasticity of demand
c. budget elasticity of demand
d. income elasticity of demand

Answer

Answer: d. income elasticity of demand

QN29: Inferior goods have ___ and luxury goods have ___

a. negative income elasticities, income elasticities greater than 1
b. income elasticities greater than 1, negative income elasticities
c. positive income elasticities, negative income elasticities
d. none of the above

Answer

Answer: a. negative income elasticities, income elasticities greater than 1

QN30: If your income doubles and the prices of the goods you buy double, then your demand for these goods will likely ___

a. increase
b. not change
c. decrease
d. shift

Answer

Answer: b. not change

QN31: The income effect of a price increase of a normal good is to ___ of that good and the substitution effect is to ___ of that good

a. increase quantity demanded, reduce quantity demanded
b. increase quantity demanded, increase quantity demanded
c. reduce quantity demanded, reduce quantity demanded
d. reduce quantity demanded, increase quantity demanded

Answer

Answer: c. reduce quantity demanded, reduce quantity demanded

QN32: The opportunity cost of a student is

a. Course fees and rent
b. A loan from the bank
c. What the student could have earned in the best job available by not studying
d. What the student will earn after graduation

Answer

Answer: c. What the student could have earned in the best job available by not studying

QN33: Economics assumes that people consume goods and services to achieve

a. Status
b. Prestige
c. Utility
d. Self-esteem

Answer

Answer: c. Utility

QN34: The extra utility from consuming one more unit of a good is called

a. Marginal utility
b. Additional utility
c. Surplus utility
d. Bonus utility

Answer

Answer: a. Marginal utility

QN35: Adding up the quantities demanded of a good by different people facing the same price gives us the

a. Supply curve
b. Market demand curve
c. Demand curve
d. Market supply curve

Answer

Answer: b. Market demand curve

QN36: Firms are assumed to ___ costs and to ___ profits

a. incur, desire
b. pay, make
c. charge, earn
d. minimize, maximize

Answer

Answer: d. minimize, maximize

QN37: The increase in total cost when one more unit is produced is known as

a. marginal cost
b. opportunity cost
c. limited cost
d. average cost

Answer

Answer: a. marginal cost

QN38: Marginal revenue is the ___ when output is ___

a. change in average revenue, increased
b. change in total revenue, increased by one unit
c. change in average revenue, increased by one unit
d. change in total revenue, increased

Answer

Answer: b. change in total revenue, increased by one unit

QN39: Profits are maximized when ___

a. costs are minimized
b. revenue is maximized
c. average cost is less than average revenue
d. marginal cost equals marginal revenue

Answer

Answer: d. marginal cost equals marginal revenue

QN40: If a firm’s wage costs increase this will cause ___ and ___

a. marginal cost to increase, output to fall
b. marginal revenue to increase, output to fall
c. opportunity cost to increase, the firm will close
d. average cost will rise, output will increase

Answer

Answer: a. marginal cost to increase, output to fall