Online MCQ Assignment
This flash card is very useful for Online MCQ Assignment and must study for if you are student of distance learning program for amity, upes, imtcdl, smu or any others university/institute
QN1: Which of the following is not a barrier to entry
a) High costs of production
b) Government regulations
c) Production differentiation
d) Tax sops to new firms
Answer
Answer: d) Tax sops to new firms
QN2: The maximum profit condition for a monopoly firm is–
a) Total cost should be minimum
b) Total revenue should be maximum
c) Marginal revenue = Marginal cost
d) Quantity should be maximum
Answer
Answer: c) Marginal revenue = Marginal cost
QN3: ‘Four-Firm concentration’ refers to–
a) The number of firms in an industry
b) The four largest firms in four different and important industries in an economy
c) The number of industries in an economy which have only four firms
d) The percent of the total industry output that is accounted for by the largest four firms
e) The percent of the total industry output that is accounted for by the largest four firms.
(Note: Correct answers (e) because the degree by which an industry is dominated by a few large firms is measured by concentration ratios. The four firm concentration ratio is the percentage of total industry sales made by the four (or sometimes eight) largest firms of an industry.)
Answer
Answer: e) The percent of the total industry output that is accounted for by the largest four firms.
QN4: Market inefficiencies can come from–
a) Externalities
b) Monopolies
c) Imperfect information
d) All of the above
Answer
Answer: d) All of the above
QN5: A monopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is–
a) Less than one
b) Equal to one
c) Greater than one
d) Zero
Answer
Answer: a) Less than one
QN6: An entrepreneur in order to maximize the profits, without affecting the price, should produce an output where–
a) Average cost is minimum
b) Average variable cost is minimum
c) Average fixed cost is minimum
d) Marginal cost is equal to the average variable cost
Answer
Answer: a) Average cost is minimum
QN7: Macroeconomics is concerned with–
a) The level of output of goods and services
b) The general level of prices
c) The growth of real output
d) None of the above
e) All of the above
(Note: All 1st three options are correct)
Answer
Answer: e) All of the above
QN8: Real GNP increases–
a) When there is an increase in the price level
b) When there is an increase in the output of goods and services
c) When there is an increase in the price level and/or the output of goods and services
d) None of the above
Answer
Answer: b) When there is an increase in the output of goods and services
QN9: Personal income includes all of the following except–
a) Transfer payments
b) Undistributed corporate profits
c) Personal income taxes
d) Personal savings
Answer
Answer: b) Undistributed corporate profits
QN10: NDP does not include–
a) Payments made for income taxes
b) Depreciation allowances
c) Undistributed profits
d) The value added from intermediate goods
Answer
Answer: b) Depreciation allowances
QN11: National income is–
a) NDP at market prices
b) NNP at market prices
c) NDP at factor cost
d) GNP at market prices
Answer
Answer: d) GNP at market prices
QN12: The difference between personal disposable income and personal income is–
a) Residential investment
b) Indirect taxes
c) Subsidies
d) Personal taxes
Answer
Answer: d) Personal taxes
QN13: The ratio of the change in equilibrium output to the change in autonomous spending that causes change in output is called–
a) Marginal propensity to consume
b) Marginal propensity to save
c) Average propensity to save
d) Average propensity to consume
e) Multiplier
(Note: Correct Answer should = Multiplier)
Answer
Answer: e) Multiplier
QN14: When planned saving is greater than planned investment–
a) Output should increase
b) Output should decrease
c) Output should not change
d) None of the above
Answer
Answer: b) Output should decrease
QN15: An autonomous increase in investment–
a) Does not affect the IS curve
b) Shifts the LM curve to the left
c) Shifts the IS curve to the left
d) Shifts the IS curve to the right
Answer
Answer: d) Shifts the IS curve to the right
QN16: 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
QN17: A resource is scarce if supply exceeds demand at zero price
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN18: A command economy decides resource allocation by government planning
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN19: 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
QN20: Positive economics studies objective explanations of the workings of the economy
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN21: An economic model is a physical representation of an economy
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN22: Index numbers express base data in relation to some relative value
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN23: To find the percentage change in a number, divide the absolute change by the original number and multiply by 100
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN24: 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%
QN25: 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
QN26: Supply is the quantity of a good sellers wish to sell each time the market opens
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN27: The equilibrium price clears the market; it is the price at which ___
A) Everything is sold
B) Buyers spend all their money
C) Quantity demanded equals quantity supplied
D) Excess demand is zero
E) c and d
Answer
Answer: E) c and d
QN28: A change in price can cause a shift of a demand curve
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN29: An increase in price will cause a supply curve to shift to the left
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN30: Price ceilings are imposed increase price above the free market equilibrium price
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN31: The cross-price elasticity of demand measures how the quantity demanded of one good is related to consumer income
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN32: 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
QN33: Any price change can be decomposed into an income effect and a complementary effect
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN34: If a firm is producing a level of output where marginal cost is greater than marginal revenue, it should increase output to maximise profits
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN35: An upward shift in marginal cost ___output and an upward shift in marginal revenue ___ output
A) reduces, reduces
B) reduces, increases
C) increases, increases
D) increases, reduces
Answer
Answer: B) reduces, increases
QN36: A firm should close down if profits are zero
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN37: A firm that breaks even after all economic costs are paid is earning
A) Economic profit
B) Accounting profit
C) Normal profit
D) Supernormal profit
Answer
Answer: C) Normal profit
QN38: A firm that makes profit in addition to normal profit is making
A) Economic profit
B) Accounting profit
C) Normal profit
D) Supernormal profit
Answer
Answer: D) Supernormal profit
QN39: If both marginal cost and marginal revenue increase, a firm ___
A) should increase output
B) should reduce output
C) will require further information on how to respond
D) should not change output
Answer
Answer: C) will require further information on how to respond
QN40: A production technique is technically efficient if
A) output is maximized
B) inputs are minimized
C) there is no way to make a given output using less of one input and no more of the other inputs
D) costs are minimized
Answer
Answer: C) there is no way to make a given output using less of one input and no more of the other inputs
QN41: A period of time long enough for the firm to adjust all production inputs is described as the long run
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN42: Decreasing returns to scale means that ___ as ___
A) short run marginal costs rises, output rises
B) long run marginal cost rises, output rises
C) short run average cost rises, output rises
D) long run average cost rises, output rises
Answer
Answer: D) long run average cost rises, output rises
QN43: If a long run average cost curve is falling from left to right this is an example of
A) increasing returns to scale
B) decreasing returns to scale
C) constant returns to scale
D) the minimum efficient scale
Answer
Answer: A) increasing returns to scale
QN44: If a firm is not operating at the output necessary to achieve all scale economies, it has not achieved its
A) Efficient scale
B) Average efficient scale
C) Maximum efficient scale
D) Minimum efficient scale
Answer
Answer: D) Minimum efficient scale
QN45: When average cost is falling marginal cost is ___ and when average cost is rising marginal cost is ___
A) greater than average cost, greater than average cost
B) less than average cost, greater than average cost
C) less than average cost, less than average cost
D) greater than average cost, less than average cost
Answer
Answer: B) less than average cost, greater than average cost
QN46: The firms long run output decision will be where
A) long run average cost is lowest
B) marginal revenue equals output
C) marginal revenue equals long run marginal cost
D) marginal cost equals output
Answer
Answer: C) marginal revenue equals long run marginal cost
QN47: Short run average total costs are equal to the sum of ___ and ___
A) short run opportunity costs, profit
B) short run variable costs, profit
C) short run average variable costs, profit
D) short run average variable costs, short run average fixed costs
Answer
Answer: D) short run average variable costs, short run average fixed costs
QN48: The short run marginal cost curve cuts the short run total cost curve and short run average variable cost curve ___
A) At their lowest points
B) When they are declining
C) When they are increasing
D) When marginal revenue is zero
Answer
Answer: A) At their lowest points
QN49: Given a long run average cost curve, every point represents a tangency with the lowest point of a short run average cost curve for a fixed plant size
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN50: Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreasing marginal product of that factor. This is an example of
A) decreasing returns to scale
B) the law of diminishing returns
C) constant returns to scale
D) an inefficient production technique
Answer
Answer: B) the law of diminishing returns
QN51: In the short run a firm will produce zero output if ___
A) price is greater than short run average total cost
B) price is between short run average total cost and short run average variable cost
C) price is less than short run average variable cost
D) profit is zero
Answer
Answer: C) price is less than short run average variable cost
QN52: In a competitive industry each buyer and seller ___
A) Is a price taker
B) Produce different products
C) Believes that can influence price
D) Prevents the entry of competitors
Answer
Answer: A) Is a price taker
QN53: For a competitive firm, its short run supply curve is ___ and its long run supply curve is ___
A) SMC, LMC
B) SMC above SAVC, LMC above LAC
C) SMC below SAVC, LMC above LAC
D) SMC below SAVC, LMC below LAC
Answer
Answer: B) SMC above SAVC, LMC above LAC
QN54: For perfect competition to work there must be
A) many buyers and sellers
B) a standard product
C) free entry and exit
D) perfect information
E) all of the above
Answer
Answer: E) all of the above
QN55: If there are short run excess profits in a competitive industry, in the long run they will disappear because of new entrants
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN56: A competitive firms demand curve is
A) horizontal
B) vertical
C) downward sloping
D) fairly elastic
Answer
Answer: A) horizontal
QN57: A competitive firm produces a level of output at which ___
A) price is greater than marginal cost
B) price equals marginal cost
C) price is less than marginal cost
D) none of the above
Answer
Answer: B) price equals marginal cost
QN58: The supply rule of the profit maximising monopolist is different from that of a competitive firm
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN59: Comparing a monopoly and a competitive firm, the monopolist will ___
A) produce less at a lower price
B) produce more at a lower price
C) produce less at a higher price
D) produce less at a lower price
Answer
Answer: C) produce less at a higher price
QN60: A discriminating monopolist will charge a higher price to groups with elastic demand
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN61: Perfect price discrimination means that every customer ___
A) buys the same amount
B) pays the same price
C) contributes the same revenue
D) pays what she thinks the product is worth
Answer
Answer: D) pays what she thinks the product is worth
QN62: A monopoly may be self-perpetuating because profits may be used for
A) research
B) cost-saving
C) technical advance
D) all of the above
Answer
Answer: D) all of the above
QN63: All of the following are types of imperfect competition except
A) monopolistic competition
B) oligopoly
C) monopoly
D) unfair competition
Answer
Answer: D) unfair competition
QN64: A natural monopoly has a declining ___ over a large range of output
A) long run marginal cost
B) short run marginal cost
C) long run average cost
D) long run marginal cost
Answer
Answer: C) long run average cost
QN65: When a market is contestable, incumbent firms must ___ to avoid the entry of new competitors
A) behave like competitive firms
B) agree to act together
C) differentiate their products
D) practise price discrimination
Answer
Answer: A) behave like competitive firms
QN66: The long run equilibrium in monopolistic competition involves competitors making excess profits
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN67: The reason for the kinked demand curve is that
A) The oligopolist believes that competitors will match output increases but not output reductions
B) The oligopolist believes that competitors will match price increases but not output reductions
C) The oligopolist believes that competitors will match price cuts but not price rises
D) The oligopolist believes that competitors will match price increases but not output increases
Answer
Answer: C) The oligopolist believes that competitors will match price cuts but not price rises
QN68: Game theory studies interdependent decision-making
A) TRUE
B) FALSE
Answer
Answer: A) TRUE
QN69: The Prisoners’ Dilemma Game demonstrates that
A) players are better off to act independently
B) monopoly is better than competition
C) people will always cheat
D) players are better off if they co-operate
Answer
Answer: D) players are better off if they co-operate
QN70: In Nash equilibrium each player chooses the best strategy ___
A) assuming other players move first
B) dominated by the other players
C) given the strategies of other players
D) that is a credible threat
Answer
Answer: C) given the strategies of other players
QN71: A dominant strategy is ___
A) a winning strategy
B) a losing strategy
C) a players best strategy when moving first
D) a player’s best strategy whatever the strategies adopted by rivals
Answer
Answer: D) a player’s best strategy whatever the strategies adopted by rivals
QN72: Strategic entry barriers are made by nature
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN73: The substitution effect of a rise in the price of labour will ___ the quantity of labour and the output effect will ___ it
A) increase, increase
B) increase, reduce
C) reduce, reduce
D) reduce, increase
Answer
Answer: C) reduce, reduce
QN74: As more labour is used the marginal physical product of labour increases
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN75: A profit-maximizing firm will hire labour until ___ equals the ___
A) marginal revenue, marginal cost
B) long run marginal revenue, long run marginal cost
C) labour output ratio, capital output ratio
D) marginal cost of labour, marginal revenue product
Answer
Answer: D) marginal cost of labour, marginal revenue product
QN76: The downward sloping marginal physical product of labour is the firm’s ___
A) supply of labour
B) short-run demand curve for labour
C) marginal cost of labour
D) marginal revenue product of labour
Answer
Answer: B) short-run demand curve for labour
QN77: When we say that labour demand is a derived demand, we are referring to government initiatives to increase employment
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN78: The participation rate in the labour force is affected by
A) higher real wages
B) lower fixed costs of working
C) lower non-labour income
D) changes in tastes between leisure and work
E) all of the above
Answer
Answer: E) all of the above
QN79: Top footballers tend to earn more than lecturers because
A) footballers give more entertainment
B) lecturers are lazy
C) the labour markets are imperfect
D) top footballers are relatively scarce in relation to lecturers
Answer
Answer: D) top footballers are relatively scarce in relation to lecturers
QN80: Human capital can be described as
A) the tools used by workers to enhance productivity
B) a persons inherited abilities
C) the stock of expertise accumulated by a worker
D) education
Answer
Answer: C) the stock of expertise accumulated by a worker
QN81: The supply of highly educated workers is fixed in long run
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN82: The most important source of wage differentials are
A) regional variation
B) unionization
C) relative danger
D) skills
Answer
Answer: D) skills
QN83: Skilled labour is relatively scarce because
A) there are too few teachers
B) too few student places in higher education
C) it is costly to acquire human capital
D) teachers’ salaries are too low
Answer
Answer: C) it is costly to acquire human capital
QN84: The opportunity cost of acquiring education is ___
A) course fees
B) course fees and living expenses
C) the earnings foregone
D) course fees, living expenses and textbooks
Answer
Answer: C) the earnings foregone
QN85: By restricting labour supply a trade union can ___ and ___
A) increase the wage, increase employment
B) maintain the wage, increase employment
C) increase the wage, lower employment
D) maintain the wage, lower employment
Answer
Answer: C) increase the wage, lower employment
QN86: In the UK under a ___ of the labour force belong to a trade union
A) quarter
B) third
C) half
D) three-quarters
Answer
Answer: B) third
QN87: Unions achieve a higher wage differential the more ___ and the more ___
A) inelastic the demand for labour, they can restrict the supply of labour
B) members they have, aggressive they behave
C) the economy is growing, people prefer leisure
D) the productivity s growing, vacancies exist
Answer
Answer: A) inelastic the demand for labour, they can restrict the supply of labour
QN88: A closed shop is a union that has no room for additional members
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN89: Women and non-whites on average receive lower incomes than white men because
A) they tend to work in relatively unskilled jobs
B) educational disadvantage
C) firms are reluctant to invest in training
D) all of the above
Answer
Answer: D) all of the above
QN90: In the UK, in recent years, union membership has ___ and days of work lost because of strikes has ___
A) grown, declined
B) declined, declined
C) declined, grown
D) grown, grown
Answer
Answer: B) declined, declined
QN91: Involuntary unemployment exists if workers
A) will not work at the offered wage
B) Would work at the going wage but cant find jobs
C) Will not work because the hours are anti-social
D) Are not prepared to move house to get the job
Answer
Answer: B) Would work at the going wage but cant find jobs
QN92: Efficiency wages are ___ that raise ___
A) low wages, employment
B) high wages, labour supply
C) high wages, productivity
D) high wages, employment
Answer
Answer: C) high wages, productivity
QN93: The difference between gross investment and net investment is
A) depreciation of the existing capital stock
B) productive investment
C) dwellings
D) inventories
Answer
Answer: A) depreciation of the existing capital stock
QN94: The cost of using capital services is the ___
A) wage rate of capital
B) interest charges
C) marginal capital cost
D) rental rate for capital
Answer
Answer: D) rental rate for capital
QN95: The value of an asset depends upon
A) its scrap value
B) its depreciation
C) the present value of the future stream of income it can earn
D) the cost of loans
Answer
Answer: C) the present value of the future stream of income it can earn
QN96: The marginal revenue product of capital is the ___
A) change in a company’s balance sheet when it acquires new plant
B) additional value of output from using more capital
C) change in a company’s share price
D) changing value of the capital stock
Answer
Answer: B) additional value of output from using more capital
QN97: The demand for capital services is derived from a falling MRPK schedule
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
QN98: In the short run, the supply of capital is ___ and in the long run will depend on ___
A) variable, technology
B) fixed, expectations
C) fixed, rental rate of capital
D) variable, interest rates
Answer
Answer: C) fixed, rental rate of capital
QN99: If workers get a real wage increase this will likely ___ and ___
A) encourage the use of more capital in the long run, reduce demand for all inputs
B) encourage the use of more capital, increase demand for all inputs
C) encourage the use of less capital, reduce demand for all inputs
D) encourage the use of less capital, reduce demand for all inputs
Answer
Answer: C) encourage the use of less capital, reduce demand for all inputs
QN100: The supply of land is normally greater in the long run than in the short run
A) TRUE
B) FALSE
Answer
Answer: B) FALSE
