Basics Economics Studies MCQs

Multiple Choice Questions 27 Pages

Mahatma Gandhi University

BA sociology

Contributed by

Tarun Kanda

ECONOMICS - BASICS ECONOMICS STUDIES

COMMON FOR PRIVATE REGISTRATION TO BA HISTORY, POLITICAL SCIENCE,
SOCIOLOGY, & ISLAMIC HISTORY, PROGRAMME

1. The subject matter of economics is concerned with
A. Production
C. Distribution and exchange
B. Consumption
D. All of the above

2. The economic problem arises since
A. Wants are unlimited
B. Resources are limited
C. Resources are capable of alternative uses
D. All of the above

3. The wants of the people are
A. Limited
C. Unlimited
B. Satiable
D. All of the above

4. Economic problem arises in
A. Planned economies
B. Free market economies
C. Mixed economies
D. All of the above

5. The resources are :
A. Limited
B. Unlimited
C. Not only limited but are capable of alternative uses
D. None of the above

6. Which one of the following is an example of an economic good
A. Sunlight
B. Air
C. Petrol
D. None of the above

7. ----- is not an example of free good
A. Sunlight
B. Car
C. Petrol
D. Computer

8. The term production refers to:
A. Producing things which are capable of satisfying human wants
Page 1
B. Creation or addition of utilities
C. Transformation of inputs into output
D. All of the above

9. The problem of allocation of resources is concerned with:
A. What to produce
B. How to produce
C. For whom to produce
D. All of the above

10. The distribution of national product among the members of the society
is the problem of:
A. What to produce
B. How to produce
C. For whom to produce
D. All of the above

11. Production is said to be efficient when:
A. The re-allocation of resources cannot increase the production of
the article even by one unit
B. More output is produced with the given input
C. Resources are fully employed
D. All of the above

12. Which one of the following come under macro economics:
A. Per capita income
B. Study of a firm
C. Individual income
D. Theory of factor pricing

13. Which one of the following is not come under macro economics
A. National income
B. Per capita income
C. Disposable income
D. Individual income

14. Partial equilibrium analysis come under:
A. Micro economics
B. Macro economics
C. Welfare economics
D. International economics

15. “The starting point of all economic activity is the existence of human
wants” Who said this?
A. Adam Smith
B. Selligman
C. Ricardo
D. Alfred Marshall

16. Production and consumption takes place simultaneously in the case of
Page 2
A. Goods
B. Services
C. Both in the case of goods and services
D. Neither in the case of goods and services

17. Economics is a social science because
A. The central point in economics is man and his problems
B. Economics uses scientific approach to derive its laws
C. Like History, Politics and Psychology economics deals with the
problems of human being
D. All of the above

18. Economic growth can be achieved through
A. Advanced technology
B. Expansion of resources
C. Both A & B
D. Neither A & B

19. Micro economics doesn’t deal with:
A. The study of individual economic units
B. Determination of factor prices
C. Price determination of commodities
D. General equilibrium analysis

20. Name the economist who analyses the subject matter of economics into
two branches: micro economic analysis and macro economic analysis.
A. Adam Smith
B. Alfred Marshall
C. Ragner Frisc
D. P A Samuelson

21. Transformation of inputs into outputs is known as
A. Production
B. Consumption
C. Distribution
D. Exchange

22. ----- is an example of secondary input
A. Land
B. Labour
C. Capital
D. Raw material

23. Odd-man out from the following
A. Steel
B. Medicine
C. Education
D. Train

24. The choice of techniques of production is related to the problem of
Page 3
A. What to produce
B. How to produce
C. For whom to produce
D. None of the above

25. The functional relationship between inputs and outputs is called
A. Production function
B. Consumption function
C. Investment function
D. Saving function

26. Firms owned by one individual is known as
A. Proprietorship
B. Partnership
C. Corporations
D. None of the above

27. Firms owned by two or more individuals is known as
A. Proprietorship
B. Partnership
C. Corporations
D. None of the above

28. Firms owned by stock holders are known as
A. Proprietorship
B. Partnership
C. Corporations
D. None of the above

29. The major objective of a firm is
A. Profit maximization
B. Revenue maximization
C. Sales maximization
D. None of the above

30. Which one of the following is an example of fixed input
A. Raw materials
B. Casual workers
C. Plant and equipments
D. All of the above

31. In short-run
A. All inputs are fixed
B. All inputs are variable
C. Some inputs are fixed and some are variable
D. None of the above

32. In long-run
A. All inputs are fixed
B. All inputs are variable
Page 4
C. Some inputs are fixed and some are variable
D. None of the above

33. Marginal product of a factor is
A. The additional product received by the firm due to the
employment of an additional unit of a variable factor
B. Addition to the total product when one more unit of a factor is
employed
C. The rate of change in the total product per unit change in the
variable factor.
D. All of the above

34. Production function expresses
A. The relationship between input and output
B. How maximum output is produced with the given input
C. What is the least-cost combination of input to produce the given
output
D. All of the above

35. The variable cost of a firm vary in direct proportion to the
A. Volume of its output
B. Extent of its profits
C. Volume of its sale
D. All of the above

36. Law of variable proportions is concerned with
A. Long-run production function
B. Laws of returns to scale
C. Short-run production function
D. None of the above

37. The ‘point of inflection’ come in which stage of the law of variable proportions
A. Stage I
B. Stage II
C. Stage III
D. None of the above

38. A rational producer will select his level of production in which stage of
the law of variable proportions
A. Stage I
B. Stage II
C. Stage III
D. Either Stage I or Stage II

39. Total product reaches at maximum when
A. MP is increasing
B. MP is maximum
C. MP = 0
D. MP is negative

Page 5
40. At the ‘point of inflection’
A. MP is maximum
B. AP is maximum
C. TP is maximum
D. All of the above

41. Returns to scale refers to the production function where
A. All factors are fixed
B. Some factors are fixed and others are variable
C. All factors are variable
D. None of the above

42. In the case of diminishing returns to scale, a given proportionate
increase in all factors causes
A. A more than proportionate increase in output
B. An equal proportionate increase in output
C. A less than proportionate increase in output
D. None of the above

43. Increasing returns to scale occurs due to
A. Division of labour
B. Specialization
C. Economies of scale
D. All of the above

44. The cause for diminishing returns to scale is:
A. Improper proportion of factors of production
B. Difficulty in the combination of certain factors
C. Excess combination of certain factors
D. All of the above

45. The solution to diminishing returns to scale is :
A. Technical progress
B. Expansion of resources
C. Proper combination or resources
D. All of the above

46. Economies of scale refers to:
A. Advantages resulting from large scale production
B. Disadvantages resulting from large scale production
C. Advantages resulting from the increase in the number of
consumers
D. All of the above

47. Which one of the following is not related to economies of scale:
A. Scope for division of labour and specialization
B. Scope for getting inputs at cheaper rates
C. Difficulty faces by the managers to coordinate the business
D. Scope for better storage facilities

Page 6
48. The law of Diminishing returns is applicable to:
A. Agriculture only
B. Industry only
C. In short-run only
D. Universally

49. Let a firm employs 5 labourers and produces 120 units of output. When
6 labourers are employed the firm produces 136 units of output. Then
the marginal product is ---
A. 120
B. 136
C. 6
D. 16

50. A firm produces 200 units of commodity X by employing 10 workers and
240 units of the same commodity by employing 12 workers. Then the
Average Product of the worker is --------
A. 200
B. 240
C. 20
D. 40

51. Other things remaining the same, the quantity of a product demanded
increases with ------------ in price.
A. Increase
B. Decrease
C. Variation
D. None of the above

52. When total utility is maximum, marginal utility is:
A. Maximum
B. One
C. Zero
D. Infinite

53. For complementary goods, the cross elasticity of demand:
A. Positive
B. Negative
C. Zero
D. None

54. Relation between price of a commodity and demand for another
commodity is measured by:
A. Price elasticity
B. Income elasticity
C. Cross elasticity
D. Elasticity of substitution

55. When TU falls, MU is:
A. Rises
Page 7
B. Zero
C. Positive
D. Negative

56. Demand varies ------------- with price.
A. Directly
B. Positively
C. Inversely
D. None of the above

57. When Q = f (P), the elasticity coefficient is measured by:
A. ∆Q/∆P / P/Q
B. ∆P/∆Q * Q/P
C. ∆Q/∆P * P/Q
D. ∆P/∆Q / Q/P

58. Income elasticity of demand for inferior good is:
A. Negative
B. Positive
C. Zero
D. Unity

59. In the case of luxury goods, the income elasticity of demand will be:
A. Less than unity
B. Unity
C. More than unity
D. All the above

60. Income elasticity is positive, but less than unity in the case of:
A. Necessity
B. Luxury
C. Inferior
D. Substitutes

61. In drawing an individual demand curve for a commodity, all but which
of the following are kept constant:
A. Individual’s money income
B. The prices of the related commodity
C. Price of the commodity under consideration
D. Tastes of the consumer

62. When an individual’s income rises, when everything else remains the
same, his demand for normal goods:
A. Rises
B. Falls
C. Remains the same
D. Any of the above is possible

63. When an individual’s income falls, when everything else remains the
same, his demand for inferior goods:
Page 8
A. Increases
B. Decreases
C. Remains unchanged
D. Cannot say

64. When the price of the substitute commodity of X falls, the demand for X:
A. Rises
B. Falls
C. Remains unchanged
D. All of the above is possible

65. If the quantity demanded remains unchanged as the price of the
commodity falls, the coefficient of price elasticity of demand is:
A. Greater than
B. one Equal to one
C. Smaller than one
D. Zero

66. If the income elasticity of demand is greater than one, then the
commodity is:
A. Necessity
B. Luxury
C. Inferior
D. Non-related commodity

67. If the amount of the commodity purchased remains unchanged when
the price of another commodity changes, the cross elasticity of demand
between them will be:
A. Positive
B. Negative
C. Zero
D. One

68. Which of the following is an exception to the law of demand?
A. Giffen good
B. Normal good
C. Superior good
D. All of the above

69. The law of diminishing marginal utility was popularized by:
A. Keynes
B. Marshall
C. Smith
D. Samuelson

70. If the income elasticity of demand for a commodity is found to be 0.4,
then the commodity concerned is:
A. Luxury
B. Necessity
C. Giffen’s goods
Page 9
D. Independent good

71. Cross elasticity of demand in the case of substitutes:
A. Zero
B. Negative
C. Positive
D. Infinity

72. If a small change in price leads to infinitely large change in quantity
demanded, then the demand is:
A. Perfectly elastic
B. Perfectly inelastic
C. Elastic
D. Inelastic

73. Net addition to total utility when one more unit is consumed is:
A. AU
B. MU
C. MC
D. TU

74. Most important determinant of demand is :
A. Income
B. Wealth
C. Price
D. Advertisement

75. Which of the following is the reason for law of demand:
A. Price effect
B. Backlash effect
C. Income effect
D. Real balance effect

76. A market:
A. Necessarily refers to a meeting place between buyer and sellers
B. Does not necessarily refers to a meeting place between buyer
and sellers
C. Extends over the entire country
D. Extends over a city

77. Net addition to total cost is called:
A. Marginal cost
B. Average cost
C. Fixed cost
D. Variable cost

78. The market equilibrium for a commodity is determined by :
A. Market demand
B. Market supply
C. Balancing of the forces of demand and supply
Page 10

Basics Economics Studies MCQs

Basics Economics Studies MCQs

Download this file to view remaining 17 pages