Question

Can someone come up with  50 multiple choice questions and 4 options for each of them? Furthermore, each answer should have an explanation (to understand mistake). Field: Microeconomics and Macroeconomics. Topic 10 Principles of Economics: People Face Tradeoffs, The Cost of Something is What You Give Up to Get It, Rational People Think at the Margin, People Respond to Incentives, Trade Can Make Everyone Better Off, Markets Are Usually a Good Way to Organize Economic Activity, Governments Can Sometimes Improve Economic Outcomes, The Standard of Living Depends on a Country's Production, Prices Rise When the Government Prints Too Much Money, Society Faces a Short-Run Tradeoff Between Inflation and Unemployment. Level of difficulty: medium-difficult. Please do not plagiarise or copy from other sources, it should be original.

Answer 1

1. The branch of economic theory that deals with the problem of allocation of resources is :

a)    Micro Economics
b)    Macro Economics
c)     Econometrics
d)    None of these

Explanation - Microeconomics is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

2. A study of how increase in the corporate income tax rate , will affect the natural unemployment rate is an example of :

a)    Macro Economics
b)    Descriptive Economics
c)     Micro Economics
d)    Normative Economics

Explanation - Macroeconomics is a branch of economics dealing with the performance, structure, behaviour, and decision-making of an economy as a whole. This includes regional, national, and global economies.

3. The opportunity cost of an item is :

a) What you give up to get that item.

b) The dollar value of the item.

c) Usually less than the dollar value of the item.

d) The number of hours needed to earn money to buy the item.

Explanation - Opportunity cost is the loss of other alternatives when one alternative is chosen.

4. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply?

a)    Open Economy
b)    Controlled Economy
c)     Command Economy
d)    Market Economy

Explanation - A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand.

5.Demand for a commodity refers to:

a) Desire for the commodity

b)  Need for the commodity

c)     Quantity demanded of that commodity

d)    Quantity of the commodity demanded at a certain price during any particular period of time

Explanation - Demand for a commodity refers to quantity of the commodity demanded at a certain price during any particular period of time.

6. The supply of a good refers to:

a)    Actual production of good

b)    Total stock of goods

c)     Stock available for sale

d)    Amount of goods offered for sale at a particular price per unit time

Explanation -  The supply of a good refers to amount of goods offered for sale at a particular price per unit time.

7. In which of the following market structure is the degree of control over the price of its product by a firm very large?

a) Imperfect competition

b) Perfect competition

c) Monopoly

d) In A and B both

Explanation -   A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute

8. An individual demand curve slopes downward to the right because of the:

a)Working of the law of diminishing marginal utility

b)substitution effect of decrease in price

c)income effect of fall in Price

d) All of the above

9. ______ shows the overall output generated at a given level of input:

a)    Cost function

b)    Production function

c)     Iso cost

d)    Marginal rate of technical substitution

Explanation - The production function is purely a technical relation which connects factor inputs and output

10. If LAC curve falls as output expands, this is due to _____:

a)    Law of diminishing retains

b)    Economics of scale

c)     Law of variable proportion

d)    Diseconomics of scale

11. Isoquants are equal to:

a)    Product Lines

b)    Total utility lines

c)     Cost lines

d)    Revenue lines

Explanation - An isoquant is a contour line drawn through the set of points at which the same quantity of output is produced while changing the quantities of two or more inputs

12. Increasing returns to scale can be explained in terms of:

(a)    External and internal economies

(b)    External and internal diseconomies

(c)     External economics and internal diseconomies

(d)    All of these

13. An isoquant is ______ to an iso cost line at equilibrium point:

(a)    Convex

(b)    Concave

(c)     Tangent

(d)    Perpendicular

Explanation - An isoquant is a contour line drawn through the set of points at which the same quantity of output is produced while changing the quantities of two or more inputs

14. Diminishing marginal returns implies:

(a)    Decreasing average variable costs

(b)    Decreasing marginal costs

(c)     Increasing marginal costs

(d)    Decreasing average fixed costs

15. If the marginal product of labour is below the average product of labour. It must be true that:

(a)    Marginal product of labour is negative

(b)    Marginal product of labour is zero

(c)     Average product of labour is falling

(d)    Average product of labour is negative

16. Law of variable proportion is valid when:

(a)    Only one input is fixed and all other inputs are kept variable

(b)    All factors are kept constant

(c)     All inputs are varied in the same proportion

(d)    None of these

Explanation - law of variable proportions states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.

17. A perfectly inelastic supply curve will be

(a)    Parallel to X axis

(b)    Parallel to Y axis

(c)     Downward sloping

(d)    None of these

18. Total utility is maximum when :

(a)    Marginal utility is maximum

(b)    Marginal utility is Zero

(c)     Average utility is maximum

(d)    Average utility is Zero

19. An indifference curve is always :

(a)    Concave to the origin

(b)    Convex to the origin

(c)     L-shaped

(d)    A vertical straight line

20. At equilibrium, the slope of the indifference curve is:

(a)    Equal to the slope of budget line

(b)    Greater than the slope of budget line

(c)     Smaller than the slope of budget line

(d)    None

21. The law of equi marginal utility considers price of money as:

(a)    zero

(b)    less than one

(c)     more than one

(d)    one

22. Marginal utility approach was given by:

(a)    J.R. hicks

(b)    Alfred Marshall

(c)     Robbins

(d)    A.C. Pigou

23.The PPF of a nation shows:

a) How much people consume

b) How much production takes place with the existing resources

c)The prices of products

d)The population

24.  Deficit financing leads to  

(a) Price rise

(b) Price fall

(c) Price control

(d) None of the above

25. Milton Friedman gave emphasis in his quantity theory of money on

(a) Production and Income

(b) Price level

(c) Supply of Money  

(d) Demand for Money

26-Money is said to be neutral if  

(a) it affects the real variables of the economy.

(b) it does not affect the real variables of the economy.

(c) it affects only the production.  

(d) it affects both production & employment.

27.Market which have two firms are known as:

(a)    Oligopoly

(b)   Duopoly

(c)     Monopsony

(d)    Oligopsony

Explanation - A duopoly is a type of oligopoly where two firms have dominant or exclusive control over a market

28. Firms in a monopolistic market are price _______:

(a)    Takers

(b)    Givers

(c)     Makers

(d)    Acceptors

29.Equilibrium price may be determined through:

(a)    Only demand

(b)    Only supply

(c)     Both demand & supply

(d)    None

Explanation - Equilibrium is a condition in which all influences acting cancel each other, so that a static or balanced situation results

30. In the long run:

(a)    Only demand can change

(b)    Only supply can change

(c)     Both demand and supply can change

(d)    None of these

31. Under _______ market condition, firms make normal profits in the long run:

(a)    Perfect competition

(b)    Monopoly

(c)     Oligopoly

(d)    None

Explanation - Perfect Competition is the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

32. Under Monopolistic competition the cross elasticity of demand for the product of a single firm would be:

(a)    Infinite

(b)    Highly elastic

(c)     Highly inelastic

(d)   Zero

33. Kinked demand curve hypothesis is given by:

(a)    Alfred marshal

(b)    A.C Pigou

(c)    Sweezy

(d)    Hicks & allen

34. Accounting profits are:

a) Total revenue minus total cost

b) Total cost minus total revenue

c) Marginal revenue minus total cost

d) Total revenue minus marginal cost

35 . What is Managerial economics

a) Has little to say about day-to-day decisions

b) Is valuable to the coordinator of a shelter for the homeless

c) Is not relevant for managers of "not-for-profit" groups

d) Is the study of how to get rich in the stock marke

36.Basic principles that comprise good management include

a. Identifying goals and constraints

b. Recognizing the nature and importance of profits

c. Understanding incentives

D. All of the above

37. The number of people unemployed equals

a) the number of people employed minus the labor force.

b) the labor force plus the number of people employed.

c) the labor force minus the number of people employed.

d) the number of people employed divided by the labor force.

38. The increase in unemployment that occurs during recessions and depressions is called

a) frictional unemployment.

b) structural unemployment.

c) cyclical unemployment.

d) normal unemployment

39. Income inequalities are often shown on a

a. production possibility curve.

b. marginal inequality curve.

c. Sen curve.

d. Lorenz curve.

Explantion - the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution

40. Which of the following was a socialist country?

a) Holland.

b) Australia

c) China

d)India

41. A budgetary deficit means:

a) total expenditure is more than total revenue

b) current expenditure is more than current revenue

c) capital expenditure is more than capital revenue

d) total expenditure is more than current revenue

42. Fiscal deficit in the budget means:

a) Revenue deficit plus the net borrowings of the government

b) Budgetary deficit plus the net borrowings of the government

c) Capital deficit plus revenue deficit

d) Primary deficit minus capital deficit

Explanation - The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.

43 .Which is the best measure of economic growth of a country ?

a. GNP

b. GDP

c. Net revenue

d. None of these

Explanation - GDP OR Gross domestic product is the total value of goods produced and services provided in a country during one year