Most Latest Economics MCQs – Up To Date Market ( Economics ) MCQs
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Latest Economics MCQs
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Latest Market ( Economics ) Mcqs
The most occurred mcqs of Market ( Economics ) in past papers. Past papers of Market ( Economics ) Mcqs. Past papers of Market ( Economics ) Mcqs . Mcqs are the necessary part of any competitive / job related exams. The Mcqs having specific numbers in any written test. It is therefore everyone have to learn / remember the related Market ( Economics ) Mcqs. The Important series of Market ( Economics ) Mcqs are given below:
Satellite television subscription and television detection devices are ways in which broadcasting companies address the ________ problem?
A. market imperfection
B. externality
C. deadweight burden
D. free rider
A good example of a public good is ?
A. the national health service
B. public transport
C. national defence
D. rail transport
Market failure may arise because of ?
A. taxation
B. imperfect competition
C. externalities
D. missing markets
E. all of the above
If my neighbour burns garden waste causing my house to fill with smoke this is an example of ?
A. a production externality
B. transaction costs
C. a second-best solution
D. a consumption externality
A competitive equilibrium is Pareto-efficient because ?
A. consumers and producers face the same prices
B. Producers are price takers
C. marginal costs and benefits are equal
D. prices equal marginal cost and benefit
E. All of the above
In the insurance industry, high-risk customers are more likely to take out insurance. This is an example of ?
A. risk aversion
B. moral hazard
C. adverse selection
D. a poor gamble
In Nash equilibrium each player chooses the best strategy ?
A. dominated by the other players
B. Assuming other players move first
C. given the strategies of other players
D. that is a credible threat
When a market is contestable, incumbent firms must __________ to avoid the entry of new competitors?
A. behave like competitive firms
B. differentiate their products
C. agree to act together
D. practice price discrimination
All of the following are types of imperfect competition except ?
A. oligopoly
B. monopolistic competition
C. monopoly
D. unfair competition
Tax shifting ?
A. is the ultimate distribution of a tax’s burden
B. is the way in which a tax is structured
C. occurs when taxes cause prices to increase but wages to fall
D. occurs when house hold can alter their behaviour and do something to avoid paying a tax.
Which of the following is the government most likely to subsidies ?
A. Monopolies
B. Positive externalities
C. Negative externalies
D. Oligopolies
The government is considering placing a tax on cigarettes to raise revenue to finance health-care benefits. The demand for cigarettes is price inelastic Which of the following statements is True ?
A. This a very good way to raise revenue both in the short term and in the long term, because there are no substitutes for cigarettes.
B. The tax on cigarettes may not raise as much revenue as anticipated in the years to com because the demand for cigarettes is likely to become more elastic over time.
C. This tax will not raise much revenue either in the short term or the long term since demand is price inelastic
D. No tax revenue can be raised in this way because sellers of cigarette will just lower their price by the amount of the tax and therefore, the price of cigarettes to consumers will not change
An example of an indirect tax is ?
A. VAT
B. income tax
C. inheritance tax
D. a tax on profits
If a government were to fix a minimum wage for adult workers, economists would predict ?
A. fewer young workers would be employed
B. wages in general would fall as employers tried to hold down costs
C. the costs and prices of firms employing cheap labour would increase
D. there would be more unemployment
In a free market system rationing occurs when there are increases in ?
A. quantity
B. price
C. demand
D. supply
Economics say that there has to be some from of rationing whenever ?
A. there are externalities
B. inflation occurs
C. merit goods are produced
D. there is excess demand
If a maximum price is set below equilibrium there will be ?
A. A price increase
B. A price fall
C. Excess supply
D. Excess demand
Markets, Efficiency And The Public Interest MCQs
A public good ?
A. Is free
B. Is provided by the government
C. Has the properties of being non-excludable and non-diminishable
D. Gas external costs
Agricultural prices tend to be unstable because ?
A. Demand is price elastic
B. Supply is price elastic
C. Supply is stable
D. Demand and supply are price inelastic
If the price in a market is fixed by the government above equilibrium ?
A. There is excess demand
B. There is excess supply
C. There is excess equilibrium
D. There is equilibrium
A positive externality occurs when ?
A. The social marginal costs are higher than the private marginals costs
B. The social marginal cost equal the social marginal benefit
C. A product is not provided in the free market
D. The social marginal benefits are higher than the private marginal benefits
Income inequality can be high in the free market and should be reduced This is an example of What ?
A. Positive economic statement
B. Judicial economic statement
C. Formative economic statement
D. Normative economic statement
A decrease in demand for a products should ?
A. Increase equilibrium price and decrease quantity
B. Decrease equilibrium price and quantity
C. increase equilibrium price and quantity
D. Decrease equilibrium price and increase quantity
A shift in demand will have more effect on price than quantity if ?
A. The price elasticity of supply is + 0.2
B. The price elasticity of supply is + 3
C. The price elasticity of supply is + 2
D. The price elasticity of supply is infinity
The price mechanism does not act as a ?
A. Incentive
B. Signal
C. Rationing device
D. Indicator of income
The price mechanism cannot ?
A. Act as a incentive
B. Act as a signal
C. Act as a rationing device
D. shift the demand curve
A subsidy paid to producers ?
A. Shifts the supply curve
B. Leads to a contractions in supply
C. shifts the demand curve
D. Leads to an extension of supply
If the price was fixed below the equilibrium price there would be ?
A. Equilibrium
B. Excess demand
C. Excess supply
D. Downward pressure on prices
A shift in supply will have a bigger effect on price than output if demand is ?
A. income inelastic
B. income elastic
C. Price elastic
D. Price inelastic
An increase in income will ?
A. Shift the supply curve
B. Lead to a movement along the demand curve
C. Shift the demand curve
D. Lead to an extension of demand
An inferior good is one for which an increase in income causes a(n) ?
A. increase in demand
B. decrease in supply
C. increase in supply
D. decrease in demand
Suppose consumer tastes shift toward the consumption of apples Which of the following statements is an accurate description of the impact of this event on the market for apples ?
A. There is an increase in the demand for apples and a decrease in the supply of apples
B. There is an increase in the demand and supply of apples.
C. There is an increase in the quantity demanded of apples and in the supply for apples
D. There is a decrease in the quantity demanded of apples and an increase in the supply for apples
E. There is an increase in the demand for apples and an increase in the quantity supplied of apples.
Which ofthe following statements is true about the impact of an increase in the price of lettuce ?
A. Both the demand for lettuce will decrease and the equilibrium price and quantity of salad dressing will fall
B. The demand for lettuce will decrease
C. The supply of lettuce will decrease
D. The equilibrium price and quantity of salad dressing will fall
E. The equilibrium price and quantity of salad dressing will rise
Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect?
A. the equilibrium quantity to rise and the equilibrium price to rise
B. the equilibrium quantity to rise and the equilibrium price to fall
C. the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise
D. the equilibrium quantity to rise and the equilibrium price to remain constant
E. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.
An increase (rightward shift) in the demand for a good will tend to cause ?
A. an increase in the equilibrium price and quantity
B. a decrease in the equilibrium quantity.
C. an increase in the equilibrium price and a decrease in the equilibrium quantity
D. none of these answers
E. a decrease in the equilibrium price and quantity.
If the price of good is below the equilibrium price ?
A. there is a shortage and the price will rise
B. the quantity demanded is equal to the quantity supplied and the price remains unchanged
C. there is a surplus and the price will rise
D. there is a shortage and the price will fall
All of the following shift the supply of watches to the right except ?
A. All of these answers cause an increase in the supply of watches
B. an increase in the price of watches
C. an advance in the technology used to manufacture watches
D. a decrease in the wage of workers employed to manufacture watches
A monopolistic market has ?
A. none of these answers
B. many buyers and sellers
C. firms that are price takers
D. only one seller
The law of supply states that an increase in the price of a good ?
A. decrease the quantity demanded for that good
B. increases the quantity supplied of that good
C. increase the supply of that good
D. decrease the demand for the good
E. none of these answers
If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?
A. inferior goods
B. Complements
C. normal goods
D. none of these answers
E. Substitutes
Labour Market MCQs
The problem posed by a natural monopoly is that it faces a _____ This means that _______?
A. increasing average cost curve, marginal cost lies below average cost
B. increasing average cost curve, marginal cost lies above average cost
C. decreasing average cost curve marginal cost lies above average cost
D. decreasing average cost curve, marginal cost lies below average cost
If two firms doing the same thing in the same industry join together, this is known as a ?
A. conglomerate merger
B. horizontal merger
C. vertical merger
D. hostile takeover
The social costs of monopoly power arises because ?
A. price is less than marginal cost
B. marginal cost is set equal to marginal revenue
C. marginal consumer benefit is less than marginal revenue
D. there is too little output at too high a cost
The effect of a tax to offset a negative externality will be to ____ price and ______ quantity?
A. increase, increase
B. reduce , reduce
C. increase, reduce
D. reduce, increase
Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______?
A. marginal costs, marginal benefits
B. marginal cost, marginal revenue
C. demand, supply
D. marginal cost, average cost
Except for taxes to offset ______ taxes are ______?
A. inequality , a first best option
B. externalities , distortionary
C. imperfect competition popular
D. poor health, unnecessary
If the consumption of good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a ?
A. merit good
B. Private good
C. public good
D. abundant good
Markets sometimes fail to exist because of________?
A. the free-rider problem
B. externalities
C. a and b
D. a and c
Externalities arise because there is a divergence between ________ and _________?
A. social costs, social benefit
B. private costs, social costs or benefits
C. private costs, private benefits
D. insiders, outsiders
The allocation of resources is not efficient if ?
A. the marginal cost of production does not equal society’s marginal benefit
B. economic growth is low
C. the distribution is inequitable
D. unemployment is high
We cannot say whether one allocation of resources is better than another allocation because ?
A. not all economic activity is legal
B. some people may not be permanent resident
C. some people can’t count
D. We can’t make value judgments to compare different people’s welfare
An allocation is Pareto-efficient if no reallocation of resources would make some people _______ without making others ________?
A. better off; better off
B. worse off; worse off
C. better off; worse off
D. equal, unequal
Moral hazard means that the act of insuring ____ that the desired outcome will occur?
A. guarantees
B. increases the likelihood
C. reduces the likelihood
D. none of the above
A dominant strategy is ?
A. a losing strategy
B. a wining strategy
C. a players best strategy when moving first
D. a player’s best strategy whatever the strategies adopted by rivals
The prisoners Dilemma Game demonstrates that ?
A. monopoly is better than competition
B. players are better of to act independently
C. people will always cheat
D. players are better off if they co-operate
The reason for the kinked demand curve is that ?
A. The oligopolist believes that competitors will match price increase but not output reduction
B. The oligopolist believes that competitors will match output increase but not output reduction
C. The oligopolist believers that competitors will match price cuts but not price rises
D. The oligopolist believes that competitors will match price increase but not output increase
A natural monopoly has a declining _______ over a large range of output?
A. short run marginal cost
B. long run marginal cost
C. long run average cost
D. long run marginal cost
A monopoly may be self-perpetuating because profits may be used for ?
A. cost-saving
B. research
C. technical advance
D. all of the above
Comparing a monopoly and competitive firm, the monopolist will ?
A. produce more at a lower price
B. produce less at a lower price
C. produce less at a higher price
D. produce less at a lower price
Where a tax can be shifted, the incidence depends on ?
A. how many producers there are
B. elasticities of demand and supply
C. Whether there is perfect or imperfect information
D. who is legally obliged to pay the tax
Tax incidence is the ?
A. structure of the tax
B. behaviour of shifting the tax to another party.
C. ultimate distribution of a tax’s burden.
D. measure of the impact the tax has on employment and output
VAT is a good example of which kind of tax ?
A. Exercise duty
B. Specific
C. Direct
D. Ad valorem
Economists use the term Black Markets for situations where ?
A. goods are sold at prices above legal or official price.
B. illegal substances are sold
C. buyers and/or sellers are not paying taxes as they should
D. transactions are not recorded in the GDP figures.
If the market price is below the equilibrium price ?
A. quantity demanded will be greater than quantity supplied
B. demand will be less than supply.
C. quantity demanded will be less than quantity supplied
D. quantity demanded will equal quantity supplied .
It is necessary to ration a good whenever ?
A. a surplus exists
B. supply exceeds demand
C. there is perfectly inelastic demand for the good
D. demand exceeds supply
A price ceiling is ?
A. a maximum price usually set by government that sellers may charge for a good
B. a minimum price usually set by government that sellers must charge for a good
C. the different between the initial equilibrium price and the equilibrium price after a decrease in supply
D. a minimum price that consumers are willing to pay for a good.
Nationalisation occurs when ?
A. The government bans a product
B. The government sells assets to a the private sector
C. The government takes control of an industry
D. The government taxes a product to a raise its price
With a positive externality ?
A. There is under-consumption in the free market
B. The government may tax to decrease production
C. There is over consumption in the free market
D. Society could be made off it less was produced
When supply increase in an agricultural market farmer’s earning might fall because ?
A. The government buys up all the excess production
B. Demand is price inelastic
C. Supply is price elastic
D. All output must be sold at a maximum price
Monopoly And Competition MCQs
Merit goods are ?
A. Provided free
B. Under provided in the free market economy
C. Over provided in the free market economy
D. Not provided in the free market economy
If the price in a market is fixed by the government below equilibrium ?
A. There is excess supply
B. There is excess equilibrium
C. There is excess demand
D. There is equilibrium
A public good will ?
A. Be over provided in the free market
B. Be under provided in the free market
C. Not be provided in the free market
D. Has no opportunity cost
An increase in demand for a product should ?
A. Decrease equilibrium price and quantity
B. Increase equilibrium price and quantity
C. Increase equilibrium price and decrease quantity
D. Decrease equilibrium price and increase quantity
A shift in supply will have more effect on price than quantity if ?
A. The price elasticity of supply is – 3
B. The price elasticity of supply is – 2
C. The price elasticity of supply is – 0.2
D. The price elasticity of supply is infinity
A shift is demand will have more effect on price than quantity if ?
A. The price elasticity of supply is price elastic
B. The price elasticity of supply is price inelastic
C. The price elasticity of supply is perfectly elastic
D. The price elasticity of supply is infinity
Which best describes consumer surplus ?
A. The price consumers are willing to pray for a unit
B. The profits made by a firm
C. The cost of providing a unit
D. The difference the price a consumer pays for an item and the price he/she is willing to pay
A movement along the supply curve may be caused by ?
A. A change in the number of producers
B. A change in technology
C. A shift in demand
D. A change in costs
A movement along the demand curve may be caused by ?
A. A change in the number of buyers
B. A change in income
C. A change in advertising
D. A shift in supply
Assuming a downward sloping demand curve and upward sloping supply curve a higher equilibrium price may be caused by ?
A. An increase in supply
B. An fall in demand
C. improvements in production technology
D. An increase in demand
A reduction in the costs of production will ?
A. Shift the demand curve
B. Lead to a movement along the supply curve
C. Shift the supply curve
D. Lead to an extension of supply
If demand increase in a market this will usually lead to ?
A. A higher equilibrium price and output
B. A lower equilibrium price and output
C. A lower equilibrium price and higher output
D. A higher equilibrium price and lower output
Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today ?
A. The impact on both price and quantity is ambiguous
B. price will increase, quantity will decrease
C. Price will decrease, quantity is ambiguous.
D. price will increase, quantity is ambiguous.
E. Price will increase, quantity will increase
Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice, What would we expect to happen to the equilibrium price and quantity in the market for orange juice ?
A. Price will increase, quantity will increase
B. The impact on both price and quantity is ambiguous.
C. price will decrease, quantity is ambiguous
D. price will increase, quantity will decrease
E. price will increase, quantity is ambiguous
Suppose there is an increase in the both the supply and demand for personal computers Further, suppose the supply of personal computer increase more than demand for personal computers In the market for personal computers i the market for personal computers, we would expect ?
A. the equilibrium quantity to rise and the equilibrium price to remain constant
B. the equilibrium quantity to rise and the equilibrium price to rise
C. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous
D. the equilibrium quantity to rise and the equilibrium price to fall
E. the change in the equilibrium quantity to be ambiguous and the equilibrium price to fall.
A decrease (leftward shift) in the supply for a good will tend to cause ?
A. an increase in the equilibrium price and quantity
B. a decrease in the equilibrium price and an increase in the equilibrium quantity
C. an increase in the equilibrium price and a decrease in the equilibrium quantity
D. a decrease in the equilibrium price and quantity.
E. none of these answers
If the price of good is equal to the equilibrium price ?
A. there is surplus and the price will rise
B. the quantity demanded is equal to the quantity supplied supplied and the price remains unchanged
C. there is a shortage and the price will fall
D. there is a shortage and the price will rise
E. there is a surplus and the price will fall
If the price of a good is above the equilibrium price ?
A. there is a shortage and the price will fall
B. there is a surplus and the price will rise
C. there is a shortage and the price will rise
D. The quantity demanded is equal to the quantity supplied and the price remains unchanged
E. there is a surplus and the price will fall
Which of the following shifts the demand for watches to the right ?
A. a decrease in the price of watch batteries if watch batteries and watches are complements
B. none of these answers
C. an increase in the price of watches
D. a decrease in consumer incomes if watches are a normal good
E. a decrease in the wage of workers employed to manufacture watches
If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is ?
A. a normal good
B. a substitute good
C. an inferior good
D. none of these answers
The law of demand states that an increases in the price of a good ?
A. increases the quantity supplied of that good
B. decreases the quantity supplied of that good
C. decreases the quantity demanded for that good
D. None of these answers
A perfectly competitive market has ?
A. only one seller.
B. firms that set their own prices
C. at least a few sellers.
D. many buyers and sellers.