Economics

Economics MCQs with Answers and Explanations | Microeconomics & Macroeconomics Objective Questions.

Strengthen your knowledge of Economics with a rich collection of MCQs with answers and detailed explanations. Topics include microeconomics, macroeconomics, demand and supply, national income, inflation, monetary policy, fiscal policy, international trade, economic growth, and development economics. These multiple-choice questions are designed for students, teachers, and candidates preparing for competitive exams (CSS, PMS, NTS, FPSC, PPSC, UPSC, MBA, BBA, etc.). Each MCQ is supported by a clear solution and explanation to improve conceptual clarity, analytical ability, and exam performance. Perfect for self-assessment, practice, and revision in the field of Economics.

101. The various combination of goods that can be produced in any economy when it uses its available resources and technology efficiency are depicted by

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Demand curve
Production curve
Supply curve
Production possibility curve
✅ The correct answer is D.
The various combination of goods that can be produced in any economy when it uses its available resources and technology efficiency are depicted by Production possibility curve. A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed.

106. Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?

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Cost of raw material
Cost of equipment
Interest payment on past borrowing
Payment of rent on buildings
✅ The correct answer is A.
Total costs in the short-term are classified into fixed costs and variable costs. Cost of raw material is a variable cost. Variable costs vary based on the amount of output, while fixed costs are the same regardless of production output.

107. Which is NOT a cause of shift in cost curves of a firm?

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Excise tax
Prices of inputs
Increase in productivity
Price of product
✅ The correct answer is D.
Price of product is not a cause of shift in cost curves of a firm. Cost curves shift in response to changes in two factors: If a technological change results in the firm using more capital, the average fixed cost curve shifts upward and at low levels of output, the average total cost curve may shift upward. At large output levels, average total cost decreases.

108. Demand for final consumption arises in

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Household sector only
Government sector only
Both household and government sector
Neither household nor government sector
✅ The correct answer is C.
Demand for final consumption arises in both household and government sector. In the basic two- sector circular flow of income model, the economy consists of two sectors: (1) households and (2) firms.

109. The cost that a firm incurs in hiring or purchasing any factor of production is referred to as

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Explicit cost
Implicit cost
Variable cost
Fixed cost
✅ The correct answer is A.
The cost that a firm incurs in hiring or purchasing any factor of production is referred to as Explicit cost. An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, as opposed to implicit costs, where no actual payment is made.

110. When price elasticity of demand for normal goods is calculated, the value is always

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Positive
Negative
Constant
Greater than 1
✅ The correct answer is B.
When price elasticity of demand for normal goods is calculated, the value is always Negative. The PED is the percentage change in quantity demanded in response to a one percent change in price. The PED coefficient is usually negative, although economists often ignore the sign. Demand for a good is relatively inelastic if the PED coefficient is less than one (in absolute value).