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.
Wages of the labour
Charges for electricity
Interest on owned money capital
Payment for raw material
✅ The correct answer is C.
Interest on owned money capital is an implicit cost of production. The costs in which there is no cash outlay, is known as Implicit Cost.
Less than unity
More than 1
Equal to 1
Equal to zero
✅ The correct answer is A.
Marginal revenue will be negative if elasticity of demand is less than unity. At a quantity greater than ON price elasticity on the demand curve, curve is less than one and the marginal revenue is negative.
AVC
AFC
AC
MC
✅ The correct answer is B.
All the following curves are U-shaped except AFC. The AFC curve is a rectangular hyperbola in the sense that all rectangles formed by AFC are of equal sizes. The AFC curve is asymptotic to both the axes. This means that it touches neither the horizontal axis nor the vertical axis.
An advertising campaign is successful in promoting the good
A new technique makes it cheaper to produce the good
The government introduces a tax on the good
The price of raw materials increases
✅ The correct answer is B.
A new technique makes it cheaper to produce the good best explains a shift in market supply curve to the right. A rightward shift in the supply curve, say from a new production technology, leads to a lower equilibrium price and a greater quantity.
Consumer’s preference
Producer’s preference
Liquidity preference
State Bank’s preference
✅ The correct answer is C.
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the ‘price’ for money.
Normal profits
Super normal profits
Less production
Cost will be falling
✅ The correct answer is A.
In perfect competition, in the long run, there will be Normal profits. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits.
Capital
Labour
Productivity
Entrepreneur
✅ The correct answer is D.
Entrepreneur input factor takes risk, innovates and coordinates. An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Enters into the price of his product
Does not enter into price of his product
Is unjustified
None of the above
✅ The correct answer is A.
As for the cost of production of an individual farmer, the rent paid by him enters into the price of his product. The classical political economists found value to be determined in production; since most of the cost of production could be reduced to labor, this approach was refined into the Labor Theory of Value.
Planning curve
Enveloping curve
Round curve
None of the above
✅ The correct answer is C.
Round curve is not the name of LAC curve.
B will increase
C will increase
Both B and C will increase
B and C will decrease
✅ The correct answer is C.
If the price of good A increases relative to the price of substitutes B and C, the demand for Both B and C will increase.