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.

172. The short run

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Is less than one year
Requires that at least one input is fixed
Requires that all inputs are fixed
Is just long enough to permit entry and exit
✅ The correct answer is B.
The short run Requires that at least one input is fixed. The short run is a concept that states that, within a certain period in the future, at least one input is fixed while others are variable.

174. Unemployment due to mechanization of agriculture is

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Seasonal
Structural
Industrial
Personal
✅ The correct answer is B.
Unemployment due to mechanization of agriculture is Structural. Due to structural changes in the economy, structural unemployment may take place. Structural unemployment is caused by a decline in demand for production in a particular industry, and consequent disinvestment and reduction in its manpower requirements.

177. Profits are

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Residual payment
Pre-determined
Fixed contract
Always higher than wages
✅ The correct answer is A.
Profits are Residual payment. Residual payments are most often associated with the entertainment industry, since movies and music can generate revenues long after they are originally released.

178. A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is

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Zero
Infinite
Equal to 1
Greater than 0 but less than 1
✅ The correct answer is B.
A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is Infinite. The horizontal supply curve shows another extreme case, i.e., that of perfectly inelastic supply. The implication of such a supply curve is that a little price cut will cause the quantity supplied to fall to zero while a slightest increase in price will induce purchasers to offer an infinitely large quantity.

179. If a firm’s average variable cost curve is rising, its marginal cost curve must be

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Constant
Above the total cost curve
Above the average variable cost curve
All of the above
✅ The correct answer is C.
If a firm’s average variable cost curve is rising, its marginal cost curve must be above the average variable cost curve. If average costs are falling then marginal costs must be less than average while if average costs are rising then marginal must be more than average. Marginal cost on its way up must cut the cost curve at its minimum point. If Marginal Cost is less than Average Variable Cost, then Average Cost goes down.

180. A market structure in which many firms sell products that are similar but not identical is known as

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Monopolistic competition
Monopoly
Perfect competition
Oligopoly
✅ The correct answer is A.
A market structure in which many firms sell products that are similar but not identical is known as Monopolistic competition. Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.