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.
Non-availibility of goods
High price of goods
Less supply than demand
High profit of the firms
✅ The correct answer is C.
Scarcity means Less supply than demand. Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.
P=MC
MR=MC
P=ATC
All of the above
✅ The correct answer is D.
When a competitive firm achieves long run equilibrium, then, P=MC, MR=MC and P=ATC.
Zero
Greater than zero
Less than infinity
Infinity
✅ The correct answer is D.
The elasticity of substitution between two perfect substitutions is Infinity. Elasticity of factor substitution can take any value from zero to infinity, always being positive.
Zero
Greater than Zero but less than One
One
Greater than One
✅ The correct answer is B.
If lowering of fares reduces railway’s revenues and increasing of fares increases, then the demand for rail travel has a price elasticity of Greater than Zero but less than One.
1756
1766
1776
1786
✅ The correct answer is C.
In 1776, Adam Smith’s major work “An enquiry into the Nature and Causes of Wealth of Nations” was published.
Parting with liquidity
Abstinence
Saving
Inconvenience
✅ The correct answer is C.
The classical theory explained interest as a reward for Saving. According to the classical theory, interest is the price paid for saving of capital. Like the value of other things, the price of saving is determined by its demand for and supply of savings.
Increases
Decreases
Remains constant
Is highest
✅ The correct answer is A.
When Marginal Utility is positive, Total Utility Decreases. When we say that the total utility is increasing at a diminishing rate, we mean that amount of change in total utility is decreasing with the consumption of every extra unit which is nothing but marginal utility.
There are only two variable factors
There is a fixed factor and a variable factor
All factors are variable
Variable factors yield less
✅ The correct answer is B.
The law of variable proportions come into being when there is a fixed factor and a variable factor. The 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.
MR>MC
MC>Price
MC=MR
MC=AC
✅ The correct answer is C.
The necessary condition for equilibrium position of a firm is MC=MR. A firm is in equilibrium when it has no tendency to change its level of output. It needs neither expansion nor contraction. It wants to earn maximum profits in by equating its marginal cost with its marginal revenue, i.e. MC = MR.
MC
AVC
TFC
None of the above
✅ The correct answer is C.
The vertical difference between TVC and TC is equal to TFC.