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.

202. When total utility becomes maximum, then marginal utility will be

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Minimum
Average
Zero
Negative
✅ The correct answer is C.
When total utility becomes maximum, then marginal utility will be Zero. It is based in the law of diminishing marginal utility which says ‘as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall.

203. When Marginal Utility is zero, Total Utility is

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Minimum
Maximum
Law of return
None of the above
✅ The correct answer is B.
When Marginal Utility is zero, Total Utility is maximum. It is based in the law of diminishing marginal utility which says ‘as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall.

204. In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/- per kg. During June 2013, firm’s supply of sugar had decreased to 450kg at price of Rs.20/- per kg. These changes show that supply of sugar is

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Oerfectly elastic
Perfectly inelastic
Less elastic
More elastic
✅ The correct answer is C.
In May 2013, firm was supplying 500kg of sugar at market price of Rs.30/- per kg. During June 2013, firm’s supply of sugar had decreased to 450kg at price of Rs.20/- per kg. These changes show that supply of sugar is less elastic.

205. The upper portion of the kinked demand curve is relatively

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More inelastic
More elastic
Less elastic
Inelastic
✅ The correct answer is B.
The upper portion of the kinked demand curve is relatively more elastic. The kinked-demand curve is a demand curve comprised of two segments, one that is relatively more elastic, which results if a firm increases its price, and the other that is relatively less elastic, which results if a firm decreases its price. These two segments are joined at a corner or “kink.”

206. Marginal revenue is always less than price at all levels of output in

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Perfect competition
Monopoly
Both ‘a’ and ‘b’
None of the above
✅ The correct answer is B.
Marginal revenue is always less than price at all levels of output in Monopoly. A monopolist’s marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output.

207. Excise tax is a part of

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Fixed cost
Variable cost
Implicit cost
Is not a part of cost
✅ The correct answer is B.
Excise tax is a part of Variable cost. Excise duty is an indirect tax. That means the tax amount is included as part of the selling price. Excise duty, also known as excise tax, is ultimately passed on and paid by the consumer when he makes a purchase.

208. The economic analysis expects the consumer to behave in a manner which is

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Rational
Irrational
Emotional
Indifferent
✅ The correct answer is A.
The economic analysis expects the consumer to behave in a manner which is Rational. The assumption of rational behavior implies that people would rather be better off than worse off. Most conventional economic theories are based on the assumption that all individuals taking part in an action or activity are behaving rationally.

210. The labour force participation rate is the

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Proportion of population that is working
Proportion of population working or looking for work
Proportion of skilled workers population
Proportion of female workers to male workers
✅ The correct answer is C.
The labour force participation rate is the proportion of skilled workers population. It refers to the number of people who are either employed or are actively looking for work.