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.

241. Economic profit is

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Part of total cost
Total revenue minus total cost
Total revenue minus explicit cost
Total variable cost minus total fixed cost
✅ The correct answer is B.
Economic profit is Total revenue minus total cost. Economic profit is the monetary costs and opportunity costs a firm pays and the revenue a firm receives. Economic profit = total revenue – (explicit costs + implicit costs).

242. The Revealed Preference Theory deduces the inverse price-quantity relationship from

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Assumption of indifference
Postulate of utility maximization
Observed behavior of the consumer
Introspection
✅ The correct answer is C.
The Revealed Preference Theory deduces the inverse price-quantity relationship from observed behavior of the consumer. Revealed preference theory asserts that the best way to measure consumer preferences is to observe their purchasing behavior.

243. A higher indifference curve shows

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A higher level of satisfaction
A higher level of production
A higher level of income
None of the above
✅ The correct answer is A.
A higher indifference curve shows a higher level of satisfaction. A higher indifference curve will represent a higher level of satisfaction than a lower indifference curve. In other words, the combinations which lie on a higher indifference curve will be preferred to the combinations which lie on a lower indifference curve.

244. If price changes by 1% and supply changes by 2%, then supply is

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Elastic
Inelastic
Indeterminate
Static
✅ The correct answer is A.
If price changes by 1% and supply changes by 2%, then supply is Elastic. The Price Elasticity of Supply (PES) for elastic and inelastic supply would be different. The PES for elastic supply would be greater than 1. This tells us that if prices were to increase (or decrease) by 1%, the quantity supplied would increase (or decrease) in a number greater than 1%.

248. The degree of monopoly power is measured in terms of difference between

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Marginal cost and the price
Marginal cost and average revenue
Marginal cost and average cost
Marginal revenue and average cost
✅ The correct answer is A.
The degree of monopoly power is measured in terms of difference between Marginal cost and the price. In a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit.

249. In the context of oligopoly, the kinked demand curve hypothesis is designed to explain

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Price and output determination
Price rigidity
Price leadership
Collusion among rivals
✅ The correct answer is B.
In the context of oligopoly, the kinked demand curve hypothesis is designed to explain Price rigidity. The curve is more elastic above the kink and less elastic below it. This means that the response to a price increase is less than the response to a price decrease.

250. In which form of the market structure is the degree of control over the price of its product by a firm very large?

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Monopoly
Imperfect condition
Oligopoly
Perfect competition
✅ The correct answer is A.
In Monopoly market structure the degree of control over the price of its product by a firm very large. In a monopoly type of market structure, there is only one seller, so a single firm will control the entire market. It can set any price it wishes since it has all the market power.