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.
Discount on purchases of raw materials
Technical progress leads to development of machine at low price
Hiring of specialized staff due to increase in scale of production
A firm starts producing by-products
✅ The correct answer is B.
Technical progress leads to development of machine at low price is example of external economies of scale.
Necessity item
Luxury item
Inferior good
None
✅ The correct answer is B.
If the income elasticity is greater than one, the commodity is Luxury item. Luxury goods represent normal goods associated with income elasticities of demand greater than one. Consumers will buy proportionately more of a particular good compared to a percentage change in their income.
Rent receiver
Interest receiver
Wage earner
Government officer
✅ The correct answer is C.
Some economists say that profit earner is a kind of Wage earner. Wage earner is a person who works for wages or salary.
AC=AVC
AR=AC
AR=MC
AR=MR
✅ The correct answer is D.
Under perfect competition AR=MR. If the market price is unaffected by variations in the firm’s output, then the firm’s demand curve, its AR curve and MR curve will coincide in the same horizontal line.
Desire for the commodity
Means to purchase
Willingness to use those means for that purchase
All of the above
✅ The correct answer is D.
Effective demand depends upon Desire for the commodity, Means to purchase and Willingness to use those means for that purchase.
Max Muller
Adam Smith
Karl Marx
None of the above
✅ The correct answer is B.
Adam Smith is the ‘father of economics’. Adam Smith is called the father of economics for his work on The Wealth of Nations which he published in 1776.
Price does not at least cover average total cost
Price does not equal marginal cost
Economies of sale are being reaped
Price is greater than long run average cost
✅ The correct answer is A.
In the long run, any firm will eventually leave the industry if Price does not at least cover average total cost. Exit is the long-run process of firms reducing production and shutting down in response to industry losses.
What to produce
How to produce
How to maximize private profit
For whom to produce
✅ The correct answer is C.
How to maximize private profit is not a central problem of an economy. Some of the central problems that are faced by every economy of a country are as follows: Production, distribution and disposition of goods and services are the basic economic activities of life. In the course of these activities, every society has to face scarcity of resources.
David Ricardo
Adam Smith
T.R.Malthus
J.S.Mill
✅ The correct answer is B.
Adam Smith is generally regarded as the founder of the ‘Classical School’.
Homogenity of a factor
Perfect competition in the factor market
All factors, except one, are variable
Given stock of each factor and full employment
✅ The correct answer is C.
All factors, except one, are variable is NOT the assumption of the Marginal Productivity Theory of Distribution.