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.
An upward shift in demand for the other commodity
A rise in the price of the other commodity
A downward shift in demand for the other commodity
No shift in the demand for the other commodity
✅ The correct answer is C.
If two goods are complements, this means that a rise in the price of one commodity will induce a downward shift in demand for the other commodity.
Cardinal concept
Ordinal concept
Indeterminate concept
None of the above
✅ The correct answer is A.
Under Marginal utility analysis, utility is assumed to be a Cardinal concept. The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1,2,3, and so on.
Capital is scarce
Capital is productive
Capital is attractive
Capital is surplus
✅ The correct answer is A.
Interest is paid because Capital is scarce. The borrower can get additional income from borrowed capital and in easily afford to pay interest. Hence it is scarcity.
Consumer equilibrium
Utility maximization
Utility minimization
Diminishing marginal utility
✅ The correct answer is D.
Demand curve slopes downward because of the law of Diminishing marginal utility. The law of diminishing marginal utility states that with each increasing quantity of the commodity, its marginal utility declines.
Indifference curve analysis
Revealed preference theory
Law of substitution
The law of diminishing marginal utility
✅ The correct answer is D.
The law of consumer surplus is based on the law of diminishing marginal utility. The concept of consumer surplus is derived from the law of diminishing marginal utility. As per the law, as we purchase more of a commodity, its marginal utility reduces. Since the price is fixed, for all units of the goods we purchase, we get extra utility. This extra utility is consumer surplus.
Interest income
Proprietor’s income
Employee’ wages
Rental income
✅ The correct answer is C.
In the form of Employee’ wages, the largest percentage of national income is earned.
Not all wants can be satisfied
We will never be faced with the need to make choices
We must develop ways to decrease our individual wants
The discovery of new natural resources is necessary to increase our ability to satisfy wants
✅ The correct answer is A.
Resource scarcity for the satisfaction of wants implicates that not all wants can be satisfied. The classification of human wants is not a rigid concept.
Price equals marginal cost
The slope of the firm’s profit function is equal to zero
Marginal revenue equals marginal cost
All of the above
✅ The correct answer is D.
A competitive firm maximizes profit at the output level where Price equals marginal cost, The slope of the firm’s profit function is equal to zero and Marginal revenue equals marginal cost.
Perfect substitute goods
Substitute goods
Perfect complementary goods
Complementary goods
✅ The correct answer is C.
If two goods are perfect complements then the indifference curves will be L-shaped.
Short run
Long run
Both periods
None of the period
✅ The correct answer is B.
All inputs can be varied in Long run. The long run is defined as a period in which all INPUTS are variable. Because of that all costs are variable too. You’re right that in the short run your rent and the cost of the machines you’ve already bought are fixed costs. But in the long term they aren’t.