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.

42. Giffen goods are those goods

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For which demand increases as price increases
That have a high income elasticity of demand
That are in short supply
None of the above
✅ The correct answer is A.
Giffen goods are those goods for which demand increases as price increases. A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand, which states that the quantity demanded for a product falls as the price increases, resulting in a downward slope for the demand curve.

43. If a firm shuts down temporarily, it will incur loss equal to

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AFC
AVC
TFC
TVC
✅ The correct answer is C.
If a firm shuts down temporarily, it will incur loss equal to TFC. The intersection of the average variable cost curve and the marginal cost curve, which shows the price where the firm would lack enough revenue to cover its variable costs, is called the shutdown point. If the perfectly competitive firm can charge a price above the shutdown point, then the firm is at least covering its average variable costs. It is also making enough revenue to cover at least a portion of fixed costs, so it should limp ahead even if it is making losses in the short run, since at least those losses will be smaller than if the firm shuts down immediately and incurs a loss equal to total fixed costs.

45. Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively

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Large fall in quantity demanded
Large fall in demand
Small fall in quantity demanded
Small fall in demand
✅ The correct answer is A.
Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering rasiing prices, it can expect a relatively large fall in quantity demanded.

48. The shape of PPC is concave due to

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Falling opportunity cost between two goods
Rising opportunity cost between two goods
Constant opportunity cost between two goods
None of the above
✅ The correct answer is B.
The shape of PPC is concave due to rising opportunity cost between two goods. Most of the PPF curves are concave due to the inadaptability of the resources. The law of increasing opportunity cost states: as the production of one good rises, the opportunity cost of producing that good increases.

50. The elasticity of demand of durable goods is

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Less than unity
Greater than unity
Equal to unity
Zero
✅ The correct answer is B.
The elasticity of demand of durable goods is greater than unity. Price elasticity of demand for durable goods is generally more elastic in short run than in long run. That is, quantity demanded is more sensitive to price changes of such durable goods in short run and not so much in the long run.