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.

61. In Monopoly at various output levels

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AR = MR
AR < MR
AR > MR
None of the above
✅ The correct answer is C.
A firm under monopoly faces a downward sloping demand curve or average revenue curve. In monopoly, since average revenue falls as more units of output are sold, the marginal revenue is less than the average revenue. In other words, under monopoly the MR curve lies below the AR curve.

62. If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for

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Coke will rise
7-Up will decrease
Coke and 7-Up will increase
Coke and 7-Up will decrease
✅ The correct answer is D.
If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for Coke and 7-Up will decrease. A decrease in the price of a good normally results in an increase in the quanti ty demanded by consumers because of the law of demand, and conversel y, quant ity demanded decreases when price rises. So. here the decrease in price of Pepsi will increase in demand for it, while the demand for Coke and 7-Up will decrease because of no change in their price level.

66. Who stated explicitly for the first time, the Law of Comparative Costs?

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David Ricardo
Adam Smith
James Mill
Thomas Mun
✅ The correct answer is A.
David Ricardo stated explicitly for the first time, the Law of Comparative Costs. Absolute advantage refers to the uncontested superiority of a country to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production.

67. Rational decision making requires that

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One’s choices be arrived at logically and without errors
One’s choices be consistent with one’s goals
One’s choices never vary
One makes choices that do not involve trade offs
✅ The correct answer is B.
Rational decision making requires that One’s choices be consistent with one’s goals. Rational choice theory, also called rational action theory or choice theory, school of thought based on the assumption that individuals choose a course of action that is most in line with their personal preferences.

70. In perfect competition, the firm’s _____ above AVC has the identical shape of the firm’s supply curve

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Marginal revenue curve
Marginal cost curve
Average cost curve
None of the above
✅ The correct answer is B.
In perfect competition, the firm’s Marginal cost curve above AVC has the identical shape of the firm’s supply curve. Under perfect competition average revenue is equal to marginal revenue, so the firm will produce up to that point where marginal revenue and marginal cost are equal. Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve.