# 1st Year Economics Important Mcqs For The Exam 2013

1st Year MCQ’s of Economics

1. The first book on economics of “Wealth of Nations” was written by ____________.

a. Prof Marshall

c. Prof Robbins

d. Keynesian

2. According to Prof. Marshall Economics is science of _________________.

a. Wealth

b. Scarcity & Choice

c. Material Welfare

d. All of above

3. Economics is a science of “Scarcity and Choice”, this definition was presented by _____.

b. Prof. Marshall

c. Prof Robbins

d. Non o above

4. Human wants or desires are:

a. Unlimited

b. Limited

c. Nothing

d. None of above

5. Land, Labor, Capital and Organization are the factors of _______.

a. Factory

b. Supply

c. Demand

d. Production

6. The Law of Demand states that:

a. Increase in price, decrease in quantity demand

b. Decrease in price, increase in demand

c. The inverse relationship between “Price and Demand”

d. All of above

7. The demand curve moves from left to right ______.

a. Upward

b. Downward

c. Straight

d. None of Above

8. The slope of demand curve is __________.

a. Positive

b. Zero

c. Negative

d. Infinite

9. If the changes in demand and price are in the same ration, the elasticity of demand will be _____ unity.

a. Greater than

b. Equal to

c. Less than

d. All of above

10. The Elasticity of Luxuries is ______ than unity.

a. More

b. Less

c. None of them

11. The Elasticity of Basic Necessities is _______ than unity.

a. More

b. Less

c. None of them

12. If Demand curve is parallel to X-axis then the Elasticity of demand will be _________.

a. perfectly in elastic

b. Elastic

c. Perfectly elastic

d. Relatively less elastic

13. If Demand curve is parallel to Y-axis then the Elasticity of demand will be _________.

a. perfectly in elastic

b. Elastic

c. Perfectly elastic

d. Relatively less elastic

14. The Law of Supply states that, increase in price, _____ in quantity supplied and decreases in price, _______ in quantity supplied.

a. Decrease, increase

b. Increase, increase

c. Decrease, decrease

d. Increase, decrease

15. Supply is the part of ____________.

a. Demand

b. Supply

c. Stock

d. None of the above

16. Micro economics is the study of __________

a. Whole economy

b. Individuals

c. Both of them

17. _____________ utility is the utility of the last unit of consumption.

a. Total Utility

b. Negative Utility

c. Marginal Utility

d. None of the above

18. There is ________ relationship between no of units consumed and marginal utility.

a. Direct

b. Inverse

c. No

d. None of above

19. The Law of Equi-Marginal utility is also called ____________.

a. Law of Substitution

b. Law of Demand

c. Law of Satisfaction

d. None of the above

20. When marginal utility becomes zero total utility will be ____________.

a. Minimum

b. Maximum

c. Zero

d. Income

21. The power of a Commodity to satisfy human wants is called ____________.

a. Usefulness

b. Utility

c. Income

d. None of the above

22. Net national can be calculated by:

a. GNP + depreciation

b. GNP – depreciation

c. G.N.P – indirect taxes

d. None of the above

23. Personal disposal income = personal income –

a. Indirect taxes

b. subsidies

c. direct taxes

d. all of the above

24. Macro economies is the study of:

a. Individual units of economy

b. Aggregate and averages of economy

c. Individual units aggregate and averages of economy

d. None of the above

25. In inflation:

a. Price raises

c. poor become poorer

d. all of the above

26. To avoid double counting in estimation of G.D.P only:

a. Intermediate goods are included

b. free goods are included

c. final goods are included

d. none of the above

27. GNP or GDP is the sum of:

a. All goods are produced

b. All goods and services are produced

c. All goods and services consumed

d. All final goods and services produced in a year.

28. The fundamental economic problem faced by all societies is:

a. unemployment

b. inequality

c. poverty

d. scarcity

29. “Capitalism” refers to:

a. the use of markets

b. government ownership of capital goods.

c. private ownership of capital goods.

d. private ownership of homes and cars.

30. The law of demand states that:

a. as the quantity demanded rises, the price rises.

b. as the price rises, the quantity demanded rises.

c. as the price rises, the quantity demanded fails.

d. as supply rises, the demand rises.

31. The price elasticity of demand is the:

a. percentage change in quantity demanded divided by the percentage change in price.

b. percentage change in price divided by the percentage change in quantity demanded.

c. dollar change in quantity demanded divided by the dollar change in price.

d. percentage change in quantity demanded divided by the percentage change in quantity supplied.

32. If there is a price floor, there will be:

a. shortages

b. surpluses

c. equilibrium

33. If there is a price ceiling, there will be

a. shortages

b. surpluses

c. equilibrium

34. The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:

a. Total physical product begins to fall.

b. The marginal physical product rises.

c. The marginal physical product falls.

d. The average physical product falls.

35. Which of the following is a characteristics of pure monopoly?

a. one seller of the product.

b. low barriers to entry

c. close substitute products

d. perfect information

36. In pure monopoly, what is the relation between the price and the marginal revenue?

a. the price is greater than the marginal revenue.

b. the price is less that the marginal revenue

c. there is no relation

d. they are equal

37. Which of the following best defines price discrimination?

a. charging different prices on the basis of race

b. charging difference prices for goods with different costs of production

c. charging different prices based on cost-of-service differences.

d. selling a certain product of given quality and cost per unit at different prices to different buyers.

38. Which of the following IS a function of money?

a. medium of exchange

b. store of value

c. standard deferred payment

d. all of the above

39. Increase in the number of buyers in the market would lead to a shift of the demand curve to:

a. The right

b. The left

c. Upwards along the curve

d. None of the above

40. Competitive market comprises:

b. Large number of firms

c. Large number of both buyers and producers.

d. None of the above

41. Under perfect competition, a firm would maximize profit at a point where:

a. Average revenue = average cost

b. Marginal cost = average revenue

c. Marginal cost = marginal revenue

d. None of the above

a. Because of terms of trade

b. Due to differences in production costs.

c. Because of territorial differences.

d. None of the above

43. Equilibrium price is a price at which

a. Quantity demanded is equal to quantity supplied.

b. Quantity demanded minus quantity supplied is zero

c. Quantity demanded = quantity supplied

d. All of these

44. A demand curve shows the relationship between the quantity demanded for a commodity over a given time and:

a. The tastes of consumer

b. The money income of consumer

c. The price of related commodities

d. The price of the commodity

45. The % change in quantity demanded due to % change in income is:

a. Price elasticity

b. Prices cross elasticity

c. Income elasticity

d. All of these

46. The incidence of tax refers to:

a. Who economically bear the burden of the tax

b. The canons of taxation

c. Type of tax, direct or indirect tax

d. Whether the tax is continuously or periodically levied

47. Balance of payment includes:

a. Visible goods only

b. Invisible goods only

c. Visible and invisible items both

d. None of the above

a. Visible items only

b. Invisible items only

c. Visible and invisible items both

d. None of the above

49. During inflation the prices of goods:

a. Rises

b. Falls

c. Unchanged

d. None of the above

50. During inflation the value of money:

a. Increases

b. Diminishes or decreases

c. Unchanged

d. All of the above

a. 2 phases

b. 4 phases

c. 3 phases

d. No phases

52. When the economic activities are at their peak, it is called:

a. Boom

b. Recession

c. Depression

d. recovery

53. The cannons of taxation were first presented by:

a. Prof Marshall

b. Prof Robbins

d. Keynes

54. Which one is not a direct tax?

a. Income tax

b. Sales tax

c. Property tax

d. Wealth tax

55. The theory of comparative costs is related to:

56. When the total monetary value of imports of a country is less than the total monetary value of exports, the balance of payment is:

a. zero

b. Positive

c. Negative

d. None of the above

57. Checks and drafts are:

a. Cash instruments

b. Credit instruments

c. Musical instruments

d. None of the above

58. The mobility of land is:

a. Possible

b. Possible in some conditions

c. Impossible

d. All of the above

59. The marginal cost curve has a tangency to:

a. Fall first and then rise

b. Rise first and then fall

c. Fall first and then stop

d. Rise first and then stop

60. A cost which a firm has to bear in each and every condition is:

a. Variable cost

b. Fixed cost

c. Marginal cost

d. All of the above

61. The law of increasing return in terms of cost is called:

a. Law of increasing cost

b. Law of constant cost

c. Law of diminishing cost

d. None of the above

62. Which one of the following determines scale of production?

a. Financial resources

b. Production techniques

c. Extent of market

d. All of the above

63. Balance of trade will be negative when:

a. Exports are greater than imports

b. Exports are equal imports

c. Exports and imports are zero

d. Exports are less than imports