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Tag: Basic Economics MCQs with Answers

Basic Economics MCQs with Answers

Basic Economics MCQs with Answers

1. The fundamental economic problem faced by all societies is:
a. unemployment 
b. inequality 
c. poverty
d. scarcity

2. “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 & cars

3. There are three fundamental questions every society must answer. Which of the following is/are one of these questions?
a. What goods and services are to be produced?
b. How are the goods and services to be produced?
c. Who will get the goods and services that are produced?
d. All of the above 

4. If you were working full-time now, you could earn $20,000 per year. Instead, you are working part-time while going to school. In your current part-time job, you earn $5,000 per year. At your school, the annual cost of tuition, books, and other fees is $2,000. The opportunity cost of completing your education is:
a. $2,000 
b. $5,000 
c. $17,000 
d. $20,000 
e. $22,000

5. The bowed shape of the production possibilities curve illustrates:
a. the law of increasing marginal cost 
b. that production is inefficient
c. that production is unattainable
d. the demand is relatively inelastic

6. You have taken this quiz and received a grade of 3 out of a possible 10 points (F). You are allowed to take a second version of this quiz. If you score 7 or more, you can raise your score to a 7 (C). You will need to study for the second version. In making a rational decision as to whether or not to retake the test, you should 
a. always retake the quiz
b. consider only the marginal benefits from of retaking the quiz (four extra points) 
c. consider only the marginal opportunity costs from taking the quiz (the time spent 
studying and taking the quiz)
d. consider both the marginal benefits and the marginal opportunity costs of retaking the quiz

7. 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 falls
d. as supply rises, the demand rises

8. 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

9. Community Colleges desired to increase revenues. They decided to raise fees paid by students with Bachelors degrees to $50 per unit because they believed this would result in greater revenues. But in reality, total revenues fell. Therefore, the demand for Community College courses by people with Bachelors degrees must have actually been:
a. relatively inelastic 
b. unit elastic 
c. relatively elastic 
d. perfectly elastic 

10. The demand for a product would be more inelastic:
a. the greater is the time under consideration
b. the greater is the number of substitutes available to buyers
c. the less expensive is the product in relation to incomes
d. all of the above


Answers: D C D C A D C A C C

1. In the case of agriculture,
a. the demand has shifted to the right more than the supply has shifted to the right
b. the demand has shifted to the right less than the supply has shifted to the right
c. the demand has shifted to the left more than the supply has shifted to the left
d. the demand has shifted to the left less than the supply has shifted to the left

2. The agricultural price support program is an example of 
a. a price ceiling 
b. a price floor 
c. equilibrium pricing

3. If there is a price floor, there will be
a. shortages 
b. surpluses 
c. equilibrium

4. If there is a price ceiling, there will be
a. shortages
b. surpluses 
c. equilibrium

5. If there is a price ceiling, which of the following is NOT likely to occur?
a. rationing by first-come, first-served
b. black markets
c. gray markets
d. sellers providing goods for free that were formerly not free

6. The goal of a pure market economy is to best meet the desires of
a. consumers 
b. companies 
c. workers 
d. the government

7. In a pure market economy, which of the following is a function of the price?

I. provide information to sellers and buyers , II. provide incentives to sellers and buyers
a. I only 
b. II only 
c. both I and II 
d. neither I nor II

8. In a market system, sellers act in ____________ interest , but this leads to behaviors in ____________ interest.
a. self; self 
b. self; society’s 
c. society’s; society’s 
d. society’s; self

9. 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 

10. Why is the law of diminishing marginal returns true?
a. specialization and division of labor
b. spreading the average fixed cost
c. limited capital
d. all factors being variable in the long-run


Answers: B B B A D A C B C C

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