All Free Economics MCQs with Answers
Every Economics question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
4,037 questions · page 120 of 202
- A. To address the impact to taxes on income distribution an economist assumes that everyone earns the same income.
- B. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.
- C. To model the benefits of trade. an economist assumes that there are two people and two goods
- D. To estimate the speed at which a beach ball falls, a physicist assumes that if falls in a vacuum.
Explanation: Assuming two people and two goods simplifies trade theory while preserving its essential mechanism, comparative advantage.
Correct answer: To model the benefits of trade. an economist assumes that there are two people and two goods2382. Economic models are ?
- A. Usually made of wood and plastic
- B. built with assumptions.
- C. useless if they are simple.
- D. created to duplicate reality.
Explanation: Economic models are simplified representations of reality built from assumptions, allowing economists to isolate important relationships.
Correct answer: built with assumptions.- A. If Susan works for BAe Systems and receives a salary payment, the transaction takes place in the market for good and services.
- B. If BAe Systems sells a military aircraft, the transaction takes place in the market for factors for production
- C. None of these
- D. The factors of production are owned by households
Explanation: Households own the factors of production, such as labor, land, and capital, and supply them to firms through factor markets.
Correct answer: The factors of production are owned by households- A. the scientist be objective
- B. The scientific use precision equipment.
- C. only correct theories are tested
- D. only theories are tested.
- E. the scientist uses test tubes and have clean lab.
Explanation: Objectivity is essential to the scientific method because evidence must be evaluated without letting personal beliefs determine the…
Correct answer: the scientist be objective- A. restrict; promote
- B. restrict; restrict
- C. promote; promote
- D. promote; restrict
Explanation: Antimonopoly legislation aims to promote competition by preventing excessive market power, while market regulation commonly restricts…
Correct answer: promote; restrict- A. nationalized; privatized
- B. natural monopoly; potentially competitive
- C. cartel; a sellers' market
- D. monopolistic competition duopoly
Explanation: Electricity transmission and distribution networks have natural-monopoly characteristics because one network can serve the market more…
Correct answer: natural monopoly; potentially competitive- A. extended warranties offer value for money.
- B. the cost of repair will usually exceed the cost of the warranty
- C. they are paid commission on each extended warranty they sell.
- D. They are concerned about customer satisfaction.
Explanation: Sales employees are often paid commission on extended warranties, giving them a direct financial incentive to promote them.
Correct answer: they are paid commission on each extended warranty they sell.- A. firms producing the same product
- B. firms at various stages in production process.
- C. firm producing complementary products
- D. firms producing unrelated products.
Explanation: A conglomerate merger combines firms from unrelated industries or product markets.
Correct answer: firms producing unrelated products.- A. increasing market power is the best way to achieve efficiency.
- B. competition is the best way to achieve efficiency.
- C. public ownership is the best way to achieve efficiency
- D. regulation is the best way to achieve efficiency.
Explanation: Antimonopoly policy rests on the view that competition pressures firms to lower costs, improve quality, and use resources efficiently.
Correct answer: competition is the best way to achieve efficiency.- A. low; low
- B. high; high
- C. low; high
- D. high; low
Explanation: Cars provide some external benefits, but these are generally small compared with the external costs imposed through congestion, pollution…
Correct answer: low; high- A. Spain
- B. Belgium
- C. USA
- D. UK
Explanation: The referenced comparative data show car ownership per 1,000 people falling in the United States during 1990–1999, unlike the countries…
Correct answer: USA- A. deregulation
- B. making markets contestable
- C. natural monopoly.
- D. cross-subsidization.
Explanation: Allowing firms from one utility industry to enter another makes the market open to potential competitors, which is the idea of…
Correct answer: making markets contestable- A. removes barriers to entry
- B. imposes higher standards of conduct
- C. removes barriers to entry and minimum product quality standards
- D. breaks up private sector monopolies.
Explanation: Deregulation means removing government-imposed restrictions, especially barriers to entry and mandatory operating or product standards.
Correct answer: removes barriers to entry and minimum product quality standards- A. Competitive pricing.
- B. Price discrimination
- C. price discounting.
- D. price fixing.
Explanation: Price discrimination occurs when a seller charges different prices to different buyers for the same product, usually because their…
Correct answer: Price discrimination- A. production merger
- B. vertical merger
- C. conglomerate merger.
- D. horizontal merger
Explanation: A vertical merger joins firms operating at different stages of the same supply chain, such as a manufacturer combining with a distributor…
Correct answer: vertical merger- A. a conglomerate merger.
- B. a horizontal merger
- C. a complementary products merger.
- D. a vertical merger
Explanation: A paper producer supplies an important input to a book publisher, so the firms operate at successive stages of production and…
Correct answer: a vertical merger- A. firms producing unrelated products
- B. firms producing complementary products
- C. firms at various stages in a production process.
- D. firms producing the same product
Explanation: A horizontal merger combines firms operating at the same stage and producing the same or closely similar products, such as two competing…
Correct answer: firms producing the same product- A. is that if encourages firms to engage in research which leads to new products
- B. is the revenue generated from the fines paid by those individuals who are found guilty of antitrust violation?
- C. Is that this policy serves to deter firms from engaging in such practices as collusion, price-fixing and deceptive advertising
- D. is that it forces firms to produce efficiently.
Explanation: Antimonopoly enforcement is mainly justified because the threat of penalties deters harmful conduct such as collusion, price-fixing, and…
Correct answer: Is that this policy serves to deter firms from engaging in such practices as collusion, price-fixing and deceptive advertising- A. Car licenses are very expensive vehicle entry to the city center is very restricted road pricing is being introduced and modern cheap rail transport is being expanded.
- B. London
- C. Athens
- D. Singapore
- E. New York
Explanation: Singapore is associated with expensive vehicle ownership, restrictions on entering the central area, road pricing, and expanded mass rail…
Correct answer: Singapore- A. Environmentally damaging
- B. an inferior good
- C. a potential public good
- D. a superior good
Explanation: If motoring takes a larger share of household expenditure as income rises, its income elasticity is positive and greater than one, making…
Correct answer: a superior good