All Free Economics MCQs with Answers

• A. 1.50
• B. 1.15
• C. none of these
• D. 0.15
• E. 1.00

Explanation: If food always takes a constant 15 percent share of income, food expenditure rises proportionately with income.

• A. all of these answers
• B. price inelastic
• C. unit price elastic
• D. price elastic

Explanation: Total revenue remains unchanged when a price change causes an exactly proportional opposite change in quantity demanded.

• A. zero
• B. infinite
• C. one
• D. unable to be determined form this information

Explanation: After the catch is made, its quantity cannot be increased in response to a higher price because the fish must be sold before spoiling.

• A. substitutes
• B. complements
• C. necessities
• D. luxuries

Explanation: A negative cross-price elasticity means that an increase in the price of one good reduces demand for the other.

• A. The good is luxury
• B. There are a great number of substitutes for the good
• C. The good is a necessity
• D. The good is an inferior good

Explanation: Necessities are difficult to do without, so consumers reduce their purchases only slightly when prices rise.

• A. income inelastic
• B. price inelastic
• C. price elastic
• D. unit price elastic

Explanation: When a small price change causes a much larger percentage change in quantity demanded, the elasticity's absolute value exceeds one.

• A. marginal rate of substitution
• B. labor force literacy
• C. substitution of leisure and work among labor
• D. limited technical sustainability of factors

Explanation: The zero-marginal-product idea is associated with limited technical substitutability among factors, especially in models of surplus or…

• A. plant and equipment
• B. buildings
• C. inventories
• D. consumers goods

Explanation: Consumer goods are used directly for consumption, whereas plant, equipment, buildings and inventories are treated as capital goods in this…

• A. technique to manage raw materials efficiently
• B. residual of a production function
• C. resource coordinating other productive resources
• D. blueprint on how to manage the labor force

Explanation: Entrepreneurship coordinates land, labour and capital, while also making decisions and bearing business risk.

• A. national product
• B. capital
• C. natural resources
• D. prevailing technology

Explanation: In a production function, Y denotes output, which at the national level may be called national product.

• A. shows the dependency output of the working population
• B. depicts the relationship between input and output
• C. states the relationship between products and income distribution
• D. is a function of natural resources in a country

Explanation: A production function shows the technical relationship between inputs used and the maximum output that can be produced with them.

• A. There are more women than men in U.S business because of the aspirations of U.S girls
• B. There are relatively few women in U.S business partly because of female socialization
• C. LDC businesswomen have a better chance than men of getting credit from bankers and suppliers
• D. Businesswomen in India are viewed as naturally stronger, less emotional more socially adept and more rational than businessmen

Explanation: Female socialization has historically encouraged women toward domestic and supportive roles rather than business leadership, contributing…

• A. oligopolistic capitalism
• B. resource management
• C. innovation
• D. land and labor

Explanation: Schumpeter placed the entrepreneur at the centre of economic development through innovation, such as new products, production methods…

• A. An existing internet provider provides competition to two other providers in Dayton Ohlio
• B. The production and marketing of the Model T Ford in the 19-teens
• C. The invention of the Stanley steamer
• D. An American buying a stock in the Philippines stock market

Explanation: The Model T represented a commercially implemented new product and production method, fitting Schumpeter's broad concept of innovation.

• A. based on government intervention in the means of production
• B. that originated in the United States in the 19th Century
• C. Where private owners of capital make decisions based on profit
• D. that dominated developing economies in the 19 Century

Explanation: Capitalism is characterized by private ownership of capital and production decisions guided largely by profit.

• A. created stationary economies of scale
• B. maintained the relationship between firms and their clients
• C. replaced price as the important
• D. limited the expansion of firms

Explanation: Baumol argued that in high-technology oligopolies, innovation can become the main competitive weapon, taking the place of price…

• A. the development of pure science, invention innovation financing the innovation and the innovation's acceptance
• B. introducing new products modifying production functions creating credit and making profits
• C. innovation investment credit creation and economies growth
• D. patent management resource gains mature innovation and speculative gains

Explanation: Technical advance is a process running from scientific knowledge and invention to innovation, its financing and eventual acceptance or…

• A. Perfect competition
• B. An economy below full employment
• C. No savings or technical change
• D. No entrepreneurial function is required

Explanation: Schumpeter's stationary state is a circular-flow economy with no technical change, savings or entrepreneurial function, generally based on…

• A. an excess demand for that currency exists in the foreign exchange market
• B. an excess supply of the currency exists in the foreign exchange market
• C. the demand for foreign exchange shifts outward to the right
• D. the demand for foreign exchange shifts backward to the left

Explanation: When the exchange-rate price is below equilibrium, buyers want more foreign currency than sellers offer.

• A. reduce the incentive for technological innovations to further reduce pollution.
• B. set the price of pollution.
• C. determine the demand for pollution rights.
• D. Set the quantity of pollution

Explanation: A tradable-permit system fixes the total number of permits, and therefore the permitted quantity of pollution, while allowing firms to…