All Free Economics MCQs with Answers

• A. Subaru's impact on the price f cars
• B. a farmer's impact on the price of corn
• C. Microsoft's impact on the price of desktop operating systems
• D. a student's impact on college tuition

Explanation: Microsoft historically dominated desktop operating systems, so it could influence prices more than a Subaru manufacturer, an individual…

• A. A student eats a hamburger in the student union.
• B. A student reads a novel for pleasure
• C. A student sits at home and watches T.V
• D. A student has a party in her room in the student hall of residence.

Explanation: A party can impose noise, disturbance, or other costs on nearby residents who are not part of the transaction, creating a negative…

• A. Taking a nap
• B. All of these answers involve trade-offs
• C. Watching a football game on Saturday afternoon
• D. Going to university

Explanation: Each activity uses scarce time that could have been devoted to another valuable activity, so each has an opportunity cost.

• A. Consumers
• B. voters
• C. government
• D. Workers

Explanation: In a command economy, a central authority makes the major decisions about what to produce, how to produce it, and for whom.

• A. capital consumption frontier.
• B. Lorenz curve.
• C. Circular-flow diagram.
• D. Production possibility curve.

Explanation: A production possibility curve shows the maximum combinations of two goods or services that can be produced when available resources are…

• A. is relevant only for a capitalist economy like the United States.
• B. Suggests a major increase in public health care spending means an expansion in other areas will be harder to achieve.
• C. Suggests all our wants can be achieved.
• D. Would be relevant if we eliminated poverty

Explanation: Opportunity cost means that choosing one use of scarce resources sacrifices the next-best alternative.

• A. The free provision of products
• B. The Subsidizing of products by the government
• C. Market forces of supply and demand
• D. All trade via barter

Explanation: A free market allocates resources mainly through the interaction of supply and demand, with prices coordinating buyers and sellers.

• A. What to produce
• B. Who to produce for
• C. How to produce
• D. How to maximize economic growth

Explanation: The basic economic questions are what to produce, how to produce and for whom to produce.

• A. Always fixed
• B. Limited
• C. Unlimited
• D. Likely to decrease over time

Explanation: Human wants are unlimited, while the resources available to satisfy them are scarce.

• A. Alternative
• B. Opportunity cost
• C. Consumer cost
• D. Producer cost

Explanation: Opportunity cost is the value of the next-best alternative sacrificed when a choice is made.

• A. Are always found
• B. Can never decease
• C. Always increase over time
• D. Are limited at any moment in time

Explanation: Scarcity is the basic economic problem: available resources are insufficient to satisfy all human wants at a given time.

• A. irrational behavior
• B. a lazy person
• C. marginal benefit-marginal cost analysis
• D. programmed learning

Explanation: Asim compares the extra benefit of using the open door with the extra cost of opening the closed one, then chooses the lower-cost option.

• A. is a reality that underlies economic behavior
• B. has the same meaning as selfishness
• C. is more characteristic of men than of women
• D. is usually self-defeating

Explanation: Economic self-interest means that people generally make choices they expect will improve their own welfare, and it is a foundation for…

• A. people are greedy
• B. productive resources are limited
• C. human beings are inherently insecure
• D. people are irrational

Explanation: Human wants continue to expand, while productive resources such as land, labor, and capital are limited.

• A. look for and pursue opportunities to increase their utility
• B. generally disregard the interests of others
• C. are mainly creatures of habit
• D. are unpredictable

Explanation: Rational self-interest means seeking choices and opportunities expected to increase personal utility, or satisfaction.

• A. marginal cost
• B. rational outcome
• C. status fulfillment
• D. utility

Explanation: Utility is the satisfaction or pleasure a consumer receives from consuming a good or service.

• A. versatility and flexibility
• B. rationality
• C. pleasure and satisfaction
• D. purposefulness

Explanation: In economics, utility means the satisfaction or pleasure obtained from consuming a good or service.

• A. J.P Kense
• B. David Ricordo
• C. Adam Smith
• D. Mankew

Explanation: Adam Smith is commonly called the father of modern economics because his 1776 work The Wealth of Nations systematically discussed markets…

• A. has been used as an instrument of foreign policy by the U.S
• B. should be abolished until poverty is eliminated is our own society
• C. is what ultimately overthrowing communism
• D. None of the aboveExplore Policy Courses

Explanation: Foreign aid can serve strategic and diplomatic purposes, so the United States has used it as an instrument of foreign policy as well as…

• A. the statuses and roles that enforce the law
• B. the legitimate use of force within a territory
• C. the process by which individuals and groups acquire power
• D. all of the above

Explanation: Politics concerns how individuals and groups seek, obtain, and exercise power.