All Free Economics MCQs with Answers

• A. Urban resident
• B. More educated than parents
• C. Comes from a large family of several brothers and sisters
• D. Marries later and limits family to no more than two children

Explanation: Upward mobility is commonly associated with education, urban residence and delayed marriage with a smaller family.

• A. households
• B. firms
• C. governments
• D. all of the above

Explanation: Households supply resources and demand goods, firms produce goods and hire resources, and governments tax, regulate, and purchase goods…

• A. land
• B. labor
• C. capital
• D. entrepreneurship

Explanation: Capital consists of produced means of production, such as machinery, tools, and buildings.

• A. the housing given factory workers
• B. The fact that in early industrialization work was done in the home
• C. a type of architecture popular in Britain
• D. The way young people were put out to go work in factories

Explanation: The putting-out system was an early form of industrial production in which merchants supplied raw materials and workers completed goods in…

• A. Untrained and unskilled
• B. High-cost, highly skilled
• C. Lean skilled and motivated
• D. Untrained and unmotivated

Explanation: Craft production depends on workers who possess specialized skills and can produce complete or highly customized goods.

• A. 50%
• B. 25%
• C. 35%
• D. 40%

Explanation: In mass-production plants, approximately 25 percent of total work hours was reported to be spent correcting assembly-line errors.

• A. combines the best features of craft and mass production
• B. has as its goal perfection
• C. pushes responsibility down the organizational ladder
• D. All of the above

Explanation: Lean production combines the flexibility of craft production with the efficiency of mass production, seeks continuous improvement toward…

• A. 50 times that of the average workers
• B. 100 times that of the average workers
• C. 250 times that of the average workers
• D. 262 times that of the average workers

Explanation: In 2005, the average CEO's compensation was reported as about 262 times that of the average worker.

• A. Domestic workers
• B. Accountants and financial consultants
• C. Senior and chief executive
• D. corporate attorneys

Explanation: Senior and chief executives received the greatest increase in compensation during the 1990s, reflecting the rapid growth of executive pay…

• A. Home construction
• B. Oil drilling
• C. Salmon canning
• D. All of these

Explanation: Oil drilling is part of the primary sector because it extracts a natural resource directly from the earth.

• A. PACs
• B. interlocking directorates
• C. investment portfolios
• D. All of the above

Explanation: Corporations can influence economic and political decisions through political action committees, ownership and control across investment…

• A. gradually narrowed
• B. remained stable
• C. slightly increased
• D. greatly increased

Explanation: The gap between average CEO compensation and average worker pay greatly increased, especially during the late twentieth century.

• A. fixed costs
• B. risk
• C. opportunity costs
• D. prime costs

Explanation: Every choice uses resources that could have been used for another purpose, creating an opportunity cost.

• A. production-possibility schedules
• B. product-moment correlations
• C. Venn diagrams
• D. welfare functions

Explanation: A production-possibility schedule shows the maximum combinations of goods an economy can produce with its available resources and…

• A. Ownership
• B. consumption
• C. distribution
• D. production

Explanation: Property consists of legally recognized rights of ownership, including the right to use, transfer, or exclude others from an asset.

• A. partnership
• B. subchapter S corporation
• C. sole survivorship
• D. sole proprietorship

Explanation: A sole proprietorship is owned and operated by one person and is the most numerous form of business ownership in the United States.

• A. secure the highest possible salaries for managers
• B. ensure that the long-term interests of the corporation outweigh short-term gains
• C. shield absentee owners from any and all responsibility
• D. shield the board of directors from any and all responsibility

Explanation: Separating ownership from management permits professional managers to run the firm while directors represent shareholders, with the aim of…

• A. Government
• B. stockholders
• C. banks
• D. founders

Explanation: Stockholders own a corporation because they hold its shares, which represent ownership claims and voting rights.

• A. economic consequences
• B. social consequences
• C. value of sacrificed resources
• D. parallel world

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

• A. distribute
• B. consume
• C. allocate
• D. appropriate

Explanation: Using goods and services to satisfy wants is consumption. Distribution moves products to users, while allocation concerns assigning scarce…