Free Microeconomics MCQs with Answers

• A. transportation
• B. taxi rides
• C. bus tickets
• D. airline tickets

Explanation: Transportation is a broad necessity with relatively few practical substitutes, so its demand is likely to respond least to price changes.

• A. the percentage change in the quantity demanded divided by the percentage change in income.
• B. the percentage change in income divided by the percentage change in the quantity demanded
• C. the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good
• D. none of these answers

Explanation: Price elasticity compares the percentage change in quantity demanded with the percentage change in price.

• A. Supply would tend to be price elastic
• B. none of these answers
• C. demand would tend to be price inelastic
• D. demand would tend to be price elastic

Explanation: Few substitutes make it difficult for consumers to switch when the price rises, so quantity demanded changes relatively little.

• A. elastic in the upper portion and inelastic in the lower portion
• B. inelastic in the upper portion and elastic in the lower portion
• C. inelastic throughout
• D. constant along the demand curve

Explanation: On a straight-line demand curve, elasticity is not constant: the upper portion is elastic, the midpoint is unit elastic, and the lower…

• A. Rs 0 per month
• B. Rs 30 per month
• C. Rs 40 per month
• D. Either Rs 30 or Rs 40 per month because the price elasticity of demand is 1.0

Explanation: Revenue at Rs 30 is Rs 900,000, calculated as 30,000 × 30, while revenue at Rs 40 is Rs 800,000, calculated as 20,000 × 40.

• A. 1.4
• B. 0.66
• C. 0.75
• D. 2.0

Explanation: Using midpoints, the quantity change is 10,000/25,000 = 0.4 and the price change is 10/35 ≈ 0.286.

• A. infinite
• B. Zero
• C. less than 1
• D. none of these
• E. greater than 1

Explanation: Price-inelastic supply means the percentage change in quantity supplied is smaller than the percentage change in price.

• 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…