Free Microeconomics MCQs with Answers

• A. direct exporting
• B. indirect exporting
• C. licensing
• D. contract manufacturing

Explanation: Direct exporting occurs when a seller manages its own export activities and sells to foreign buyers or intermediaries.

• A. achievement ans success
• B. activity and involvement
• C. material comfort
• D. collectivism

Explanation: Individualism is a typical value associated with United States culture, whereas collectivism places greater emphasis on group loyalty and…

• A. the Commerce Department
• B. the Massachusetts institutes of Technology (MIT)
• C. Northwestern University
• D. the Defense Department

Explanation: The modern internet developed from ARPANET, a network created under the Advanced Research Projects Agency of the U.S.

• A. Modeling
• B. Motivation
• C. Perception
• D. Learning

Explanation: Learning is a relatively lasting change in behaviour or knowledge resulting from experience, practice, or observation.

• A. social class
• B. occupation
• C. lifestyle
• D. personality

Explanation: Psychographic segmentation uses lifestyle, personality, and social class to divide consumers according to how they live and think.

• A. Key-size approach
• B. work-load appraoch
• C. product-need appraoch
• D. call-service appraoch

Explanation: The workload approach estimates salesforce size by classifying accounts, assigning the required number of calls, and dividing total…

• A. Prospecting
• B. Preapproach
• C. Approach
• D. Handling objections

Explanation: During the preapproach, the salesperson studies the prospect and sets objectives for the sales call before making contact.

• A. Exporting
• B. Joint venturing
• C. Licensing
• D. Direct investment

Explanation: Direct investment involves the greatest commitment and control in a foreign market because the firm owns or establishes production…

• A. Need recognition
• B. Information search
• C. Evaluation of alternative
• D. Postpurchase behaviour

Explanation: Cognitive dissonance is the doubt or discomfort a buyer may feel after making a purchase, especially when considering rejected…

• A. Marketing intelligence
• B. Marketing research
• C. Customer profiles
• D. Internal databases

Explanation: Internal databases contain information already collected within the organisation, such as sales and customer records, so they are usually…

• A. efficiency analysis
• B. partial equilibrium analysis
• C. general equilibrium analysis
• D. equity analysis

Explanation: General equilibrium analysis studies how markets and decisions are interdependent, so a change in one market can affect many others.

• A. Marginal benefit equals marginal damage cost
• B. marginal benefits equals marginal social cost
• C. marginal benefit equals marginal private cost
• D. marginal social cost equals marginal external cost

Explanation: A person making a private decision continues an activity while its marginal benefit exceeds its marginal private cost, stopping where the…

• A. technically efficient.
• B. inefficient.
• C. potentially efficient
• D. unequivocally Pareto optimal

Explanation: A change is potentially efficient under the Kaldor-Hicks criterion when the gains are large enough that winners could theoretically…

• A. The coase theorem
• B. Arrow's impossibility theorem
• C. the drop -in-the bucket problem.
• D. the free rider problem

Explanation: The Coase theorem states that, with well-defined property rights and negligible transaction costs, private parties may bargain to an…

• A. non-rival in consumption and their benefits are nonexcludable:
• B. rival in consumption and their benefits are excludable
• C. rival in consumption and their benefits are non-excludable
• D. non-rival in consumption and their benefits excludable

Explanation: Private goods are both rival and excludable: one person's consumption reduces what remains for others, and owners can prevent non-payers…

• A. households do not have perfect information
• B. firms are not price takers in input markets
• C. firms are not price takers in the output market
• D. all of the above

Explanation: The efficiency result for unregulated markets depends on competitive price-taking behaviour and adequate information.

• A. industry equilibrium analysis
• B. specific equilibrium analysis
• C. partial equilibrium analysis
• D. general equilibrium analysis

Explanation: Partial equilibrium analysis studies the effect of a policy in one market while holding conditions in other markets broadly constant.

• A. less than the efficient level of output
• B. more than the efficient level of output
• C. so that consumer surplus is zero
• D. the efficient level of output

Explanation: Because consumption creates benefits for others, social benefit exceeds the consumer's private benefit.

• A. marginal damage cost
• B. marginal social cost
• C. marginal private cost
• D. marginal external cost

Explanation: Marginal social cost is the total extra cost to society from producing one more unit, including both the producer's marginal private cost…

• A. raising the price of X.
• B. production less X
• C. Producing more X
• D. Increasing the cost of producing X

Explanation: Price represents the marginal benefit of the good, so PX greater than MCX means the extra benefit from another unit exceeds its extra…