Free Microeconomics MCQs with Answers
1,742 Microeconomics MCQs from Economics, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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- A. price to fall
- B. quantity supplied to decrease.
- C. price to rise
- D. quantity demanded to increase
Explanation: Excess demand means buyers want more than sellers offer at the current price, creating upward pressure on price.
Correct answer: price to rise- A. As the price of calculators rise, the quantity supplied of calculators decreases, ceteris paribus.
- B. As the price of calculators calls the supply of calculators increases, ceteris paribus.
- C. As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.
- D. As the price of calculators rise, the supply of calculators increases ceteris paribus.
Explanation: The law of supply states that, other things equal, a higher price leads producers to offer a greater quantity for sale.
Correct answer: As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.- A. an inferior good
- B. a normal good
- C. a complementary good
- D. a substitute good
Explanation: A normal good is one whose demand moves in the same direction as income, so demand falls when income falls.
Correct answer: a normal good- A. complements
- B. substitutes
- C. inferior
- D. nromal
Explanation: For substitutes, a fall in the price of one good makes consumers buy less of the other, shifting its demand downward.
Correct answer: substitutes- A. Pepsi's advertising is not as effective as in the past .
- B. The price of Coca Cola has increased,
- C. Pepsi consumers had an increase in income.
- D. The price of Pepsi increased
Explanation: A decrease in quantity demanded means movement along Pepsi's existing demand curve, which is caused by an increase in Pepsi's own price.
Correct answer: The price of Pepsi increased- A. have few substitutes.
- B. are normal goods
- C. have few complementary goods.
- D. have many complementary goods.
Explanation: The prediction that demand will rise with consumers' incomes is accurate if chairs are normal goods.
Correct answer: are normal goods- A. Should increase output
- B. Should reduce output
- C. will require further information on how to respond
- D. Should not change output
Explanation: An increase in both marginal revenue and marginal cost does not by itself show whether producing another unit is profitable.
Correct answer: will require further information on how to respond- A. Economic profit
- B. Accounting profit
- C. Normal profit
- D. Supernormal profit
Explanation: Breaking even after all economic costs, including opportunity costs, means economic profit is zero.
Correct answer: Normal profit- A. marginal cost to increase, output to fall
- B. marginal revenue to increase output to fall
- C. opportunity cost to increase the firm will close
- D. average cost will rise output will increase ____ output and an upward shift in marginal revenue ____ output
Explanation: Higher wage costs raise the firm's variable and marginal costs, making each additional unit less profitable at the former output.
Correct answer: marginal cost to increase, output to fall- A. costs are minimized
- B. revenue is maximized
- C. average cost is less than average revenue
- D. marginal cost equals marginal revenue
Explanation: Profit is maximised at the output where marginal revenue equals marginal cost, provided marginal cost is rising through that point.
Correct answer: marginal cost equals marginal revenue1351. Adding up the quantities demanded of a good by different people facing the same price gives us the ?
- A. Supply curve
- B. Market demand curve
- C. Demand curve
- D. Market supply curve
Explanation: Adding the quantities demanded by all consumers at each price produces the market demand curve.
Correct answer: Market demand curve- A. Status
- B. Prestige
- C. Utility
- D. Self-esteem
Explanation: Consumers are assumed to use goods and services to obtain utility, meaning satisfaction or wants fulfillment.
Correct answer: Utility- A. increase quantity demanded, reduce quantity demanded
- B. increase quantity demanded, increases quantity demanded
- C. reduce quantity demanded, reduce quantity demanded
- D. reduce quantity demanded, increase quantity demanded
Explanation: A price increase lowers the consumer’s real purchasing power, so the income effect reduces demand for a normal good.
Correct answer: reduce quantity demanded, reduce quantity demanded- A. negative income elasticity income elasticity greater than 1
- B. income elasticity greater than 1, negative income elasticities
- C. Positive income elasticities, negative income elasticities
- D. None of the above
Explanation: Inferior goods have negative income elasticity because demand falls as income rises, while luxury goods have income elasticity greater…
Correct answer: negative income elasticity income elasticity greater than 1- A. substitutes inferior
- B. normal, complements
- C. substitutes complements
- D. normal, inferior
Explanation: A positive cross-price elasticity means the goods are substitutes, since a rise in the price of one increases demand for the other.
Correct answer: substitutes complements- A. inelastic; increase
- B. elastic; increase
- C. elastic, decrease
- D. none of the above
Explanation: When demand is elastic, the percentage increase in quantity demanded exceeds the percentage fall in price, so total consumer spending…
Correct answer: elastic; increase- A. +2
- B. +0.5
- C. -2
- D. -0.5
Explanation: Price rises by 20% while quantity supplied rises by 10%, so price elasticity of supply is 10% ÷ 20% = +0.5.
Correct answer: +0.5- A. Demand shifts outwards
- B. The supply curve shifts inwards
- C. The quantity supplied falls when the price falls
- D. The supply curve shifts outwards
Explanation: A contraction of supply is a movement along the supply curve caused by a fall in price, resulting in a lower quantity supplied.
Correct answer: The quantity supplied falls when the price falls- A. In the short run rather than the long run
- B. If factors of production are relatively immobile between industries
- C. If there are very few producers
- D. If it is easy to expand output
Explanation: Supply is more price elastic when producers can readily expand output in response to a price rise.
Correct answer: If it is easy to expand output- A. The quantity consumers would like to buy in an ideal world
- B. The quantity producers are willing and able to sell at each and every price all other things unchanged
- C. The quantity producers are willing and able to sell at each and every income all other things unchanged
- D. The quantity producers are willing and able to sell at each and every point in time all other things unchanged
Explanation: A supply curve shows the quantity producers are willing and able to sell at every possible price, with other factors held constant.
Correct answer: The quantity producers are willing and able to sell at each and every price all other things unchanged