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. decrease the level of national security
- B. provide benefits to some particular industry
- C. provide benefits to the entire nation
- D. not yield welfare losses for the nation
Explanation: Protectionist arguments often present restricted trade as benefiting the entire nation through jobs, national security, or strategic…
Correct answer: provide benefits to the entire nation- A. the WTO
- B. the GATT
- C. the IMF
- D. the World Bank
Explanation: The General Agreement on Tariffs and Trade, or GATT, was established in 1947 to reduce trade barriers and promote liberalization.
Correct answer: the GATT- A. Nontariff barriers (NTBs) and tariffs have increased in relative importance
- B. NTBs and tariffs have decreased in relative importance
- C. NTBs have increased and tariffs have decreased in relative importance
- D. NTBs have decreased and tariffs have increased in relative importance
Explanation: Postwar tariff reductions made tariffs relatively less important, while non-tariff barriers such as quotas, standards, and licensing…
Correct answer: NTBs have increased and tariffs have decreased in relative importance- A. U.S grains consumers and producers of bread
- B. U.S farmers and grains companies
- C. Grain Producers in foreign countries
- D. Grain consumers in foreign countries
Explanation: A grain embargo harms domestic farmers and grain-exporting companies by restricting their foreign market and reducing sales opportunities.
Correct answer: U.S farmers and grains companies1485. Economic sanctions?
- A. are prohibited by the World Trade Organization
- B. affect international trade but not international financial flows
- C. involve restrictions on imports, but not exports
- D. involve restrictions in imports exports and or financial flows
Explanation: Economic sanctions are broad restrictions used to influence another country and may target imports, exports, investment, banking, or other…
Correct answer: involve restrictions in imports exports and or financial flows- A. have tariff rates equal to zero suggesting a free trade policy for the United States
- B. have lower tariff rates than the rates that apply to any other country sending goods to the United States
- C. have tariff rates that are identical to the rates that apply to other countries to which the U.S grants most-favored nation treatment
- D. have lower tariff rates than the rates that apply to other countries to which the U.S grants most favored nation treatment
Explanation: Most-favored-nation treatment means China receives the same normal tariff schedule as other countries granted that status, not a uniquely…
Correct answer: have tariff rates that are identical to the rates that apply to other countries to which the U.S grants most-favored nation treatment- A. World Bank
- B. International Trade Commission
- C. Department of justice
- D. World Trade Organization
Explanation: The World Trade Organization establishes and administers the principal multilateral rules governing international trade and helps settle…
Correct answer: World Trade Organization- A. Kennedy Round of 1964-1967
- B. Tokyo Round of 1973-1979
- C. Uruguay Round of 1986-1993
- D. Doha Round of 2003-2007
Explanation: The Uruguay Round, conducted from 1986 to 1993, concluded with the Marrakesh Agreement, which created the World Trade Organization in…
Correct answer: Uruguay Round of 1986-1993- A. embargoes
- B. tariff-rate quotas
- C. voluntary export restraints
- D. nontariff barriers
Explanation: An embargo is a complete prohibition on specified trade, so it can be viewed as a quota of zero.
Correct answer: embargoes- A. increase
- B. decrease
- C. not change
- D. None of These
Explanation: Dumping gives German consumers access to steel at unusually low prices, and this consumer gain normally exceeds the loss to German steel…
Correct answer: increase1491. According to the United States ____ is the number one violator of intellectual property rights
- A. Canada
- B. Australia
- C. Japan
- D. China
Explanation: In the commonly cited U.S. trade-policy context, China has been identified as the leading violator or source of…
Correct answer: China- A. General Agreement on Tariffs and Trade
- B. World Trade Organization
- C. Smoot Hawley Organization
- D. McKinley Agreement on Trade policy
Explanation: The General Agreement on Tariffs and Trade was the first major postwar framework for reducing tariffs and liberalizing trade.
Correct answer: General Agreement on Tariffs and Trade- A. bilateral tariff reductions to promote trade liberalization
- B. the use of the most-favored nation clause (normal trade relations)
- C. nondiscrimination in trading relationships
- D. the prohibition of import quotas and export quotas
Explanation: The WTO is built on multilateral, not merely bilateral, trade negotiations and nondiscrimination through most-favored-nation treatment.
Correct answer: bilateral tariff reductions to promote trade liberalization- A. foreign dumping of goods in the U.S
- B. subsidies granted to foreign firms that export to the U.S
- C. buy national policies of foreign government
- D. stringent environmental regulations of foreign government s
Explanation: Countervailing duties neutralize the benefit foreign exporters receive from government subsidies, preventing those subsidized goods from…
Correct answer: subsidies granted to foreign firms that export to the U.S- A. charge the nation's products a lower tariff than any other nation's
- B. charge that nation's products a tariff rate no higher than that on any other nation
- C. charge that nation's products a higher tariff than any other nation's
- D. exports to that nation any products that it wants to purchase
Explanation: Most-favored-nation treatment means a country must give the partner the same lowest tariff treatment it gives to any other nation, subject…
Correct answer: charge that nation's products a tariff rate no higher than that on any other nation- A. Grain prices would rise in the Soviet union
- B. Consumer surplus would decrease for the soviets
- C. Grains prices would rise in the united States
- D. Export revenues would decrease for U.S producers
Explanation: Restricting U.S. grain exports reduces demand in the U.S. market, so U.S. grain prices would tend to fall rather than rise.
Correct answer: Grains prices would rise in the united States- A. Cost ratios are different
- B. Tariff rates are different
- C. Price ratios are different
- D. A and C of above
Explanation: Trade creates gains when countries face different opportunity-cost ratios, which produce different relative price ratios and allow…
Correct answer: A and C of above- A. Policy about markets
- B. Policy about money supply
- C. Policy about imports and exports
- D. Policy of controlling of prices of goods
Explanation: Commercial policy covers a country's rules governing international trade, especially imports, exports, tariffs, quotas and related…
Correct answer: Policy about imports and exports1499. A tariff______________?
- A. Increase the volume of trade
- B. Reduces the volume of trade
- C. Has no effect on volume of trade?
- D. A and C of above
Explanation: A tariff raises the domestic price of imported goods, reducing the quantity demanded of imports and therefore the volume of international…
Correct answer: Reduces the volume of trade- A. Price increase demand decreases
- B. Price decreases demand decreases
- C. Price increased demand increases
- D. None of these
Explanation: The law of demand states that, other things remaining constant, a rise in price causes quantity demanded to fall.
Correct answer: Price increase demand decreases