300+ TOP Basics of Economics MCQs and Answers Quiz Exam

Basics of Economics Multiple Choice Questions

1. The economic problem arises since
A. wants are unlimited

B. resources are limited

C. resources are capable of alternative uses

D. all of the above

Answer: D. all of the above

2. Economic problem arises in
A. planned economies

B. free market economies

C. mixed economies

D. all of the above

Answer: D. all of the above

3. The resources are :
A. limited

B. unlimited

C. not only limited but are capable of alternative uses

D. none of the above

Answer: C. not only limited but are capable of alternative uses

4. —– is not an example of free good
A. sunlight

B. car

C. petrol

D. computer

Answer: A. sunlight

5. The term production refers to:
A. producing things which are capable of satisfying human wants

B. creation or addition of utilities

C. transformation of inputs into output

D. all of the above

Answer: D. all of the above

6. The problem of allocation of resources is concerned with:
A. what to produce

B. how to produce

C. for whom to produce

D. all of the above

Answer: A. what to produce

7. The distribution of national product among the members of the society is the problem of:
A. what to produce

B. how to produce

C. for whom to produce

D. all of the above

Answer: C. for whom to produce

8. Which one of the following come under macro economics:
A. per capital income

B. study of a firm

C. individual income

D. theory of factor pricing

Answer: A. per capita income

9. Which one of the following is not come under macro economics
A. national income

B. per capita income

C. disposable income

D. individual income

Answer: D. individual income

10. Partial equilibrium analysis come under:
A. micro economics

B. macro economics

C. welfare economics

D. international economics

Answer: A. micro economics

11. “The starting point of all economic activity is the existence of human wants” Who said this?
A. adam smith

B. selligman

C. ricardo

D. alfred marshall

Answer: B. selligman

12. Production and consumption takes place simultaneously in the case of
A. goods

B. services

C. both in the case of goods and services

D. neither in the case of goods and services

Answer: B. services

13. Economic growth can be achieved through
A. advanced technology

B. expansion of resources

C. both a & b

D. neither a & b

Answer: C. both a & b

14. Micro economics doesn’t deal with:
A. the study of individual economic units

B. determination of factor prices

C. price determination of commodities

D. general equilibrium analysis

Answer: D. general equilibrium analysis

15. Name the economist who analyses the subject matter of economics into two branches: micro economic analysis and macro economic analysis.
A. adam smith

B. alfred marshall

C. ragner frisc

D. p a samuelson

Answer: C. ragner frisc

16. Transformation of inputs into outputs is known as
A. production

B. consumption

C. distribution

D. exchange

Answer: A. production

17. —– is an example of secondary input
A. land

B. labour

C. capital

D. raw material

Answer: D. raw material

18. Odd-man out from the following
A. steel

B. medicine

C. education

D. train

Answer: C. education

19. The choice of techniques of production is related to the problem of
A. what to produce

B. how to produce

C. for whom to produce

D. none of the above

Answer: B. how to produce

20. The functional relationship between inputs and outputs is called
A. production function

B. consumption function

C. investment function

D. saving function

Answer: A. production function

21. Firms owned by one individual is known as
A. proprietorship

B. partnership

C. corporations

D. none of the above

Answer: A. proprietorship

22. Firms owned by two or more individuals is known as
A. proprietorship

B. partnership

C. corporations

D. none of the above

Answer: B. partnership

23. Firms owned by stock holders are known as
A. proprietorship

B. partnership

C. corporations

D. none of the above

Answer: C. corporations

24. The major objective of a firm is
A. profit maximization

B. revenue maximization

C. sales maximization

D. none of the above

Answer: A. profit maximization

25. Which one of the following is an example of fixed input
A. raw materials

B. casual workers

C. plant and equipments

D. all of the above

Answer: C. plant and equipments

26. In short-run
A. all inputs are fixed

B. all inputs are variable

C. some inputs are fixed and some are variable

D. none of the above

Answer: C. some inputs are fixed and some are variable

27. In long-run
A. all inputs are fixed

B. all inputs are variable

C. some inputs are fixed and some are variable

D. none of the above

Answer: B. all inputs are variable

28. The variable cost of a firm vary in direct proportion to the
A. volume of its output

B. extent of its profits

C. volume of its sale

D. all of the above

Answer: A. volume of its output

29. Law of variable proportions is concerned with
A. long-run production function

B. laws of returns to scale

C. short-run production function

D. none of the above

Answer: C. short-run production function

30. The ‘point of inflection’ come in which stage of the law of variable proportions
A. stage i

B. stage ii

C. stage iii

D. none of the above

Answer: A. stage i

31. A rational producer will select his level of production in which stage of the law of variable proportions
A. stage i

B. stage ii

C. stage iii

D. either stage i or stage ii

Answer: B. stage ii

32. Total product reaches at maximum when
A. mp is increasing

B. mp is maximum

C. mp = 0

D. mp is negative

Answer: C. mp = 0

33. Returns to scale refers to the production function where
A. all factors are fixed

B. some factors are fixed and others are variable

C. all factors are variable

D. none of the above

Answer: C. all factors are variable

34. In the case of diminishing returns to scale, a given proportionate increase in all factors causes
A. a more than proportionate increase in output

B. an equal proportionate increase in output

C. a less than proportionate increase in output

D. none of the above

Answer: C. a less than proportionate increase in output

35. Increasing returns to scale occurs due to
A. division of labour

B. specialization

C. economies of scale

D. all of the above

Answer: D. all of the above

36. The cause for diminishing returns to scale is:
A. improper proportion of factors of production

B. difficulty in the combination of certain factors

C. excess combination of certain factors

D. all of the above

Answer: D. all of the above

37. The solution to diminishing returns to scale is :
A. technical progress

B. expansion of resources

C. proper combination or resources

D. all of the above

Answer: D. all of the above

38. Which one of the following is not related to economies of scale:
A. scope for division of labour and specialization

B. scope for getting inputs at cheaper rates

C. difficulty faces by the managers to coordinate the business

D. scope for better storage facilities

Answer: C. difficulty faces by the managers to coordinate the business

39. The law of Diminishing returns is applicable to:
A. agriculture only

B. industry only

C. in short-run only

D. universally

Answer: D. universally

40. labourers are employed the firm produces 136 units of output. Then the marginal product is —
A. 120

B. 136

C. 6

D. 16

Answer: C. 6

41. Other things remaining the same, the quantity of a product demanded increases with ———— in price.
A. increase

B. decrease

C. variation

D. none of the above

Answer: B. decrease

42. When total utility is maximum, marginal utility is:
A. maximum

B. one

C. zero

D. infinite

Answer: C. zero

43. For complementary goods, the cross elasticity of demand:
A. positive

B. negative

C. zero

D. none

Answer: B. negative

44. Relation between price of a commodity and demand for another commodity is measured by:
A. price elasticity

B. income elasticity

C. cross elasticity

D. elasticity of substitution

Answer: C. cross elasticity

45. When TU falls, MU is:
A. rises

B. zero

C. positive

D. negative

Answer: D. negative

46. Demand varies ————- with price.
A. directly

B. positively

C. inversely

D. none of the above

Answer: C. inversely

47. When Q = f (P), the elasticity coefficient is measured by:
A. ∆q/∆p / p/q

B. ∆p/∆q * q/p

C. ∆q/∆p * p/q

D. ∆p/∆q / q/p

Answer: C. ∆q/∆p * p/q

48. Income elasticity of demand for inferior good is:
A. negative

B. positive

C. zero

D. unity

Answer: A. negative

49. In the case of luxury goods, the income elasticity of demand will be:
A. less than unity

B. unity

C. more than unity

D. all the above

Answer: C. more than unity

50. Income elasticity is positive, but less than unity in the case of:
A. necessity

B. luxury

C. inferior

D. substitutes

Answer: A. necessity

51. In drawing an individual demand curve for a commodity, all but which of the following are kept constant:
A. individual’s money income

B. the prices of the related commodity

C. price of the commodity under consideration

D. tastes of the consumer

Answer: C. price of the commodity under consideration

52. When an individual’s income rises, when everything else remains the same, his demand for normal goods:
A. rises

B. falls

C. remains the same

D. any of the above is possible

Answer: A. rises

53. When an individual’s income falls, when everything else remains the same, his demand for inferior goods:
A. increases

B. decreases

C. remains unchanged

D. cannot say

Answer: A. increases

54. When the price of the substitute commodity of X falls, the demand for X:
A. rises

B. falls

C. remains unchanged

D. all of the above is possible

Answer: B. falls

55. If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is:
A. greater than

B. one equal to one

C. smaller than one

D. zero

Answer: D. zero

56. If the income elasticity of demand is greater than one, then the commodity is:
A. necessity

B. luxury

C. inferior

D. non-related commodity

Answer: A. necessity

57. Which of the following is an exception to the law of demand?
A. giffen good

B. normal good

C. superior good

D. all of the above

Answer: A. giffen good
58. The law of diminishing marginal utility was popularized by:
A. keynes

B. marshall

C. smith

D. samuelson

Answer: B. marshall
59. If the income elasticity of demand for a commodity is found to be 0.4,
then the commodity concerned is:
A. luxury

B. necessity

C. giffen’s goods

D. independent good

Answer: B. necessity
60. Cross elasticity of demand in the case of substitutes:
A. zero

B. negative

C. positive

D. infinity

Answer: C. positive

61. If a small change in price leads to infinitely large change in quantity
demanded, then the demand is:
A. perfectly elastic

B. perfectly inelastic

C. elastic

D. inelastic

Answer: A. perfectly elastic
62. Net addition to total utility when one more unit is consumed is:
A. au

B. mu

C. mc

D. tu

Answer: B. mu
63. Most important determinant of demand is :
A. income

B. wealth

C. price

D. advertisement

Answer: C. price
64. Which of the following is the reason for law of demand:
A. price effect

B. backlash effect

C. income effect

D. real balance effect

Answer: C. income effect
65. Net addition to total cost is called:
A. marginal cost

B. average cost

C. fixed cost

D. variable cost

Answer: A. marginal cost
66. The market equilibrium for a commodity is determined by :
A. market demand

B. market supply

C. balancing of the forces of demand and supply

D. any of the above

Answer: C. balancing of the forces of demand and supply

67. When there are only few sellers of the commodity, the market is called:
A. monopoly

B. duopoly

C. oligopoly

D. monopsony

Answer: C. oligopoly
68. If the supply curve of the commodity is having a positive slope, a rise in
the price of the commodity, results in:
A. increase in supply

B. increase in quantity supplied

C. decrease in supply

D. decrease in quantity supplied

Answer: B. increase in quantity supplied
69. From the position of stable equilibrium, the market supply of a commodity
decreases, while the market demand remains unchanged, then:
A. equilibrium price falls

B. equilibrium quantity rises

C. both equilibrium price and equilibrium quantity decreases

D. equilibrium price rises, but equilibrium quantity falls

Answer: D. equilibrium price rises, but equilibrium quantity falls
70. Elasticity of supply for a positively sloped straight line supply curve that
intersects the price axis is:
A. equal to zero

B. equal to one

C. greater than one

D. constant

Answer: C. greater than one
71. In which of the following market, advertisement is absent:
A. monopolistic competition

B. perfect competition

C. oligopoly

D. none of the above

Answer: C. oligopoly
72. ————– cost can never become zero.
A. variable cost

B. fixed cost

C. marginal cost

D. average cost

Answer: B. fixed cost

73. If a positively sloped linear supply curve crosses the quantity axis, the
elasticity of supply is:
A. inelastic

B. elastic

C. unitary elastic

D. perfectly elastic

Answer: A. inelastic
74. If a positively sloped linear supply curve passes through the origin, the
elasticity of supply is
A. inelastic

B. elastic

C. unitary elastic

D. perfectly elastic

Answer: C. unitary elastic
75. Average cost is the sum of AVC and
A. mc

B. tc

C. afc

D. atc

Answer: C. afc

76. The horizontal supply curve parallel to quantity axis represents
A. elastic supply

B. inelastic supply

C. perfectly elastic supply

D. perfectly inelastic supply

Answer: C. perfectly elastic supply
77. When output is zero, variable cost is ——–
A. maximum

B. minimum

C. infinity

D. zero

Answer: D. zero
78. Change in quantity supplied of a product can result from
A. changes in own price

B. changes in cost of production

C. change in technology

D. change in price of related products

Answer: A. changes in own price
79. At prices above the equilibrium price
A. quantity supplied exceeds quantity demanded

B. quantity demanded exceeds quantity supplied

C. there is shortage

D. all of the above is possible

Answer: A. quantity supplied exceeds quantity demanded
80. When MC cuts AC, AC is at its ————
A. maximum

B. minimum

C. zero

D. negative

Answer: B. minimum

81. Cost function relates cost to
A. input

B. output

C. raw material

D. machines

Answer: B. output
82. An increase in market demand, supply remaining the same results in
A. decrease in equilibrium price

B. decrease in equilibrium quantity

C. decrease in equilibrium price and increase in equilibrium quantity

D. both equilibrium price and quantity rises

Answer: D. both equilibrium price and quantity rises
83. There is no distinction between firm and industry in
A. perfect competition

B. monopoly

C. monopolistic competition

D. oligopoly

Answer: B. monopoly
84. A fall in the market demand, supply remaining the same results in
A. increase in equilibrium price

B. increase in equilibrium quantity

C. increase in equilibrium price and decrease in equilibrium quantity

D. both equilibrium price and quantity falls

Answer: D. both equilibrium price and quantity falls
85. The cost of next best alternative is called
A. marginal cost

B. average cost

C. opportunity cost

D. direct cost

Answer: C. opportunity cost

86. When MC is greater than AC, AC
A. rises

B. falls

C. maximum

D. minimum

Answer: A. rises
87. There is ——- relationship between price and quantity supplied
A. positive

B. negative

C. constant

D. inverse

Answer: A. positive
88. Supply curve represents ——– relationship between quantity and
price
A. direct

B. inverse

C. either direct or inverse

D. none of the above

Answer: A. direct
89. National Income means:
A. gnp at factor cost

B. gnp at market price

C. nnp at factor cost

D. nnp at market price

Answer: C. nnp at factor cost
90. The difference between GDP and NDP equals:
A. transfer payments

B. net indirect taxes

C. net factor income from abroad

D. depreciation

Answer: D. depreciation
91. Which of the following is true?
A. gnp + depreciation = nnp

B. gnp = gdp + net factor income from abroad

C. ndp = gnp minus net indirect taxes

D. nnp = dgp minus depreciation

Answer: B. gnp = gdp + net factor income from abroad

92. NNP is equal to:
A. gnp plus depreciation

B. gnp minus depreciation

C. gnp minus exports

D. gnp plus exports

Answer: B. gnp minus depreciation
93. Which of the following is not a method of national income estimation?
A. matrix method

B. income method

C. expenditure method

D. product method

Answer: A. matrix method
94. An accounting year in India is:
A. calendar year

B. academic year

C. fiscal year

D. none of these

Answer: C. fiscal year
95. Increase in real National Income (NI) means increase in:
A. ni at current prices

B. ni at constant prices

C. both

D. none of these

Answer: B. ni at constant prices
96. Net indirect taxes means:
A. indirect taxes plus subsidies

B. income minus taxes

C. indirect taxes minus subsidies

D. exports minus imports

Answer: C. indirect taxes minus subsidies
97. Net factor income from abroad shows the difference between:
A. gdp and ndp

B. nnp and ndp

C. gnp and gdp

D. gnp and nnp

Answer: C. gnp and gdp

98. Per capita income is equal to:
A. population/national income

B. national income/population

C. national income/gdp

D. nnp/gnp

Answer: B. national income/population
99. National income in India is estimated by:
A. rbi

B. nsso

C. cso

D. world bank

Answer: C. cso
100. The first estimate of National income in India was done by:
A. k.n. raj

B. v.k.r.v. rao

C. dadabai naoroji

D. p.c. mahalanobis

Answer: C. dadabai naoroji

101. Pick the odd one out:
A. real national income

B. ni at constant price

C. ni at current prices

D. ni at base year price

Answer: C. ni at current prices
102. GDP deflator is given by:
A. nominal ni/real ni

B. nominal dgp/real gdp

C. nominal gdp/ nominal gnp

D. real gdp/real gnp

Answer: B. nominal dgp/real gdp
103. Value of output minus intermediate consumption is:
A. depreciation

B. value added

C. net value added

D. net exports

Answer: B. value added
104. Personal income minus personal taxes is:
A. national income

B. private income

C. disposable income

D. per capita income

Answer: C. disposable income
105. National income is a ——–variable.
A. flow

B. stock

C. static

D. dynamic

Answer: A. flow

106. In India, National income is estimated at:
A. current prices

B. constant prices

C. both current and constant prices

D. none of these

Answer: C. both current and constant prices
107. Which of the following is true:
A. gdp is a geographical concept

B. gdp is not a geographical concept

C. gdp and gnp are same

D. none of them

Answer: A. gdp is a geographical concept
108. GNP measured in terms of current market prices is called:
A. nominal gnp

B. real gnp

C. both

D. none

Answer: A. nominal gnp
109. In India, the current base year is:
A. 1980-81

B. 1993-94

C. 1999-2000

D. 2004-05

Answer: D. 2004-05
110. Which of the following doest not include in the group?
A. gdp

B. gnp

C. gva

D. ndp

Answer: D. ndp

111. The term “Classical Economics” was first used by:
A. j.m. keynes

B. adam smith

C. karl marx

D. david ricardo

Answer: C. karl marx
112. Who is the leader of the Classical school?
A. thomas robert malthus

B. j.s. mill

C. david ricardo

D. adam smith.

Answer: D. adam smith.
113. The core of classical economists is:
A. effective demand

B. employment

C. say’s law of market

D. socialism

Answer: C. say’s law of market
114. ‘Law of Market’ is attributed to:
A. j.s. mill

B. j.b. say

C. alfred marshall

D. a.c. pigou

Answer: B. j.b. say
115. The Classicals adopted ———policy:
A. governmental policy

B. laissez-faire

C. policy of restriction

D. none of these

Answer: B. laissez-faire
116. According to Classicals, full employment is a:
A. rare phenomenon

B. normal phenomenon

C. abnormal phenomenon

D. none of these

Answer: B. normal phenomenon

117. According to the Classical economists, general over production is:
A. possible

B. impossible

C. both

D. none

Answer: B. impossible
118. According to the Classical economists, savings and investments are:
A. always unequal

B. always equal

C. never equal

D. sometimes equal

Answer: B. always equal
119. Classical aggregate supply curve is:
A. perfectly elastic

B. perfectly inelastic

C. more elastic

D. unitary elastic

Answer: B. perfectly inelastic
120. Pick the odd one from the following:
A. law of market

B. j.b. say

C. full employment

D. j.m. keynes

Answer: D. j.m. keynes
121. According to the Classicals, investment is a function of:
A. saving

B. income

C. employment

D. rate of interest

Answer: D. rate of interest
122. “Supply creates its own demand” is called:
A. law of supply

B. law of market

C. law of demand

D. law of elasticity

Answer: B. law of market

123. Under the classical system, the equilibrium will be at:
A. under employment

B. full employment

C. voluntary employment

D. disguised unemployment

Answer: B. full employment
124. When savings exceeds the demand for savings, the rate of interest will:
A. rise

B. fall

C. remain constant

D. none of these

Answer: B. fall
125. Rate of interest will increase when the demand for saving is:
A. less than its supply

B. equal to its supply

C. more than its supply

D. less than or equal to its supply

Answer: C. more than its supply

126. In the Classical system, the role of the government is:
A. the highest

B. not at all needed

C. limited

D. important

Answer: C. limited
127. Equilibrium in the economy is settled by ———, according to the
Classicals.
A. centralized planning

B. price mechanism

C. both the planning and price mechanism

D. none of these

Answer: B. price mechanism
128. Self interest, competition, profit motive are the features of:
A. socialism

B. capitalism

C. marxism

D. mixed economy

Answer: B. capitalism
129. The Great Depression was during:
A. 1930s

B. 1920s

C. 1940s

D. 1830s

Answer: A. 1930s
130. The equilibrium price is determined by the forces of:
A. supply only

B. demand only

C. both demand and supply

D. none of these

Answer: C. both demand and supply

131. Temporary unemployment is ————-, according to the Classical
economists:
A. impossible

B. permanent

C. possible

D. none of these

Answer: C. possible
132. J.B. Say was a —————Economist.
A. swedish

B. german

C. french

D. american

Answer: C. french
133. Pick the odd one out:
A. j.b. say

B. david ricardo

C. adam smith

D. j.m. keynes

Answer: D. j.m. keynes
134. Author of the book ‘The General Theory of Employment, Interest and
Money’:
A. karl marxq

B. j.b. say

C. j.m. keynes

D. adam smith

Answer: C. j.m. keynes
135. ‘The General Theory’, was published in :
A. 1776

B. 1890

C. 1936

D. 1950

Answer: C. 1936

136. The branch of Economics that deals with economic aggregate is called:
A. micro economics

B. development economics

C. macro economics

D. welfare economics

Answer: C. macro economics
137. The central theme of Keynesian Theory is:
A. laissez-faire

B. free trade

C. effective demand

D. self interest

Answer: C. effective demand
138. Who repudiated Say’s law of market?
A. j.b. say

B. david ricardo

C. j.s. mill

D. j.m. keynes

Answer: D. j.m. keynes
139. Effective demand is that demand when:
A. aggregate demand is greater than aggregate supply

B. aggregate demand is less than aggregate supply

C. aggregate demand is equal to aggregate supply

D. all of these

Answer: C. aggregate demand is equal to aggregate supply
140. The concept of effective demand is associated with the name of:
A. marshall

B. keynes

C. krugman

D. adam smith

Answer: B. keynes
141. The proportion between total income and total consumption is called:
A. average propensity to consume

B. average propensity to save

C. marginal propensity to consume

D. marginal propensity to save

Answer: A. average propensity to consume

142. The proportion between incremental income and incremental
consumption is called:
A. apc

B. aps

C. mpc

D. mps

Answer: C. mpc
143. The proportion between total income and total saving is called:
A. apc

B. aps

C. mpc

D. mps

Answer: B. aps
144. 1- MPC is called:
A. apc

B. aps

C. mpc

D. mps

Answer: D. mps
145. APC + APS is equal to:
A. 0

B. >0

C. 1

D. <0

Answer: C. 1
146. Multiplier is obtained by:
A. 1 – mpc

B. 1/1- mps

C. 1/1- apc

D. 1/1-mpc

Answer: D. 1/1-mpc
147. Exports minus imports is termed as:
A. net income

B. net imports

C. net exports

D. national income

Answer: C. net exports

148. As income increases consumption also increases, but:
A. proportionately

B. more than proportionately

C. less than proportionately

D. equally

Answer: C. less than proportionately
149. The expected return on investment is called:
A. marginal propensity to save

B. marginal propensity to consume

C. marginal revenue

D. marginal efficiency of investment

Answer: D. marginal efficiency of investment
150. Marginal efficiency of investment curve is:
A. slopping downwards

B. slopping upwards

C. parallel to x axis

D. parallel to y axis

Answer: A. slopping downwards

151. According to Keynes, unemployment is due to:
A. deficiency of capital

B. deficiency of labour

C. deficiency of education

D. deficiency in effective demand

Answer: D. deficiency in effective demand
152. “In the long run, we are all dead”. Who said this?
A. keynes

B. adam smith

C. karl marx

D. david ricardo

Answer: A. keynes
153. According to Keynes, investment is a function of:
A. rate of interest

B. rate of profit

C. rate of mei

D. mei and rate of interest

Answer: D. mei and rate of interest
154. Keynes believed in :
A. full employment equilibrium

B. under employment equilibrium

C. both

D. none

Answer: B. under employment equilibrium
155. According to Keynes, wages and prices are:
A. rigid

B. flexible

C. variable

D. automatic

Answer: A. rigid

156. In Economics, 1930s is popularly known as the period of:
A. great battle

B. great depression

C. industrial revolution

D. great devide

Answer: B. great depression
157. Keynes strongly argued for:
A. free trade

B. non-intervention of government

C. laissez-faire

D. governmental intervention

Answer: D. governmental intervention
158. Consumption expenditure directly varies with:
A. savings

B. investment

C. disposable income

D. rate of interest

Answer: C. disposable income
159. An important issue of macro economics is the determination of:
A. consumption

B. production

C. utility

D. income and employment

Answer: D. income and employment
160. Pick the odd one:
A. aggregate demand

B. effective demand

C. j.m. keynes

D. law of market

Answer: D. law of market

161. Which of the following items does not include in the group?
A. consumption

B. investment

C. rate of interest

D. net exports

Answer: C. rate of interest
162. If marginal propensity to consume is 0.8, the value of multiplier will be:
A. 1

B. 2.5

C. 5

D. 2

Answer: C. 5
163. Who is known as the father of Modern Economics?
A. adam smith

B. j.m.keynes

C. robinson

D. ricardo

Answer: A. adam smith
164. Goods without which people can not live are called:
A. comforts

B. luxuries

C. necessaries

D. none

Answer: C. necessaries
165. The problem of what to produce is a problem of:
A. distribution

B. technological choice

C. consumption

D. allocation of resources

Answer: D. allocation of resources
166. Those things that possess both utility and scarcity are called:
A. economic goods

B. free goods

C. intermediate goods

D. luxuries

Answer: A. economic goods

167. If a worker specializes in the production of a single good, it is called:
A. product based division of labour

B. process based division of labour

C. worker based division of labour

D. none of these

Answer: A. product based division of labour
168. Goods produced for use in future productive process are called:
A. intermediate goods

B. final goods

C. consumer goods

D. capital goods

Answer: D. capital goods

169. In a horizontal straight line demand curve, the price elasticity of demand is:
A. unity

B. infinity

C. zero

D. less than one

Answer: B. infinity

170. Who wrote the article Laws of Returns Under Competitive Conditions?
A. joan robinson

B. e.h. chamberlin

C. a.c. pigou

D. p. sraffa

Answer: D. p. sraffa

171. Increase in output less than proportional to increase in inputs is called:
A. increasing returns

B. constant returns

C. diminishing returns

D. marginal returns

Answer: C. diminishing returns

172. A simplified representation of a real situation is called:
A. theory

B. hypotheses

C. evidence

D. economic model

Answer: D. economic model

173. When marginal product reaches its maximum, what can be said of total product?
A. total product must be at its maximum

B. total product starts to decline even if marginal product is positive

C. total product is increasing if marginal product is still positive

D. total product levels off

Answer: C. total product is increasing if marginal product is still positive

174. When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
A. economies of scale.

B. constant returns to scale.

C. diseconomies of scale.

D. a violation of the law of diminishing returns.

Answer: A. economies of scale.

175. When average product is at a maximum, marginal product is:
A. zero

B. increasing

C. equal to average product

D. greater than average product

Answer: C. equal to average product

176. The want satisfying power of a commodity:
A. satisfaction

B. utility

C. value

D. marginal utility

Answer: B. utility

177. Supply curve represents ——– relationship between quantity and price.
A. direct

B. inverse

C. either direct or inverse

D. none of the above

Answer: A. direct

178. Laws of return shows ———production function.
A. short-term

B. medium term

C. long term

D. annual

Answer: A. short-term

179. In classical theory the level of employment is a function of:
A. price level

B. money wage rate

C. quantity of money

D. real wage rate

Answer: D. real wage rate

180. Consumption of capital good in the process of production is called as:
A. capital consumption

B. depreciation

C. decay of capital

D. none of the above

Answer: B. depreciation

181. Economic Laws are:
A. statement of tendencies

B. exact and predictable

C. definite

D. none

Answer: A. statement of tendencies

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