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Economics MCQs with Explanations

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1271EconomicsMedium

Normal profit occurs when?

AMarginal revenue equals marginal cost

BAverage revenue equals average variable cost

CAverage revenue equals marginal cost

DAverage revenue equals average cost

Correct answer

B. Average revenue equals average variable cost

Explanation

The correct answer is Average revenue equals average variable cost.

1272EconomicsMedium

If both input and output markets are competitive and firms are profit maximizing, then in equilibrium each factor of production earns?

Athe value of its marginal product

Bthe amount allocated by the political process

Can amount equal to the price of output times total output

Dan equal share of output

Correct answer

A. the value of its marginal product

Explanation

The correct answer is the value of its marginal product.

1273EconomicsMedium

Which of the following is a correct statement about the relationship between average product (AP) and marginal product (MP)?

AIf AP = MP, then total product is at a maximum.

BIf AP is at a maximum, then MP is also,

CIf AP exceeds MP then AP is falling

DIf TP is declining, then AP is negative

Correct answer

C. If AP exceeds MP then AP is falling

Explanation

The correct answer is If AP exceeds MP then AP is falling.

1274EconomicsMedium

Pakistan is the ________largest Chickpea Producer country in the world?

AFifth

BSixth

CSecond

DEight

Correct answer

C. Second

Explanation

The correct answer is Second.

1275EconomicsMedium

A positive externality occurs when?

AThe social marginal benefits are higher than the private marginal benefits

BThe social marginal cost equal the social marginal benefit

CThe social marginal costs are higher than the private marginals costs

DA product is not provided in the free market

Correct answer

C. The social marginal costs are higher than the private marginals costs

Explanation

The correct answer is The social marginal costs are higher than the private marginals costs.

1276EconomicsMedium

fiscal incentives to attract businesses from abroad include?

AIII and IV only

BI and II only

CI, II and III only

DI, II, III, and IV

Correct answer

D. I, II, III, and IV

Explanation

The correct answer is I, II, III, and IV.

1277EconomicsMedium

The marginal revenue curve in monopoly?

ALies below and converges with the demand curve

BLies below and diverges from the demand curve

CEquals the demand curve

DIs parallel with the demand curve

Correct answer

B. Lies below and diverges from the demand curve

Explanation

The correct answer is Lies below and diverges from the demand curve.

1278EconomicsMedium

In monopolistic competition?

AFirms make normal profits in the long run

BThere are barriers to entry to prevent entry

CAll products are homogeneous

DFirms face a perfectly elastic demand curve

Correct answer

B. There are barriers to entry to prevent entry

Explanation

The correct answer is There are barriers to entry to prevent entry.

1279EconomicsMedium

To maintain that South koreans are dumping their DVDs in the United States is to maintain that?

AKoreans are selling DVDs is the U.s above their productions cost

BThe cost of manufacturing DVDs in Korea is lower in Korea than in the U.S since wages are lower in Korea

CThe cost of manufacturing DVDs in Korea is higher in Korea than in the U.S since wages are higher in Korea

DKoreans are selling DVDs in the U.S below their production cost

Correct answer

D. Koreans are selling DVDs in the U.S below their production cost

Explanation

The correct answer is Koreans are selling DVDs in the U.S below their production cost.

1280EconomicsMedium

Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent?

ARs 5,000

BRs 4,000

CRs 0

DRs 1,000

Correct answer

A. Rs 5,000

Explanation

The correct answer is Rs 5,000.

A positive externality occurs when?

AThe social marginal benefits are higher than the private marginal benefits

BThe social marginal cost equal the social marginal benefit

CThe social marginal costs are higher than the private marginals costs

DA product is not provided in the free market

Correct answer

C. The social marginal costs are higher than the private marginals costs

Explanation

The correct answer is The social marginal costs are higher than the private marginals costs.

In monopolistic competition?

AFirms make normal profits in the long run

BThere are barriers to entry to prevent entry

CAll products are homogeneous

DFirms face a perfectly elastic demand curve

Correct answer

B. There are barriers to entry to prevent entry

Explanation

The correct answer is There are barriers to entry to prevent entry.

To maintain that South koreans are dumping their DVDs in the United States is to maintain that?

AKoreans are selling DVDs is the U.s above their productions cost

BThe cost of manufacturing DVDs in Korea is lower in Korea than in the U.S since wages are lower in Korea

CThe cost of manufacturing DVDs in Korea is higher in Korea than in the U.S since wages are higher in Korea

DKoreans are selling DVDs in the U.S below their production cost

Correct answer

D. Koreans are selling DVDs in the U.S below their production cost

Explanation

The correct answer is Koreans are selling DVDs in the U.S below their production cost.