Micro Economics: 100 most repeated MCQs in Exams
1. In economics, the term “opportunity cost” refers
to:
a) The financial cost of a particular choice
b) The value of the best alternative foregone
c) The total cost of producing a good or service
d) The profit earned from a business venture
Answer: b) The value of the best alternative
foregone
2. Which of the following is an example of a perfectly
competitive market?
a) The market for luxury cars
b) The market for natural gas
c) The market for smartphones
d) The market for agricultural products
Answer:
d) The market for agricultural products
3. The law of demand states that:
a) There is a positive relationship between price and
quantity demanded
b) There is a negative relationship between price and
quantity demanded
c) Price has no effect on quantity demanded
d) Quantity demanded is determined solely by income
Answer:
b) There is a negative relationship between price and
quantity demanded
4. The term “elasticity of demand” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity demanded to changes in
price
5. A price ceiling is a government-imposed maximum price set:
a) Above the equilibrium price, leading to a surplus
b) Above the equilibrium price, leading to a shortage
c) Below the equilibrium price, leading to a surplus
d) Below the equilibrium price, leading to a shortage
Answer:
c) Below the equilibrium price, leading to a surplus
6. When a market is in equilibrium:
a) There is excess demand in the market
b) There is excess supply in the market
c) Quantity demanded is equal to quantity supplied
d) Quantity demanded is greater than quantity supplied
Answer:
c) Quantity demanded is equal to quantity supplied
7. The term “marginal utility” refers to the:
a) Total satisfaction derived from consuming a good or service
b) Additional satisfaction derived from consuming an
additional unit of a good or service
c) Total cost of producing a good or service
d) Additional cost incurred in producing an additional unit
of a good or service
Answer:
b) Additional satisfaction derived from consuming an
additional unit of a good or service
8. The term
“oligopoly” refers to a market structure characterized by:
a) A large number of firms, differentiated products, and free
entry and exit
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
c) A small number of firms, standardized products, and
significant barriers to entry
9. The concept of “diminishing marginal returns”
suggests that:
a) As more units of a variable input are added, total output
increases at an increasing rate
b) As more units of a variable input are added, total output
increases at a decreasing rate
c) As more units of a variable input are added, total output
remains constant
d) As more units of a variable input are added, total output
decreases
Answer:
b) As more units of a variable input are added, total
output increases at a decreasing rate
10. In a perfectly competitive market, a firm is a price taker,
which means that it:
a) Sets the price of its products based on its production
costs
b) Has significant control over the market price
c) Must accept the market price determined by supply and
demand
d) Can influence the market price through advertising and
marketing
Answer:
c) Must accept the market price determined by supply and
demand
11. The concept of “elasticity of supply” measures the:
a) Responsiveness of quantity supplied to changes in price
b) Responsiveness of quantity demanded to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity supplied to changes in
price
12. The term “monopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and free
entry and exit
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
b) A single firm with exclusive control over the entire
market
13. The term “price discrimination” refers to a
strategy where a firm charges different prices to different customers based on
their:
a) Personal preferences and tastes
b) Income levels and purchasing power
c) Geographic location or segment of the market
d) Price elasticity of demand
Answer:
c) Geographic location or segment of the market
14. The concept of “economic efficiency” refers to a
situation where:
a) Resources are allocated in a way that maximizes total
utility
b) Resources are allocated in a way that maximizes producer
surplus
c) Resources are allocated in a way that minimizes consumer
surplus
d) Resources are allocated in a way that maximizes total
welfare or social surplus
Answer:
d) Resources are allocated in a way that maximizes total
welfare or social surplus
15. The term “externality” in economics refers to:
a) Costs or benefits of economic activities that are borne by
third parties, not directly involved in the activity
b) Economic policies that are implemented by supranational
organizations
c) The movement of goods and services across national borders
d) The distribution of income and wealth in a society
Answer:
a) Costs or benefits of economic activities that are
borne by third parties, not directly involved in the activity
16. The term “perfectly elastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly inelastic regardless of
price changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
a) Quantity demanded is extremely sensitive to changes in
price
