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PPSC Economics Chapter 2 Micro Economics MCQs With Answers
Question # 1
As long as the principle of diminishing marginal utility is operating any increased consumption of a good.
Choose an answer
Lowers total utility
Produces negative total utility
Lowers marginal utility and therefore total utility
Lowers marginal utility, but may raise total utility.
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Question # 2
In substitution effect a consumer
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Shifts away from the commodity which price has risen
shifts in favor of commodity which price has risen
shifts away from the commodity which price has fallen
None of these
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Question # 3
The downward kinked demand curve facing the individual oligopolistic implies that
Choose an answer
He face price certainlty
Competitors have a tendency to follow price decreases but not price increase
Total revenue remains same if a firm increases price
None of these
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Question # 4
In order to constitute an oligopolistic market structure.
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There must be a few firms in a given relevant market
There must be a few firms selling in a national market
There must be more than 20 firms selling in the international market
There must be fewer than 15 firm is any given market
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Question # 5
Which of the policies in the table above an increase in social welfare according to pareto efficiency.
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Policy A
Polies A and B
Policies A and D
Policies C a, -d D
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Question # 6
Ti access internet services consumers must use a computer if computer prices fall, what is the effect on the demand for internet services.
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The demand for internet services increases.
The demand for internet services decreases
The demand for internet services does not change
The demand for internet services could increase, decrese, or stay the same depending on other factors.
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Question # 7
An -increase the expected future price of a good.
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Increases its demand
Decreases its demand
Increases its supply
Has no effect on either its demand or its supply.
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Question # 8
If a firm triples all inputs and output triples as well the firm is subject to
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Constant returns to scale
Increasing returns to scale
Economies of scale
Both b and c
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Question # 9
Disposable income is equal to.
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National income
National income minus taxes plus transfers
Real GDP
National income Minus taxes
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Question # 10
the ouput where diminishing return to production begin is also the ouput where
Choose an answer
Marginal cost is at a minimum.
Average total cost is at a minimum
Average variable cost is at a minimum
Marginal and average
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Question # 11
The exit of firms out of a competitive market causes the supply curve to.
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Shift leftward
shift rights ward
None of the above for the exit of firms supply curve
shift either left or right depending on the number of firms leaving the market
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Question # 12
When the price of an inferior goods falls ceteris paribus the substitution effect leads to ________ in the quantity purchased and the income effect leads to _______ in the quantity purchased.
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An increase an increase
An increase, a decrease
A decrease, an increase
A decrease, a decrease
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Question # 13
Which of the following is correct for the demand and supply schedules given above.
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The demand curve is non linear
The slope of the supply curve is 4
Equilibrium quantity is 40 units
The slope of the demand curve is 0.5
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Question # 14
The same graph shows that the firm order to maximize profits , should produce.
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30 units charges a price of Rs. 16
20 Units and charge a price of Rs. 22
35 Units and charge a price of Rs. 12
38 units and charge a price or Rs. 10
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Question # 15
In a perfectly competitive market if firms are earning an economic profit the economic profit.
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Attracts entry by more firms, which lowers the market price
Can be earned both in the short run and long run
Is less than the normal profit
Leads to a decreases in market demand
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Question # 16
What is the per unit marginal cost of increasing production from 20 to 25 units.
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Rs. 3,500
Rs.100
Rs.4,000
Rs.500
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Question # 17
In the short run if price falls the firm will respond by
Choose an answer
Shutting down
Equating average variable cost to marginal revenue
Reducing output along its marginal cost curve as long as marginal revenue exceed average variable cost
None of the above
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Question # 18
Foundation of law of demand is.
Choose an answer
Law of diminishing marginal utility
Law of substitution
Law of increasing return to scale
Law of diminishing marginal rate of substitution.
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Question # 19
in monopolistic competition the firms desire to sell more output at the equilibrium because.
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Price is more than marginal cost
Price is less than marginal cost
Price is less than average cost
Price more than average cost
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Question # 20
In order to practice price discrimination which of the following is needed.
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Some degree of monopoly power
An ability to separate the market
An ability to prevent reselling
All of the above
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Question # 21
The short run supply curve for a competitive industry is derived by.
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Horizontally summing the marginal cost curves for each firm in the industry
Horizontally summing the average variable cost curves for each firming the industry
Vertically summing the marginal cost curves for each firm in the industry
None of the above
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