PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 The "Law of demand" most directly means that consumers buy More of a good the higher their incomes, ceteris paribus. Less of good the higher its price ceteris paribus Buy more of a good the less is its supply ceteris paribus Buy less of a good the greater is its supply ceteris paribus
2 The "Law of demand" states that other things remaining the same the quantity demanded of any good is. Directly related to its price Positively related to its price Inversely related to its price Directly elated to the supply of the good
3 Which of the following best defines price discrimination. Charging different prices on the basis of race Charging different prices for goods with different costs of production Charging different prices based on cost of service differences. Selling a certain product of given quality and cost per unit at different prices to different buyers
4 Japan's low interest rates in the mid 80's were due to. High rates of domestic savings. A decrease in Japan's exports Increases in the U.S. deficit High rates of domestic spending in Japan
5 Sales taxes are generally considered to be. Proportional taxes Regressive taxes Progressive taxes Indirect taxes
6 The diamond water paradox can be explained by suggesting that the price of a product is determined by. Consumer incomes Its marginal utility Consumer surplus Diminishing marginal utility
7 Economists use the term marginal utility to mean. Additional satisfaction gained divided by additional cost of the last unit. Additional satisfaction gained by the consumption of one more unit of a good Total satisfaction gained when consuming a given number of units. The process of comparing marginal units of all goods which could be purchased
8 Economists use the term utility to mean The value of a product before it has been advertised The satisfaction a consumer obtains from a good or service any characteristic of a good or service which cannot be measured The contribution a good or service makes to social welfare
9 If the "Regulated -market" price is below the equilibrium price. The quantity demanded will be greater than quantity supplied Demand will be les than supply Quantity demanded will be less than quantity supplied Quantity demanded will equal quantity supplied
10 What is the effect of imposing a fixed per unit tax on a good on its equilibrium price and quantity. Price falls, quantity rises Price rises, quantity falls Both price and quantity fall Both price and quantity rise
11 Equilibrium in the market for good A obtains. When there is no surplus or shortage prevailing in the market Where the demand and supply curves for A intersect When all of what is produced of A is consumed All of the above
12 Which of the following is necessary for a natural monopoly. Economies of scale A high proportion of the total cost is the cost of capital goods The market is very small All of the above
13 The concept of "Interdependence of markets" can refer to the interdependence between. Two or more factor markets Goods and factor markets Goods markets All of the above
14 Laboratory experiments cannot be performed in economics because. Of resource scarcity Economics is a natural science Of the difficulty of distinguishing between normative and positive statements. Economics is a social science
15 What lies is at the heart of the allocation of goods and services in a free market economy. Concerns of equity or equal distribution among individuals. The order or command of the ruling government or dictator The wishes of consumers in the market The price mechanism
16 Capital, as economists use the term. Is the money the firm spends to hire resources Is money the firm raises from selling stock Refers to the process by which resources are transformed into useful forms Refers to things that have already been produced that are in turn used to produce other goods and services.
17 Compared to the case of perfect competition, a monopolist is more likely to Charge a higher price Produce a lower quantity of the product Make a greater amount of economic profit All of the above
18 In order to maximize profits a monopoly company will produce that quantity at which the. Marginal revenue equals average total cost Price equals marginal revenue Marginal revenue equals marginal cost total revenue equals total cost
19 The length of a business cycle would be measured from Peak t trough Trough to peak Peak to Peak The slump to the expansion
20 When referring to economic growth we normally refer to. Growth in actual real per capita output Growth in potential real per capita output Growth in actual nominal per capita output Growth in potential real per capita output
21 In pure monopoly what is the relation between the price and teh marginal revenue. The price is greater than the marginal revenue The price is les than the marginal revenue There is no relation They are equal
22 Which of the following is a characteristic of pure monopoly. one seller of the product Low barriers to entry Close substitute products Perfect information
23 Why is the law of diminishing marginal returns true. specialization and division of labor Spreading the average fixed cost Limited capital All factors being variable in the long run
24 Exchange rates that are determined by the unregulated forces of supply and demand are. Floating exchange rates Pegged exchange rates Fixed exchange rate Managed exchange rates
25 All currencies other than the domestic currency of a given country are referred to as. Reserve currencies Neal monies Foreign exchange Hard currency
26 If inflationary expectations increase, the short run Phillip's curve will Become vertical Become up warding sloping Shift to the right Shift to the left
27 If input price adjusted very slowly to output prices, the Phillip's curve would be. Downward sloping Vertical or nearly vertical Upward sloping Horizontal or nearly horizontal
28 The index used most often to measure inflation is the Consumer price index Wholesale price index Student price index Producer price index
29 The accelerator theory of investment says that induced investments determined by. The rate of change of national income Expectations The level of national income The level of aggregate demand
30 If injection are less than with drawls at the full employment level of national income there is. an inflationary gap Equilibrium A deflationary gap Hyperinflation
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