Economics MCQ Questions and Answers for Practice

1. The fundamental economic problem faced by all societies is:

1. unemployment
2. poverty
3. inequality
4. scarcity

2. Capitalism refers to:

1. the use of markets
2. government ownership of capital goods
3. private ownership of capital goods
4. private ownership of homes & cars

3. There are three fundamental questions every society must answer. Which of the following is one of these questions?

1. What goods and services are to be produced?
2. How are the goods and services to be produced?
3. Who will get the goods and services that are produced?
4. All of the above

4. In the case of agriculture:

1. the demand has shifted to the right more than the supply has shifted to the right
2. the demand has shifted to the right less than the supply has shifted to the right
3. the demand has shifted to the left more than the supply has shifted to the left
4. the demand has shifted to the left less than the supply has shifted to the left

5. The agricultural price support program is an example of

1. a price ceiling
2. a price floor
3. equilibrium pricing

6. If there is a price floor, there will be

1. shortages
2. surpluses
3. equilibrium

7. If there is a price ceiling, there will be

1. shortages
2. surpluses
3. equilibrium

8. If there is a price ceiling, which of the following is NOT likely to occur?

1. rationing by first-come, first-served
2. black markets
3. gray markets
4. sellers providing goods for free that were formerly not free

9. The goal of a pure market economy is to best meet the desires of

1. consumers
2. companies
3. workers
4. the government

10. Which of the following is a characteristic of pure monopoly?

1. one seller of the product
2. low barriers to entry
3. close substitute products
4. perfect information

11. In pure monopoly, what is the relation between the price and the marginal revenue?

1. the price is greater than the marginal revenue
2. the price is less than the marginal revenue
3. there is no relation
4. they are equal

12. In order to maximize profits, a monopoly company will produce that quantity at which the:

1. marginal revenue equals average total cost
2. price equals marginal revenue
3. marginal revenue equals marginal cost
4. total revenue equals total cost

13. Compared to the case of perfect competition, a monopolist is more likely to:

1. charge a higher price
2. produce a lower quantity of the product
3. make a greater amount of economic profit
4. all of the above

14. Which of the following best defines price discrimination?

1. charging different prices on the basis of race
2. charging different prices for goods with different costs of production
3. charging different prices based on cost-of-service differences
4. selling a certain product of given quality and cost per unit at different prices to different buyers

15. In order to practice price discrimination, which of the following is needed?

1. some degree of monopoly power
2. an ability to separate the market
3. an ability to prevent reselling
4. all of the above