What exists when imports from a higher-cost supplier inside a customs union replace imports from a lower-cost supplier outside it?
Correct answer D. Trade diversion
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Economics MCQs
Page 3 of Economics multiple-choice questions with answers. Tap an option to check yourself.
Page 3 of 131
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
What does diminishing marginal returns imply for costs?
Correct answer B. Increasing marginal costs
When does trade creation take place?
Correct answer D. When economic integration shifts product origin to a lower-cost member country
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Two workers produce a total of 80 units and three workers produce 90 units. With three workers, what are the average product and the marginal product of the third worker?
Correct answer D. 30; 10
Under the EU’s Common Agricultural Policy, what does a variable import levy equal?
Correct answer D. The amount by which the EU's support price exceeds the world price
Handel’s Ice Cream enjoys economies of scale up to a certain size and diseconomies of scale beyond it. What shape is its long-run average cost curve likely to have?
Correct answer A. U-shaped
The European Union has achieved all of the following EXCEPT which one?
Correct answer D. Adopting a common fiscal policy for member nations
What is the graph called that shows all combinations of capital and labour that can produce a given level of output?
Correct answer A. An isoquant
Which form of economic integration is the European Union an example of, according to this classification?
Correct answer C. Common market
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What is the graph called that shows every combination of capital and labour that can be bought for a given total cost?
Correct answer C. Isocost line
What effect has the European Union had on American firms selling in the British market?
Correct answer B. It has made it harder for Americans to compete against the Germans in the British market
What is the formula for average variable cost (AVC)?
Correct answer C. TVC/q
A perfectly competitive firm maximises profit by producing 50 units. The market price is £2, total fixed cost is £25 and total variable cost is £40. What is the firm’s economic profit?
Correct answer C. £35
As of 2002, which currency became the official currency of the European Monetary Union?
Correct answer C. Euro
When will a firm shut down in the short run?
Correct answer A. If variable costs exceed revenues
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Setting up a common market involves all of the following EXCEPT which one?
Correct answer A. A common tax system and monetary union
When does trade diversion take place?
Correct answer D. When economic integration shifts product origin from a lower-cost non-member country to a higher-cost member country
What is market power?
Correct answer D. A firm's ability to raise price without losing all demand for its product
If a firm has some market power, what becomes true of its output price?
Correct answer C. It becomes a decision variable for the firm
Why do economists not regard the cosmetics industry as a good example of perfect competition?
Correct answer C. Firms spend a large amount of money on advertising