Economics MCQs with Answers – Micro and Macro – Page 92

Question 1821 Consumer Theory vs. Real Consumers

A consumer chooses between sandwiches and pizza, with pizza on the horizontal axis and sandwiches on the vertical axis. If a pizza costs Rs10 and a sandwich costs Rs5, what is the slope of the budget constraint?

Correct answer B. 2

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Question 1822 Costs , Supply And Perfect Competition

In monopolistic competition, if firms are earning abnormal profits, other firms will enter. What will happen as a result?

Correct answer C. The demand curve will shift inwards

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Question 1823 Consumer Theory vs. Real Consumers

Which statement does NOT describe a standard property of indifference curves?

Correct answer D. Indifference curves are bowed outward

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Question 1824 Costs , Supply And Perfect Competition

According to Porter’s five forces model, what happens when a firm takes over a competitor?

Correct answer A. Rivalry is lower

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Question 1825 Costs , Supply And Perfect Competition

Which of the following describes a market with monopolistic competition?

Correct answer D. There are many sellers

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Question 1826 Consumer Theory vs. Real Consumers

Which of the following holds at a consumer’s optimum consumption bundle?

Correct answer E. All of these answers are true

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Question 1827 Costs , Supply And Perfect Competition

A long-run average cost curve that falls from left to right is an example of what?

Correct answer D. Increasing returns to scale

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Question 1828 Consumer Theory vs. Real Consumers

If a consumer buys more of a good when his income rises, what kind of good is it?

Correct answer A. A normal good

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Question 1829 Costs , Supply And Perfect Competition

How does marginal cost compare with average cost when average cost is falling, and when it is rising?

Correct answer D. Less than average cost, greater than average cost

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Question 1830 Costs , Supply And Perfect Competition

Short-run average total cost is equal to the sum of which two components?

Correct answer C. Short-run average variable costs, short-run average fixed costs

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Question 1831 Costs , Supply And Perfect Competition

Under what condition will a firm produce zero output in the short run?

Correct answer B. Price is less than short-run average variable cost

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Question 1832 Consumer Theory vs. Real Consumers

What is the change in consumption called when a price change moves the consumer along a given indifference curve?

Correct answer B. Substitution effect

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Question 1833 Costs , Supply And Perfect Competition

For a competitive firm, which curves form its short-run supply curve and its long-run supply curve respectively?

Correct answer A. SMC above SAVC, LMC above LAC

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Question 1834 Consumer Theory vs. Real Consumers

If leisure is a normal good, what effect will a rise in the wage have?

Correct answer B. It will increase the amount of labour supplied if the substitution effect outweighs the income effect

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Question 1835 Consumer Theory vs. Real Consumers

A change in the relative prices of which pair of goods would probably produce the smallest substitution effect?

Correct answer C. Right shoes and left shoes

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Question 1836 Consumer Theory vs. Real Consumers

Which statement about the result of a consumer’s optimisation process is NOT true?

Correct answer A. The consumer is indifferent between any two points on his budget constraint

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Question 1837 Consumer Theory vs. Real Consumers

What is the slope at any point on an indifference curve called?

Correct answer C. The marginal rate of substitution

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Question 1838 Consumer Theory vs. Real Consumers

At what point does a consumer make the optimal purchase of any two goods?

Correct answer B. Where the consumer reaches the highest indifference curve while remaining on the budget constraint

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Question 1839 Consumer Theory vs. Real Consumers

With good X on the horizontal axis and good Y on the vertical axis, indifference curves are bowed inward. Moving from a bundle with plenty of X to one with plenty of Y, what happens to the marginal rate of substitution of Y for X (the slope of the indifference curve)?

Correct answer B. It rises

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Question 1840 Consumer Theory vs. Real Consumers

If a rise in a consumer’s income leads her to buy less of a good, what kind of good is it?

Correct answer C. An inferior good

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