PPSC Economics Topic 2 MCQS Test Preparation

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MCQ's Test For PPSC Economics Topic 2 Micro Economics

Try The MCQ's Test For PPSC Economics Topic 2 Micro Economics

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PPSC Economics Topic 2 Micro Economics

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Question # 1

If the government lower taxes by $10 billion, the Real GDP will rise by

Question # 2

The largest source of tax revenue for the federal government is

Question # 3

A demand curve shows that relation between price and demand.

Question # 4

In perfect competition price is settled by

Question # 5

The statement that marginal cost = marginal revenue leads to profit maximization of loss minimization is true.

Question # 6

The arc income elasticity of demand is approximately

Question # 7

If the price of product X falls and this change increases the demand for product Y then.

Question # 8

If the demand curve for a good is downward sloping then the good must be.

Question # 9

The Marginal cost of product W exhibiting positive externalities is McW = 25 + 5 Qs, the competitive price for each unit of W (Pw) is Rs. 175 and the positive externality is worth Rs. 100 to society for each unit produced. Society considers product W under produced by how many units.

Question # 10

A long-run total cost curve can be constructed from

Question # 11

Company A estimates the price elasticity of demand for its products.3.0 The price of the product is Rs. 15. If MC = 2+40, the profit maximizing level of output.

Question # 12

The marginal rate of substitution for two goods can be obtained from

Question # 13

If a firm triples all inputs and output triples as well the firm is subject to

Question # 14

change in quantity demanded

Question # 15

A monopolist will maximize profit.

Question # 16

"Principles of economics" is the book of

Question # 17

A linear homogenous production function would reveal.

Question # 18

A monopolist will discontinue production if

Question # 19

In case of complimentary goods, if the price of one commodity falls there will be.

Question # 20

when there is huge change in demand following method is used to measure elasticity of demand.

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PPSC Economics Chapter 2 Important MCQ's

Sr.# Question Answer
1 As long as the principle of diminishing marginal utility is operating any increased consumption of a good.
A. Lowers total utility
B. Produces negative total utility
C. Lowers marginal utility and therefore total utility
D. Lowers marginal utility, but may raise total utility.
2 The marginal rate of substitution of two goods can be obtain from
A. Slope of budget line
B. Slope of demand curve
C. Slope of indifference curve
D. None of these
3 If average variable cos tis less then marginal cost then certainly.
A. Per unit total cost is rising
B. Per unit total cost is constant
C. Per unit total cost is falling
D. Per unit variable cost is rising
4 The ABC corporation.
A. Is earning a pure economic profit
B. Should produce zero units of output
C. Is sustaining an economic loss
D. Is breaking even
5 If a simultaneous and equal percentage decrease in the use of all physical inputs leads to a larger percentage decrease in physical output a firm's production function is said to exhibit.
A. Decreasing returns to scale
B.
Constant returns to scale
C. Increasing returns to scale
D. Diseconomies of scale
6 The marginal rate of substitution for two goods can be obtained from
A. The slope of the demand curve
B. The slope of the indifference curve
C. The ration of first derivative of the total utility functions
D. B and D both
7 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.
A. An increase an increase
B. An increase, a decrease
C. A decrease, an increase
D. A decrease, a decrease
8 The firm under monopolistic competition is likely to produce less and set a higher price than under perfect competition because.
A. The firm faces decreasing returns to scale
B. The firm faces increasing costs
C. The firm must incur selling expenses including advertising.
D. The firm faces a downward sloping demand curve
9 The price of Ketchup at a market increases by 12.5% per can, which results in a decrease in quantity purchased by 40% per week, the demand is.
A. Relatively elastic
B. Relatively inelastic
C. Perfectly elastic
D. Perfectly iinelastic
10 Along the long run supply curve all of the following can vary except.
A. The level of profits
B. The number of firms in the industry
C. Input prices
D. The level of input usage

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