Practice MCQ Exam with Questions and Smart Answers – 100% Solved
A family inherited £15000 from a long lost aunt. they are weighing up whether to buy a new car
or go on a trip to australia for a month. they decide to go to australia. the opportunity cost of
this decision is : A) the cost of going to australia B) the cost of buying a new car C) the benefits
of going to australia D) the benefits of having a new car - ✔✔✔-D) the benefits of having a new
car. explanation: the opportunity cost of the holiday is the alternative the family sacrificed. they
forego the benefits of a new car in order to go to australia
A firm produces 10 units of output per week and, at this level of output, its costs are as follows:
(Marginal cost, Average variable cost, Average total cost)
£50 £35 £40
The firm's total fixed costs are
A £5.
B £10.
C £15.
D £50. - ✔✔✔-D
A rational consumer will always attempt to
A minimise their marginal utility.
B consume all of their income.
C maximise their total utility.
D save so they are prepared for unexpected events. - ✔✔✔-C
All other things being equal, a rise in which one of the following would shift an economy's short-
run aggregate supply curve to the left?
A Wage rates
,Practice MCQ Exam with Questions and Smart Answers – 100% Solved
B Imports of consumer goods
C The money supply
D Labour productivity - ✔✔✔-A
an economic good is: A) one which has an opportunity cost B) also defined as a factor of
production C) one which increases economic efficiency D) the opposite of a public good - ✔✔✔-
A) one which has an opportunity cost. Explanation: an economic good use of scarce resources
and, therefore, involves an opportunity cost. The opposite of an economic good is a "free good''
which can be seen as a free gift of nature and does not involve the use of scarce resources
an increase in which of the following will directly lead to an increase in aggregate demand? A)
imports be) savings C) taxes D) exports - ✔✔✔-D)
An injection into an economy, with a marginal propensity to consume of 0.8, leads to a total
increase in national income of £350 million.
What was the value of the initial injection?
A £35 million
B £70 million
C £120 million
D £280 million - ✔✔✔-B
Assuming a perfectly competitive labour market, a firm's demand curve for labour would be
derived from its marginal
A cost curve.
B revenue product curve.
C utility curve.
, Practice MCQ Exam with Questions and Smart Answers – 100% Solved
D revenue curve. - ✔✔✔-B
At the initial market equilibrium, the income elasticity of demand for fresh chickens is +1.5, and
the price elasticity of supply is +1.0. Then there is a 5% increase in consumers' income. Which
one of the following combinations, A, B, C or D, is most likely to show the changes in the market
equilibrium price and quantity?
(Price, Quantity )
A) Higher Unchanged
B) Higher Higher
C) Unchanged Unchanged
D) Lower Higher - ✔✔✔-B)
at the start of the financial year, an economy's national debt stands at £1000 billion. over the
course of the year, the government plans to spend an extra £100 billion and borrow an extra
£40 billion
if the government achieves its spending and borrowing targets, by the end of the financial year
the national the debt will have increased by:
A) 4% B) 10% C) 14% D) 40% - ✔✔✔-A) 4%
Each of the following is a characteristic of a positive output gap except: A) Falling income tax
receipts B) A rise in company profits C) Fewer people claiming JSA D) A rising rate of inflation -
✔✔✔-A
economic decision-makers are primarily concerned with: A) increasing output B) maximising
their welfare C) reducing prices D) increasing international trade - ✔✔✔-B) maximising their
welfare. Explanation: economic theory assumes the entrepreneurs employees and consumers
are self interested and seek to maximise profits wages and satisfaction (utility) respectively.
A family inherited £15000 from a long lost aunt. they are weighing up whether to buy a new car
or go on a trip to australia for a month. they decide to go to australia. the opportunity cost of
this decision is : A) the cost of going to australia B) the cost of buying a new car C) the benefits
of going to australia D) the benefits of having a new car - ✔✔✔-D) the benefits of having a new
car. explanation: the opportunity cost of the holiday is the alternative the family sacrificed. they
forego the benefits of a new car in order to go to australia
A firm produces 10 units of output per week and, at this level of output, its costs are as follows:
(Marginal cost, Average variable cost, Average total cost)
£50 £35 £40
The firm's total fixed costs are
A £5.
B £10.
C £15.
D £50. - ✔✔✔-D
A rational consumer will always attempt to
A minimise their marginal utility.
B consume all of their income.
C maximise their total utility.
D save so they are prepared for unexpected events. - ✔✔✔-C
All other things being equal, a rise in which one of the following would shift an economy's short-
run aggregate supply curve to the left?
A Wage rates
,Practice MCQ Exam with Questions and Smart Answers – 100% Solved
B Imports of consumer goods
C The money supply
D Labour productivity - ✔✔✔-A
an economic good is: A) one which has an opportunity cost B) also defined as a factor of
production C) one which increases economic efficiency D) the opposite of a public good - ✔✔✔-
A) one which has an opportunity cost. Explanation: an economic good use of scarce resources
and, therefore, involves an opportunity cost. The opposite of an economic good is a "free good''
which can be seen as a free gift of nature and does not involve the use of scarce resources
an increase in which of the following will directly lead to an increase in aggregate demand? A)
imports be) savings C) taxes D) exports - ✔✔✔-D)
An injection into an economy, with a marginal propensity to consume of 0.8, leads to a total
increase in national income of £350 million.
What was the value of the initial injection?
A £35 million
B £70 million
C £120 million
D £280 million - ✔✔✔-B
Assuming a perfectly competitive labour market, a firm's demand curve for labour would be
derived from its marginal
A cost curve.
B revenue product curve.
C utility curve.
, Practice MCQ Exam with Questions and Smart Answers – 100% Solved
D revenue curve. - ✔✔✔-B
At the initial market equilibrium, the income elasticity of demand for fresh chickens is +1.5, and
the price elasticity of supply is +1.0. Then there is a 5% increase in consumers' income. Which
one of the following combinations, A, B, C or D, is most likely to show the changes in the market
equilibrium price and quantity?
(Price, Quantity )
A) Higher Unchanged
B) Higher Higher
C) Unchanged Unchanged
D) Lower Higher - ✔✔✔-B)
at the start of the financial year, an economy's national debt stands at £1000 billion. over the
course of the year, the government plans to spend an extra £100 billion and borrow an extra
£40 billion
if the government achieves its spending and borrowing targets, by the end of the financial year
the national the debt will have increased by:
A) 4% B) 10% C) 14% D) 40% - ✔✔✔-A) 4%
Each of the following is a characteristic of a positive output gap except: A) Falling income tax
receipts B) A rise in company profits C) Fewer people claiming JSA D) A rising rate of inflation -
✔✔✔-A
economic decision-makers are primarily concerned with: A) increasing output B) maximising
their welfare C) reducing prices D) increasing international trade - ✔✔✔-B) maximising their
welfare. Explanation: economic theory assumes the entrepreneurs employees and consumers
are self interested and seek to maximise profits wages and satisfaction (utility) respectively.
