Economics/Microeconomics MCQs

Q.1    Which of the following statements about factors of production is false?

1. The term ‘factors of production’ is another term for resources.
2. The factor of production termed labour means human resources.
3. The factor of production termed capital means the money which the owners of firms need in order to set their firms up.
4. The factor or production termed land means natural resources.

The correct answer is “C”.

Q.2      Which of the following statements about the use of resources is not one of the key questions in economics?

1. How are resources used?
2. For what are resources used?
3. Where are resources used?
4. For whom are resources used?

 The correct answer is “B”.

Q.3      Which of the following statements about producers is false?

1. All the goods and services consumed in any country are produced by its own producers.
2. Households produce many goods and services for themselves
3. People set up some producers who do not aim to make profits.
4. Governments arrange the production of some goods and services.

The correct answer is “a”.

Q.4      Which of the following statements is true?

1. The problem of scarcity would disappear if the world’s population grew to ensure more labour was available.
2. Despite the problem of scarcity, people do not always want producers to use the most efficient production methods
3. A producer who uses no more resources than it needs must display productive efficiency.
4. The world’s economies were as integrated 50 years ago as they are today

The correct answer is “b”.

Q.5      What is meant by intermediate goods and services?

1. The same as capital goods, such as plant, buildings, vehicles and machinery.
2. Products which one firm buys off another and then uses up in its own products.
3. All inputs bought by firms, including labour and raw materials.
4. Imports

The correct answer is “b”.

Q.6      What is meant by the term final goods and services?

1. The same as the term intermediate goods and services.
2. The same as the term consumer goods and services.
3. All goods and services except those traded secondhand.
4. Goods and services which are finished as far as the economy is concerned.

The correct answer is “d”.

Q.7      Which of the following statements is false?

1. Purchases of capital goods are called investment
2. GDP equals the total value of wages received by households.
3. In a simple economy with just households and firms, the value of investment equals the value of saving.
4. In a simple economy with just households and firms, the value of investment plus consumers’ expenditure equals GDP.

The correct answer is “b”.

Q.8      Which of the following statements is false?

1. GDP measures the value of all the goods and services produced in the economy.
2. GDP stands for gross domestic product.
3. GDP excludes intermediate goods and services.
4. GDP equals wages plus trading profits.

The correct answer is “a”.

Q.9      Which of the following statements is true?

1. Microeconomics is concerned chiefly with the economy as a whole.
2. Macroeconomics is concerned chiefly with individual markets.
3. Governments have no influence over market prices.
4. When economists study the price in a market, their chief aims are to understand why the price is what it is and why it may change.

The correct answer is “d”.

Q.10    Which of the following statements is false?

1. An economic model is a theory based on key variables and expressed in formal terms.
2. An economic model is tested by seeing how accurate its predictions are.
3. Testing economic models is rarely tricky.
4. The words ‘ceteris Paribus mean other things remaining the same.

The correct answer is “c”.

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