Economics Questions (MCQs) for Competitive Examinations
Economics Multiple Choice Questions (MCQs) for General Studies and GK preparation of SSC, NDA, CDS, UPSC, UPPSC and State PSC Examinations.
31. Which of the following is a fixed cost for a firm?
[A] Land
[B] Labour
[C] both a and b
[D] None
Show Answer
Correct Answer: A [Land]
Notes:
Fixed cost is the Expenditure on hiring/purchasing of fixed inputs which is land. Whereas labor is variable cost as the input is variable with time. The other costs available are Explicit and Implicit cost.
32. Which of the following is correct for economic efficiency?
[A] Increase in economic acitivty in an economy
[B] Use of resources to maximize the production of goods and services
[C] Distribution of economic resources in fair and equitable manner
[D] Maximum usage of resources for maximum production of goods
Show Answer
Correct Answer: B [Use of resources to maximize the production of goods and services]
Notes:
Economic Efficiency is the use of resources so as to maximize the production of goods and services. Resources are scarce and there are unlimited wants so economic efficiency is key in development.
33. What does Public sector in an economy means?
[A] That which is owned by community
[B] That which is owned by public
[C] That which is owned by government
[D] Both a and b
Show Answer
Correct Answer: C [That which is owned by government]
Notes:
The Public Sector in an economy is that which are owned and operated by the government and exist to provide services for its citizens. They are government-owned and government-controlled and doest exist to generate profits.
34. Which of the following correctly defines economic profit?
[A] Total revenue – Total explicit and implicit costs
[B] Total revenue – Total cost
[C] Total cost – Total revenue
[D] Total revenue – Total sold
Show Answer
Correct Answer: A [Total revenue – Total explicit and implicit costs]
Notes:
Economic profit is the surplus left after subtracting both explicit and implicit costs from total revenue. This is different from accounting profit, which usually subtracts only explicit costs. Hence, the correct definition is total revenue minus total explicit and implicit costs.
35. What is the extra cost imposed by the government which increase the price for a customer is known as?
[A] Subsidy
[B] Tax
[C] Inflation
[D] Fine
Show Answer
Correct Answer: B [Tax]
Notes:
Tax is the cost imposed by the government over goods and services in an economy to generate revenue for the government for its expenditure. This includes capital as well as revenue expenditure.
36. Which among the following is part of Macroeconomics?
[A] Investment of households
[B] Wages of a person
[C] How to produce good
[D] Aggregate economic activity
Show Answer
Correct Answer: D [Aggregate economic activity]
Notes:
Macroeconomics is a branch of economics that studies how an overall economy the market systems that operate on a large scale behaves. It deals with the performance, structure, behavior, and decision-making of an economy as a whole. Its features are Employment, national income, poverty etc.
37. Which of the following best defines national income?
[A] Value of final goods and services produced in a financial year
[B] Value of all goods and services produced in a financial year, including intermediate goods
[C] Value of reused goods sold in that financial year
[D] Service rendered by housewife
Show Answer
Correct Answer: A [Value of final goods and services produced in a financial year]
Notes:
National income refers to the value of final goods and services produced in a year. Intermediate goods are excluded to avoid double counting, and reused goods are not counted as current production. Unpaid household services, such as those performed by a housewife, are also generally not included in national income accounting.
38. Which of the following is included in Gross National Product (GNP)?
[A] Income earned by residents abroad
[B] Imports of goods and services
[C] Depreciation of capital goods
[D] Government budget deficit
Show Answer
Correct Answer: A [Income earned by residents abroad]
Notes:
GNP measures the value of final goods and services produced by a country’s residents, wherever they are located. It includes net income earned from abroad by residents. Imports are not part of GNP, and depreciation or fiscal deficit are not components of GNP calculation.
39. What causes the depreciation of a good?
[A] Reduction in market value of a good
[B] Physical wear and tear
[C] Fall in value of good
[D] None of the above
Show Answer
Correct Answer: B [Physical wear and tear]
Notes:
Depreciation of a good reduction in the value of an asset over time, due in particular to wear and tear. It is method of valuation.
40. What is subtracted from Gross Value Added to get Net Value Added?
[A] Depreciation
[B] Value added
[C] Production flow
[D] Investment
Show Answer
Correct Answer: A [Depreciation]
Notes:
Net Value Added is obtained by subtracting depreciation from Gross Value Added. Depreciation represents the wear and tear or consumption of fixed capital during the production process. It is a key measure in national income accounting.
