Economics MCQs

Sample Economics questions

A sample from the full interactive bank. Open the complete bank to attempt questions and review answers.

1. 1. What is the correct definition of Scarcity?

   1. Unemployment from mismatch of skills or locations
   2. Limited resources relative to unlimited wants
   3. Difference between willingness to pay and actual price
   4. Average tax rate rises as income rises

2. 2. What is the correct definition of Opportunity cost?

   1. Tax imposed on imported goods
   2. Market with a single dominant seller and high barriers to entry
   3. Unemployment caused by economic downturns
   4. Value of the next best alternative forgone

3. 3. What is the correct definition of Production possibility frontier?

   1. Increase in the stock of productive assets
   2. Share of the labour force without work but seeking and available for work
   3. Curve showing maximum feasible output combinations
   4. High inflation combined with weak growth and high unemployment

4. 4. What is the correct definition of Demand?

   1. Official reduction in a fixed exchange rate
   2. Output produced per unit of input
   3. Total output firms are willing to produce at different price levels
   4. Quantity consumers are willing and able to buy at different prices

5. 5. What is the correct definition of Supply?

   1. Limited resources relative to unlimited wants
   2. Quantity producers are willing and able to sell at different prices
   3. Skills, knowledge and health embodied in people
   4. Record of transactions between residents and the rest of the world

6. 6. What is the correct definition of Market equilibrium?

   1. Price and quantity where demand equals supply
   2. Stock of money available in an economy
   3. Broader improvement in welfare, institutions and productive capacity
   4. Ability to produce at lower opportunity cost

7. 7. What is the correct definition of Price elasticity of demand?

   1. Increase in the stock of productive assets
   2. Increase in an economy's real output over time
   3. Responsiveness of quantity demanded to a price change
   4. Significant decline in economic activity across the economy

8. 8. What is the correct definition of Income elasticity of demand?

   1. Price and quantity where demand equals supply
   2. Responsiveness of demand to income change
   3. Income earned by a country's residents including net income from abroad
   4. Composite index of health, education and income

9. 9. What is the correct definition of Cross-price elasticity?

   1. Balance covering goods, services, primary income and transfers
   2. Price of one currency in terms of another
   3. Responsiveness of demand for one good to another good's price
   4. Market dominated by a small number of firms

10. 10. What is the correct definition of Consumer surplus?

    1. Short-term unemployment during job search and transitions
    2. Ratio of total income change to an initial autonomous spending change
    3. Share of an additional unit of income spent on consumption
    4. Difference between willingness to pay and actual price

11. 11. What is the correct definition of Producer surplus?

    1. Share of the labour force without work but seeking and available for work
    2. Difference between market price and minimum acceptable price
    3. Ability to produce at lower opportunity cost
    4. Income earned by a country's residents including net income from abroad

12. 12. What is the correct definition of Externality?

    1. Record of transactions between residents and the rest of the world
    2. Cost or benefit imposed on a third party
    3. Ratio of total income change to an initial autonomous spending change
    4. Price of one currency in terms of another