Micro MSQ @

Multiple choice questions
T. M Jacob Memorial Govt. College Manimalakunnu,

Koothattukulam, Kerala
Multiple Choice Questions – Microeconomics
Collected and Prepared by

Smt. Anjaly Prakash, Assistant Professor
1. A linear homogeneous production function shows:

a. Increasing returns to scale b. Constant returns to scale
c. Diminishing returns to scale d. None of these
2. Average fixed cost curve will take the shape of:

a. Rectangular hyperbola b. Straight line
b. U-shaped d. Upward rising
3. If goods are not perfect substitutes, price elasticity of demand is:

a. Higher b. Lower
c. Greater than one d. Zero
4. Consumers’ tastes must show diminishing marginal utility in:

a. Ordinal utility theory b. Revealed preference theory
b. Hicks-Allen theory d. Cardinal utility theory
5. For inferior goods, over a range of income, less is demanded at a:

a. Higher income b. Lower income
b. Same level of income d. None of these
6. Isoquants are labeled in terms of :

a. Satisfaction b. Utilities
b. Amount of output produced d. Utils
7. The magnitude of income effect should be large enough to overcome the substitution
effect.
a. Normal goods b. Luxuries
b. Giffen goods d. Necessaries
8. Which of the following is the same thing as the price per unit?
a. MR b. AR
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Department of Economics
b. AC d. MC
9. Normal profit is shown by

a. AR=MR b. AR=MC
b. MR=MC d. AR=AC
10. In the long run entry of firms is not possible under:

a. Perfect competition b. Monopoly
b. Monopolistic competition d. Oligopoly
11. Substitution effect is always :

a. Positive b. Negative
b. Zero d. Infinity
12. The situation of prisoner’s dilemma in game theory represents:

a. Co-operative equilibrium b. Cartel
c. Non co-operative equilibrium d. Sequential game
13. The slope of budget line represents:

a. Price ratio b. Product ratio
b. Both d. None of these
14. For normal goods income consumption curve become:

a. Downward moving b. Upward moving
c. Remain constant d. None of these
15. The supply curve of labour is:

a. Upward bending b. Vertical
b. Horizontal d. None of these
16. Under increasing returns to scale, the distance between consecutive isoquants:
a. Increases b. Decreases
b. Remain constant d. All of these
17. In long run, firm under competitive market earns:

a. Abnormal profit b. Normal profit
c. Excess profit d. Loss
18. Product heterogeneity is the characteristic feature of:

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b. Monopolistic competition d. All of these
19. Marginal cost is equal to:

a. Slope of total cost b. Slope of average cost
b. Slope of average variable cost d. None of these
20. In perfectly competitive market, the MR is equal to zero when:

a. Elasticity is unity b. Elasticity is zero
b. Elasticity is infinity d. All of these
21. Selling cost is important under:

a. Pure competition b. Monopoly
b. Monopsony d. Monopolistic competition
22. Cardinal approach to utility is:

a. Comparable b. Measurable
b. Not measurable d. None of these
23. Economics as a subject deals with:

a. Nature & animals b. Rational man
b. Human beings & their activities d. None of these
24. Nominal cost is the:

a. Real cost b. Wealth
b. Opportunity cost d. Money cost
25. Growth definition of economics was given by:

a. Marshall b. Samuelson
b. Robbins d. None of these
26. At the point of equilibrium, the slope of the indifference curve and the budget line should
be:
a. Same b. Different
b. Inverse d. None of these
27. Consumer surplus is associated with:

a. Adam smith b. Ricardo
b. Marshall d. Pigou
28. In Cobb Douglas production function returns to scale are:
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a. Constant b. Increasing
b. Decreasing d. First increases & then decreases
29. Cardinal utility theory assumes that marginal utility of money is:
a. Increasing b. Diminishing
b. Constant d. Zero
30. If goods are not inferior , more will be demanded at:

a. Higher price b. Higher income
b. Lower income d. Changing price
31. Lines connecting the ridge points of all isoquants are called:
a. Production space b. Substitution region
b. Ridge lines d. Price lines
32. Isoquants lying to the right represent:

a. Smaller output b. Larger output
b. Some output d. Diminishing returns
33. A firm is in equilibrium when:

a. AR=MR b. MR=AR
b. AC=MC d. MR=MC
34. Average revenue curve under monopoly is :

a. Upward sloping b. Downward sloping
b. Horizontal straight line d. A vertical line
35. Which of the following has a U shaped?

a. Fixed cost curve b. Variable cost curve
b. Average cost curve d. Total cost curve
36. Price discrimination is possible only under:

b. Monopolistic competition d. Oligopoly
37. Name the author of “Value and Capital”

a. J.R Hicks b. Paul Samuelson
b. William Baumol d. Alfred Marshall
38. Production function relates:
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a. Cost to input b. Wages to profits

b. Cost to output d. Inputs to output
39. Name the author of “ Principles of Economics”

a. Adam smith b. Paul Samuelson
b. J R Hicks d. Alfred Marshall
40. MU curve will be below X axis when:

a. MU is positive b. MU is negative
b. Mu is zero d. MU is constant
41. Risk bearing theory of profit is developed by:

a. Prof. Hawtrey b. Prof. Knight
b. Schumpeter d. Marx
42. Cardinal utility approach uses the following concept to explain consumer equilibrium:
a. Indifference curve b. Equimarginal utility
b. Product maximization d. None of the above
43. To measure the elasticity between two points on a demand curve the following method is
used:
a. Point method b. Arc method
b. Proportional method d. Total outlay method
44. The demand for essential good is:

a. Elastic b. Relatively elastic
b. Inelastic d. Relatively inelastic
45. For perfect substitutes , indifference curve will be:

a. Straight line b. Concave to the origin
b. Convex to origin d. L-shaped
46. A concave isoquant implies

a. Diminishing returns b. Increasing returns
b. Constant returns d. Negative returns
47. Firms and industry are identical under:

a. Perfect competition b. Oligopoly
b. Monopoly d. Monopolistic competition
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48. In Ricardian theory of rent, the marginal land is called

a. No rent land b. Surplus land
b. ‘C grade land’ d. Fertile land
49. The saucer shaped long run average cost is related to:
a. Full capacity utilization b. Reserve capacity
b. Excess capacity d. Minimum capacity
50. The concept of Identical Product is related to :

a. Monopoly b. Oligopoly
b. Perfect Competition d. Duopoly
51. An income demand curve for an inferior good always slopes :

a. Backwards b. Downwards to the right
b. Upwards to the right d. Horizontally
52. Mu curve will be below X axis when :

a. Mu is positive b. Mu is zero
b. Mu is negative d. Mu is constant
53. A negative income elasticity of demand for a commodity indicates that as income falls,
the amount of the commodity purchased:
a. Rises b. Decrease
b. Remains constant d. None of these
54. When the MP land is negative, we are in :

a. Stage I for land b. Stage II for land
b. Stage III of labour d. None of these
55. Which of the following closely approximates the perfectly competitive model?
a. Automobile b. Newspaper
b. Cigarette d. Wheat farming
56. When the perfectly competitive firm and industry are both in the long run equilibrium?
a. P=MR=SMC=LMC b. P=MR=SAC=LAC
b. P=MR=Lowest point on the LAC curve d. All the above
57. Which of the following cost curve is not ‘U’ shaped:

a. LRACC b. SRACC
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b. LRMCC d. AFCC
58. Micro economic analysis consists of :

a. The theory of factor pricing b. The theory of product pricing
b. The theory of economic welfare d. All the above
59. An isoquant slopes :

a. Downward to the left b. Downward to the right
b. Upward to the left d. Upward to the right
60. Which of the following cost curve is never’ U’ shaped :

a. AVC b. ATC
b. AFC d. MC
61. The degree of control over the price by a firm is very large in :
b. Oligopoly d. Monopolistic competition
62. When total utility increases marginal utility is:

a. Negative and increasing b. Negative and declining
b. Zero d. Positive and declining
63. The AFC curve is a :

a. Circular hyperbola b. Triangular hyperbola
b. Rectangular hyperbola d. None of these
64. Traditional long run average cost curve is like :

a. L-shape b. U-shape
b. Y-shape d. None of these
65. Price discrimination is essential feature of :

a. Perfect competition b. Oligopoly
b. Duopoly d. Monopoly
66. In Duopoly, sellers are :

a. Dependent b. Independent
b. Co-operative d. None of these
67. Under Monopoly the slope of the average revenue curve is :

a. Upward sloping b. Downward sloping
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b. Horizontal d. None of these
68. The scarcity definition of Economics was given by :

a. Samuelson b. Lionel Robbins
b. Alfred Marshall d. Arthur Lewis
69. The demand for a commodity is always expressed in terms of its :

a. Supply b. Price
b. Utility d. Elasticity
70. Indifference curve analysis is based on :

a. Elasticity of demand b. Ordinal utility
b. Cardinal utility d. All the above
71. The distinction between micro and macro economics was given by :
a. Arthur Lewis b. Alfred Marshall
b. J.S.Mill d. Ragnar Frisch
72. Short run production function is explained by :

a. Law of substitution b. Law of returns to scale
b. Law of Variable Proportion d. Indifference curve analysis
73. The difference between short run and long run analysis is based on :
a. Fixed and Variable factors b. Diminishing returns
b. Marginal utility d. None of the above
74. At the minimum point of the average cost curve, the marginal cost curve :
a. Is tangent b. Greater than the average cost curve
b. Cuts it from below d. Less than the average cost curve
75. The advantages that a large firm enjoys when it expands its output is called :
a. Production possibility curve b. Law of variable proportions
b. Economies of scale d. Economic growth
76. Optimum firm is a feature of :

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77. A group of firms that have explicitly and openly agreed to work together as monopolist is
called
a. Cartel b. Duopoly
b. Oligopoly d. None of the above
78. Nobel prize in economics was introduced in the year :

a. 1959 b. 1969
b. 1979 d. 1989
79. The cross elasticity of demand for white tennis balls with respect to the price of yellow
tennis balls is probably :
a. Negative and high b. Negative and low
b. Positive and high d. Positive and low
80. Marginal utility equals :

a. Total utility divided by price
b. Total utility divided by the total number of units consumed
c. The slope of total utility curve
d. The inverse of total utility
81. The basic economic postulates concerns human decisions about the allocation of :
a. Leisure and work b. Ford and clothing
b. Studying and dating time d. All of the above
82. A firm remains in business, over the short run, as long as which one of the following
types of costs is covered :
a. Total costs b. Fixed costs
b. Variable costs d. Constant costs
83. The distinction between variable casts and fixed costs are relevant only in :
a. Long period b. short period
b. Medium period d. None of these
84. For consumer equilibrium budget line should be :

a. Above the IC b. Tangent to IC
b. Below the IC d. None of these
85. Total cost is equal to :

a. TFC +SAVC b. TC+TVC
b. TC+AFC d. None of these
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86. In perfect competition the firm is :

a. Price taker b. Price market
b. Price leader d. None of these
87. Product differentiation is a feature of :

a. Monopoly b. Monopolistic competition
b. Perfect competition d. Oligopoly
88. In Cobb Douglas production function returns to scale are :

a. Increasing b. Decreasing
b. Constant d. None of these
89. Micro economic deals with :

a. Market b. Prices
b. Value d. All the above
90. Shut down point is :

a. TR=TC b. P=AVC
b. TC>TR d. P=AR
91. Price in perfect competition is :

a. Higher than in monopoly b. lower than in monopoly
b. Equal to monopoly d. none of these
92. In the long run firm under perfect competition earns :

a. Abnormal profits b. Normal profits
b. Excess profits d. Loss
93. Market in which firm has zero market power is :

a. Monopoly b. Perfect competition
94. The monopolist may charge different prices for different customers in :
a. Simple monopoly b. Pure monopoly
b. Discriminating monopoly d. Public monopoly
95. The first economist who coined the terms Micro-Economics and Macro-Economics is :
a. Marshall b. Keynes
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b. Ragnar Frisch d. Friedman
96. Demand curve has :

a. Downward slope b. Upward slope
b. Perpendicular d. Horizontal
97. The economist who popularized indifference curve approach is :

a. Simon Kuznets b. Paul Samuelson
b. J.R.Hicks d. Sweezy
98. In case of Giffen good, price effect is :

a. Negative b. positive
b. Zero d. None of these
99. Doctrine of conspicuous consumption was put forward by :

a. Hicks b. Allen
b. Veblen d. Marx
100. The successive increment in total utility :

a. Average utility b. marginal utility
b. Average unit d. marginal unit
101. The uncertainty theory of profit is given by :

a. Marshall b. knight
b. Schumpeter d. Keynes
102. Stationary state was explained by:

a. Smith b. Keynes
b. Marx d. Ricardo
103. CES production function was developed by:

a. Solow b. Minhas
b. Arrow d. All the above
104. According to traditional theory when marginal cost rises average cost:
a. Is minimum b. Falls
b. Always rises d. None of these
105. Hall & Hitch advocated the principle of:

a. Limit pricing b. Marginal cost pricing
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b. Full cost pricing d. All the above
106. Under Cobb-Douglass production function, elasticity of substitution is assumed to

be:
a. Zero b. One
b. Positive d. Infinity
107. Under increasing cost conditions, production possibility curve will be:
a. Passing through origin b. A straight line
b. Convex to origin d. Concave to origin
108. In Cobb- Douglas theorem, it is assumed that the supply is a function of:
a. Its own price
b. Its own price in previous period
c. Prices of close substitutes
d. Its own price and the prices of close substitutes.
109. Indifference curve can never intersect each other since:

a. Each represents a particular level of utility
b. Indifference curves are convex to origin
c. Indifference curves should be parallel to each other
d. Indifference will not touch either axes.
110. In revealed preference theory , under strong axiom approach, two points:
a. Can represent equal level of satisfaction
b. Cannot represent equal level of satisfaction
c. At times can represent equal level of satisfaction
d. Can represent equal level of satisfaction in rare cases.
111. The short run total cost function of a firm is given as TC=100+6q+0.25q2. The
fixed cost in this case is:
a. Zero b. Rs 100
b. Rs 106.25 d. None of these
112. If the rate of interest is 10%, the present value of an asset which will yield Rs
1,100 one year hence from now would be:
a. Rs 1000 b. Rs 1200
b. Rs 900 d. None of these
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113. The demand function of a commodity is D=10-2p. If the commodity becomes a

free good the quantity demanded could be:
a. 8 units b. 10 units
b. Indeterminate d. 5 units
114. The traditional theory of the firm assumes:

a. Separation of ownership & management
b. A single owner entrepreneur
c. Multi product firm
d. Sales maximization
115. Limit pricing theory was originally developed by:

a. Hall & Hitch b. Baumol
b. Bain d. Stigler
116. If the demand equation is q=12-4p and the supply equation is q=6+p then the
equilibrium price would be:
a. Re 1 b. Rs 2
b. Rs 3 d. Rs 4
117. In the case of unit elasticity the demand curve assumes the shape of:
a. Straight line with a negative slope
b. Parallel to X axis
c. Rectangular hyperbola
d. None of these
118. Linearly homogeneous production function is a case of:

a. Constant returns to scale b. Increasing returns to scale
b. Decreasing returns to scale d. None of these
119. Price rigidity is a characteristics of:

a. Monopoly b. Perfect competition
b. Bilateral monopoly d. Oligopoly
120. A market in which there is a single seller :

a. Monopoly b. Oligopoly
b. Perfect competition d. Monopsony
121. Indifference curve was developed by:

a. Marshall b. Hicks
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b. Hayek d. Knight
122. To measure elasticity between two points on a demand curve:

a. Point method b. Arc method
b. Proportional method d. Total outlay method
123. Indifference curve analysis is based on

a. Strong ordering b. Weak ordering
124. In atypical C-D production function factor substitution equals to:

a. Greater than one b. Equals to one
b. Equals to unity d. Ranges between zero & one
125. A monopoly firm can determine:

a. Elasticity of demand b. Price & output
b. Price or Output d. Market demand
126. According to whom price does not measure the value of commodities:
a. Marx b. Marshall
b. Hicks d. Pigou
127. Quasi rent is a short run phenomenon. Who said it?

a. Ricardo b. Malthus
b. Joan d. Marshall
128. Full cost pricing is associated with:

a. Cyert & March b. Hall & Hitch
b. Arrow d. Walras
129. The demand curve facing a firm is in a perfectly competitive market is:
a. Horizontal straight line b. Vertical
b. Downward sloping d. Upward sloping
130. A method of production is:

a. A process of production b. An activity of production
b. A combination of factors c. All the above
c. None of the above
131. Isocost line or isoclines represents:

a. Price ratio of factors b. Price ratio of products
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b. Optimum factor combination d. Optimum product combination
132. PPC has its application in :

a. Theory of production b. International trade
b. Economics of growth d. All the above
133. Implicit cost refers to:

a. The paid-out costs b. The imputed costs
b. The accounting costs d. None of the above
134. The elasticity of AFC is

a. Equal to one b. greater than one
b. Less than one but more than zero d. Infinity
135. The difference between ATC & AFC shows:

a. Normal profits b. Implicits costs
b. Variable costs d. Opportunity costs
136. The planning curve of a firm in the long run is:

a. The engineering cost curve b. The isocost line
b. The envelope curve d. Only the rising part of LAC
137. Who questioned the U shaped of cost curve of the traditional theory:
a. G Stigler b. Andrews
b. Hall & Hitch d. Barback
138. Supply in general is related to price:

a. Negatively b. Positively
b. Indirectly d. All the above
139. The law of diminishing returns was modified and rechristened as ;

a. Law of variable proportions b. Law of returns to scale
b. Law of demand d. Law of supply
140. The ridge lines connect the points where :

a. The average products of capital and labour are zero.
b. The marginal products of capital and labour are zero.
c. The slopes of isoquants are equal to slopes of budjet lines
d. None of the above
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141. Law of diminishing returns was propounded by

a. Adam Smith b. Marshall
b. Richadro d. J S Mill
142. What is the difference between returns to a factor and returns to scale:
a. Size of inputs
b. Size of outputs
c. Variability of inputs in the production function
d. All of the above
143. The prime object of production activity is

a. To satisfy consumer wants
b. To create a private business kingdom
c. To earn profit
d. To capture the market
144. The extra output resulting from the use of one more unit of a factor, ceteris
Paribus, is known as
a. Marginal product b. Average product
b. Marginal return d. Average return
145. Returns to scale and laws of returns are

a. Long run and short run analysis of production respectively
b. Short run and long run analysis of production respectively
c. Market period and short period analysis of production respectively
d. Long run and very long period analysis of production respectively
146. A curve which shows the optimal inputs combination at different levels of income
of a company is the
a. Optimum production frontier b. Producer optimum path
b. Manufacturing curve d. Price factor curve
147. The law of increasing returns is applicable, according to classicals, is

a. All fields of production b. Agriculture
b. Manufacturing d. Services
148. According to Marshall, Law of Diminishing Returns is applicable to

a. Manufacturing b. Agriculture
b. All fields of production d. None of the above
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149. The cost that any firm incurs in purchasing or hiring any factor of production is
referred to as
a. Explicit cost b. Implicit cost
b. Variable cost d. Fixed cost
150. MC curve cuts AC curve at

a. The declining range of AC b. The increasing range of AC
b. The minimum point of AC d. The point where MR equals AC
151. LAC is “Saucer-Shaped”- This means that

a. LAC is constant over a wide range
b. LAC is constant over a small range
c. LAC increase first, and declines continuously as output increases
d. Both a and b
152. Perfectly inelastic supply curve will be

a. Vertical b. Horizontal
b. Hyperbola d. Any of the above
153. Normal profit is

a. Minimum profit b. Alternative cost
b. Economic profit d. Any of the above
154. Internal economies of scale

a. Shift the LAC
b. Are built into the shape of LAC
c. Move the minimum point of LAC right
d. Any of the above
155. LAC curve shifts upwards because of

a. Changes in technology
b. Diseconomies of scale
c. Rise in the price of a particular factor
d. All the above
156. Which economies of scale arises from indivisibility of factors of production:

a. Technical b. External
b. Marketing d. Managerial
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157. The basic economic problems that every society must address include:
a. What, how and for whom b. Where, when and why
b. Which, why and what d. When, how and which
158. Economic models or theories do not involve:

a. Definitions b. Assumptions
b. Value judgments d. Hypothesis
159. The cost of one thing in terms of the alternative given up is known as:
a. Production cost b. Physical cost
b. Opportunity cost d. Real cost
160. Total utility is maximum when:

a. MU is zero b. MU is highest
b. MU is equal to average d. Average utility is maximum
161. Micro economic theory studies:

a. The price of goods b. The price of services
b. The price of resources d. All the above
162. An economic model:

a. Represents a real situation
b. Includes all the essential relationships
c. Is a simplified version of reality
d. None of the above
163. The fundamental problem of the economy is:

a. Production b. Exchange
b. Multiplicity of wants & choice d. Economic welfare
164. What is true for inductive method:

a. Abstract method b. Hypothetical method
b. Analysis of facts relevant to the inquiry d. All the above
165. If income elasticity of demand is greater than one, the commodity is a:

a. Necessity b. Luxury
b. Inferior d. A non related good
166. Which of the elasticities measure a movement along a curve:

a. Price elasticity b. Income elasticity
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b. Cross elasticity d. Point elasticity
167. Cross elasticity between substitutes is;

a. Positive b. Negative
b. Zero d. Either positive or negative
168. If percentage increase in quantity demanded is smaller than the percentage fall in
price, price elasticity (ep) is :
a. >1 b. <1
b. =1 d. Zero
169. When total product falls:
a. AP is zero b. MP is zero
b. AP is positive d. AP is declining
170. If the MRTSLK equals 4, then MPK/MPL is:

a. 4 b. 1
b. ¼ d. 2
171. At the point of producer’s equilibrium

a. Isoquant is tangent to isocost b. MRTSLK=PL/PK
b. MPL/MPK=PL/PK d. All of the above
172. Stage II of production begins where the APL

a. Declines b. Increases
b. Becomes zero d. Is negative
173. When α=3/4 and β=1/4 for the Cobb-Douglas production function returns to scale
are:
a. Constant b. Increasing
b. Decreasing d. All the above
174. The output elasticity of labour measures;

a. ∆Q/∆L b. %∆Q/%∆L
b. ∆L/∆Q d. %∆L/%∆Q
175. When successive isoquants lie at, smaller distance from each other it is a case of:
a. Constant returns to scale b. Increasing returns to scale
b. Decreasing returns to scale d. All the above
176. Production is defined as:
19
a. Creation of utility b. Creative of value

b. Creation of want satisfying goods & services d. All the above
177. Which of the following embodies a more widely accepted definition of

economics?
a. Science of wealth b. Science of material
value
b. Study of mankind in ordinary business of life d. Choice making
178. Which of the following definition of economics includes the concept of scale of
preferences?
a. Wealth definition b. Welfare definition
b. Scarcity definition d. Growth definition
179. Who of the following emphasized the normative aspect of economics as a

science?
a. Robbins b. English classical school
b. German historical school d. None of the above
180. The meaning of the word economic is closely associated with the word:
a. Fare b. Scarce
b. Unlimited d. Unrestricted
181. Induction is the process of reasoning from:

a. A part to the whole b. Particular to general
b. Individual to universal d. All the above
182. What is true for inductive method?

a. Static b. Hypothetical
b. Empirical d. Ignores experimentation
183. A theory is:

a. An assumption b. A hypothesis
b. A validated hypothesis d. An if-then proportion
184. In an economic model D=f(P), the independent variable is:

a. P b. D
b. P and D d. None of the above
185. Who was the first economist to coin the terms micro and macro economics?
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a. J. M Keynes b. Ragnar Nurkse

b. Ragnar Frisch d. M. Dobb
186. Micro economics uses:

a. Slicing method b. Lamping method
b. Monetary analysis d. Income analysis
187. Who is considered as the master of partial equilibrium analysis?

a. J.S Mill b. Alfred Marshall
b. A.C Pigou d. J. M Keynes
188. Utility is always realted to:

a. Usefulness b. Profit
b. Want satisfying power d. Maximum returns
189. MU is equal to Average utility when:

a. MU is maximum b. AU is maximum
b. AU is minimum d. MU is minimum
190. The slope of indifference curve shows:

a. Price ratio b. Factor substitution
b. Diminishing MRS d. Level of indifference
191. The statement A=B=100 utiles implies:

a. Ordinal measure of utility b. Cardinal measure of utility
b. An ordinal & a cardinal measure d. None of the above.
192. Consumer surplus is described as:

a. Extra quantity bought b. Low price available
b. Difference between imaginary and actual price
c. None of the above
193. Consumer surplus is higher in the case of:

a. Buyer’s surplus b. Differential surplus
b. Indifference surplus d. Extra personal gain
194. Consumer surplus is highest in the case of:

a. Necessaries b. Comforts
b. Luxuries d. Conventional necessaries
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195. Samuelson’s revealed preference theory of demand is based on the assumption:

a. Rationality b. Income elasticity is positive
b. Income elasticity is negative d. All the above
196. Who has developed the demand theory of logical ordering?

a. Marshall b. Samuelson
b. Hicks d. Allen
197. Cross elasticity of demand between two perfect substitutes will be :

a. Very high b. Zero
b. Very low d. Infinity
198. If income elasticity of demand is greater than 1, the commodity is:

a. A necessity b. An inferior good
b. A luxury d. A non related good
199. Consumer sovereignty is primarily found under:
a. Capitalism b. Mixed economy
b. Socialism d. All of the above
200. The expansion path of production theory is analogous in consumption theory to
the:
a. PCC b. ICC
b. Engel curve d. Budget- constraint line
201. The elasticity of technical substitution is measured by:
a. The slope of the isoquant b. Change in the slope of isoquant
b. The ratio of factor inputs d. None of the above
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Multiple choice questions

T. M Jacob Memorial Govt. College Manimalakunnu,

Collected and Prepared by

1. A linear homogeneous production function shows:

2. Average fixed cost curve will take the shape of:

3. If goods are not perfect substitutes, price elasticity of demand is:

4. Consumers’ tastes must show diminishing marginal utility in:

5. For inferior goods, over a range of income, less is demanded at a:

6. Isoquants are labeled in terms of :

9. Normal profit is shown by

10. In the long run entry of firms is not possible under:

11. Substitution effect is always :

12. The situation of prisoner’s dilemma in game theory represents:

13. The slope of budget line represents:

14. For normal goods income consumption curve become:

15. The supply curve of labour is:

17. In long run, firm under competitive market earns:

18. Product heterogeneity is the characteristic feature of:

b. Monopolistic competition d. All of these

19. Marginal cost is equal to:

20. In perfectly competitive market, the MR is equal to zero when:

21. Selling cost is important under:

22. Cardinal approach to utility is:

23. Economics as a subject deals with:

24. Nominal cost is the:

25. Growth definition of economics was given by:

27. Consumer surplus is associated with:

28. In Cobb Douglas production function returns to scale are:

30. If goods are not inferior , more will be demanded at:

32. Isoquants lying to the right represent:

33. A firm is in equilibrium when:

34. Average revenue curve under monopoly is :

35. Which of the following has a U shaped?

36. Price discrimination is possible only under:

37. Name the author of “Value and Capital”

38. Production function relates:

a. Cost to input b. Wages to profits

39. Name the author of “ Principles of Economics”

40. MU curve will be below X axis when:

41. Risk bearing theory of profit is developed by:

44. The demand for essential good is:

45. For perfect substitutes , indifference curve will be:

46. A concave isoquant implies

47. Firms and industry are identical under:

48. In Ricardian theory of rent, the marginal land is called

50. The concept of Identical Product is related to :

51. An income demand curve for an inferior good always slopes :

52. Mu curve will be below X axis when :

54. When the MP land is negative, we are in :

57. Which of the following cost curve is not ‘U’ shaped:

58. Micro economic analysis consists of :

59. An isoquant slopes :

60. Which of the following cost curve is never’ U’ shaped :

62. When total utility increases marginal utility is:

63. The AFC curve is a :

64. Traditional long run average cost curve is like :

65. Price discrimination is essential feature of :

66. In Duopoly, sellers are :

67. Under Monopoly the slope of the average revenue curve is :

b. Horizontal d. None of these

68. The scarcity definition of Economics was given by :

69. The demand for a commodity is always expressed in terms of its :