Economics Practice MCQ Questions
1. Plastic and steel are substitutes in the production of body panels for certain automobiles.
If the price of plastic increases, with other things remaining the same, we would expect:
A. the price of steel to fall B. the demand curve for steel to shift to the right. C. The
demand curve for plastic to shift to the left D. Nothing to happen to steel because it is
only a substitute for plastic. E. the demand curve for steel to shift to the left.
2. One of the basic facts of life is that people must make choices as they try to attain their
goals. This unavoidable fact comes from a reality an economist calls A. rationality B.
scarcity C. economics D. the market
3. When an industry's raw material costs increase, other things remaining the same, A. the
supply curve shifts to the left. B. the supply curve shifts to the right. C. output increases
regardless of the market price and the supply curve shifts upward. D. output decreases
and the market price also decreases.
4. In January, buyers of gold expect that the price of gold will fall in February. What
happens in the gold market in January, holding everything else constant? A. The
demand curve shifts to the right. B. The quantity demanded increases. C. The quantity
demanded decreases. D. The demand curve shifts to the left.
5. Economics can best be defined as the study of: A. How society resolves the problem of
scarcity B. Why productive resources are scarce? C. How to interpret economic theories
D. The features of different types of economic system E. How the consumers maximize
their utility
6. The fundamental economic problems facing all societies arise because of: A. Availability
of unlimited resources. B. The insatiable wants of man C. Resources being scarce in
relation to human want D. Government’s passive role in the economy E. Large
bureaucratic structures of governments
7. What do economists mean by the concept of “scarcity”? A. When there is a shortage of a
particular goods and its price rises B. The society’s desire exceed the want satisfying
capability of the resources available C. There are fewer consumable goods now than in
the past D. When there is more money chasing fewer goods E. When there is no money
in the economy
8. When the price of a given commodity rises above the equilibrium price, the quantity
supplied of that commodity A. Exceeds the demand B. Equals demand C. Less than the
demand D. Increases continuously E. Cannot be determined
9. Which of the following has a negative income elasticity of demand A. inferior goods B.
normal goods C. luxury goods D. the budget constraint
10. The price of a good rises from $6 to $9 and the quantity demanded falls from 205 to 200
units. Over this price range, the price elasticity of this good is A. perfectly inelastic B.
fairly inelastic C. perfectly elastic D. fairly elastic
11. If the income elasticity of demand is greater than 1, the commodity is A. a necessity B. a
luxury C. an inferior good D. non-related good
12. The production possibilities curve CAN NOT be usefully employed to illustrate A.
Opportunity Cost B. Economic Scarcity C. Economic Growth D. Unemployment E. Scale
of preference
13. Most West African economies can be classified as A. Socialist economies B. Capitalist
economies C. Centrally Planned economies D. Mixed economies E. Free-market
economies
14. The following are determinants of quantity demanded of a commodity EXCEPT: A.
Income of the consumer B. Price of the commodity C. Prices of related commodities D.
Prices of factors of production E. Taste
15. Which of the following is not responsible for a shift in supply curve? A. changes in
technology B. increase in prices of related goods C. a reduction in input prices D. prices
of the good E. favourable weather condition
16. When a 15 percent increase in the price of a product leads to a 25 percent increase in
the quantity supplied of the product, then the price elasticity of supply coefficient is A. 0.6
B. 1.7 C. 1.5 D. 0.33 E. 0.25
17. An increase in the price of a commodity will result in A. a decrease in the quantity
demanded B. an increase in quantity demand C. an increase in quantity demanded D. a
decrease in quantity demand
18. If the price of a bicycle changes from #120 to #80 and quantity changes from 300 units
to 500 units, the elasticity of demand for bicycles is? A. 66.7 B. 0.5 C. 1.5 D. 2.0
19. If the supply of a product is elastic, a small reduction in price will A. reduce the cost of
production B. reduce the quantity supply C. increase in quantity supply D. lead to no
change in quantity supply
20. One of the criticisms of the price mechanism is that A. producers are sovereign B. it
provides low degree of freedom C. it widens the inequitable gap D. consumers are
sovereign
21. When the curve is vertically sloped, the price elasticity of demand is A. unitary elastic B.
perfectly elastic C. perfectly inelastic D. fairly inelastic
22. If the price of chicken falls, then in the market price of beef A. there would be a
movement downward along the demand curve for beef B. there would be a movement
upward along the demand curve for beef C. the demand curve for beef would shift
leftward D. the demand curve for beef would shift rightward
23. An increase in the expected future price of a good would A. has no effect on either its
demand or its supply B. increases its demand C. decreases its demand D. increases its
supply
24. A price ceiling set below the current equilibrium price A. leads to a surplus B. has no
impact C. changes the equilibrium D. leads to a shortage
25. If own-price elasticity of demand equals 0.3 in absolute value, then what percentage
change in price will result in a 6% decrease in quantity demanded? A. 3% B. 6% C. 20%
D. 50%
26. If a given consumer preferences- a certain good has many close substitutes, then: A.the
demand for that good will be relatively inelastic, compared to goods for which there are
few close substitutes. B. the supply of that good will be relatively inelastic, compared to
goods for which there are few close substitutes C. the demand for that good will be
relatively elastic, compared to goods for which there are few close substitutes D. the
supply of that good will be relatively elastic, compared to goods for which there are few
close substitutes.
27. Which of the following will result in a decrease in demand A. an increase income, if the
good is normal B. a decrease in the price of a complement to the good C. an increase in
the price of a substitute for the good D. none of the above
28. The following four questions refer to the diagram below, which illustrate a consumer’s
demand curve for a good.
If the price of this good is $30, what quantity will be demanded A. 5 units B. 10 units C.
15 units D. 20 units
29. If the price of this good is $20, what quantity will be demanded? A. 5 units B. 10 units C.
15 units D. 20 units
30. If the price of this good is $20, what will be consumer surplus equal? A. $100 B. $200 C.
$300 D. $400
31. If the price of this good falls from $30 to $20, but the consumer is prohibited from buying
more than 5 units of the good, by how much will consumer surplus increase? A. $100 B.
$75 C. $50 D. $25
32. Which of the following statements about demand curves is true? A. if price falls and
quantity demanded increases, this is represented by a movement along a given demand
curve B. if price falls and quantity demanded increases, this is represented by a shift of
the demand curve C. if price falls and quantity demanded increases, this can be
represented by either a movement along a given demand curve, or a shift of the demand
curve. D. none of the above are true
33. If cookies are a normal good and incomes increase, we would expect: A. an increase in
equilibrium price and a decrease in equilibrium quantity B. a decrease in equilibrium
price and an increase in equilibrium quantity C. a decrease in equilibrium price and
equilibrium quantity D. an increase in equilibrium price and equilibrium quantity
34. A decrease in demand is graphically represented by: A. a leftward shift in the demand
curve B. a rightward shift in the demand curve C. a movement up and to the left along a
demand curve D. a movement down and to the right along a demand curve
35. The diagram below illustrates 3 possible demand curves for coconut
Suppose that (i) coconuts are an inferior goods and (ii) consumer income decreases.
Which of the following movements could represent the effect of this in the market for
coconuts? A. A to C B. B to A C. C to A D. B to E
36. Given the demand function for milk as Qd = 120 – 3P, and supply function as Qs =50
+4P, the equilibrium quantity is A. 90 B. 80 C. 70 D. 60 E. 50
37. The graphical relationship between price and quantity purchased of a particular
commodity is called A. demand curve B. demand schedule C. supply schedule D. PPC
38. Given the demand and supply functions for a particular commodity as Qd=136-2p and
Qs=100+2p respectively, the market price is A. #31 B. #10 C. #33 D. #9 E. #12
39. A supply curve differs from a supply schedule because a supply curve A. is a graph and
the supply schedule is a table B. holds costs of factors of production constant, whereas
the supply schedule allows them to vary. C. represents one firm, whereas the supply
schedule represents all firms in the market. D. holds the number of suppliers constant,
whereas the supply schedule allows the number to vary.
40. If a producer can use resources to produce either good A or good B, then A and B are
A. complements in production B. complements in consumption C. substitutes in
consumption D. substitutes in production