BGCSE Economics MCQ’s
For each question there are FOUR possible answers labeled A, B, C and D. Choose the ONE answer you consider
correct.
1. All economic units must answer three basic economic questions. Which of the following does not have to be
decided?
A.
B.
C.
D.
For whom it is to be produced
How to allocate resources
What to produce?
Who should be employed?
2. Making choices in an economic society is fundamental because
A.
B.
C.
D.
Prices are always rising
Provisions must be made for the future
Supply of money is unrestricted
Wants are many and resources are scarce
3. Which of the following NOT a barrier to entry into a monopoly?
A.
B.
C.
D.
Economics of scale
Licenses
Price fixing by the state
Restrictive trade practices
4. In a free market economy resources are generally allocated by the
A.
B.
C.
D.
Actions of individuals
Governement
Ministry of finance
World trade organization
5. A textbook costs $10, a paperback novel costs $5 and the newspaper costs $0.50. What might be the
opportunity cost of one textbook?
A.
B.
C.
D.
20 newspapers
4 paperbacks
1 paperback and 20 newspapers
2 paperbacks and 10 newspapers
6. Stocks of hamburger buns used by a fast food may be classified as
A.
B.
C.
D.
Free goods
Producer goods
Resource goods
Utility goods
The diagram below shows a production possibility curve which shows the possible combinations of goods an
economy can produce. Study the diagram and answer questions 7 and 8.
7. Resources are under employed at
A.
B.
C.
D.
P.
Q.
R.
S.
8. A country wishing to enjoy maximum current standard of living would produce at
A.
B.
C.
D.
A.
P.
R.
S.
9. The Law of Diminishing Marginal Utility suggests that
A.
B.
C.
D.
As more variety of goods are consumed less price will be paid
There is no satisfaction in consumption
There will be less satisfaction from additional consumption of the same good
Utility of goods will always decrease
10. Which of the following statements does NOT apply to equilibrium price?
A.
B.
C.
D.
It is a situation of excess demand
It will shift if either demand or supply alters
Quantity demanded and supplied are equated
There is no tendency for price to change
Generally if supply is high and demand is low, the price will be low and the reverse is true.
Study the demand and supply schedule below for Basketball tickets and answer Questions 11, 12 and 13.
Price $
Quantity Demanded
Quantity Supplied
$5.00
600
200
$10.00
500
300
$15.00
400
400
$20.00
300
500
$25.00
200
600
11. Demand is greatest when price is
A.
B.
C.
D.
$5.00
$10.00
$15.00
$25.00
12. If the price is $20.00, there will be
A. A decrease in supply
B. A surplus of tickets
C. An increase in demand
D. An increase in supply
13. If the price of the Basketball tickets is too high with no government intervention, there will be
A.
B.
C.
D.
A competitive market
A shortage of tickets
An over-supply of tickets
An under supply of tickets
14. Which of the following economic reasons would explain why the government often buys agricultural produce
at the time of good harvest??
A.
B.
C.
D.
Encourage local farmers to produce more
Fulfill its social responsibilities
Increase supply in the market and reduce prices
Stablise prices and create buffer stock
Use the following information to answer Questions 15 and 16.
Below is a supply schedule for bananas in the local market.
Price $/kg
Quantity Supplied (kgs)
1.6
1000
2
1500
15. Which of the following is the elasticity of supply of bananas when price rises??
A.
B.
C.
D.
0.80
1.00
2.00
3.00
16. Indicate the nature of elasticity of supply of bananas in the local market.
A.
B.
C.
D.
Imperfectly inelastic
Perfectly elastic
Relatively elastic
Unitarily elastic
17. Which of the following is the main objective of advertising?
A.
B.
C.
D.
Decrease prices
Decrease fixed costs
Increase costs
Increase demand
18. The table shows how quantity demanded for a product changes as income changes.
Income per week
Quantity demanded per week
$70
175
$85
250
What is the income elasticity of demand when income rises from $70 to $85?
A.
B.
C.
D.
0.08
0.4
1.7
2.0
19. What benefit is shared by private limited and public limited companies?
A.
B.
C.
D.
Huge profits
Limited liability
Transferability of shares
Sales turnover
20. As the production of goods and services increases the average cost of producing them decreases. This is an
example of?
A.
B.
C.
D.
Average cost policy
Decreasing returns
Economies of scale
Optimum size of a firm
21. Which of the following statements regarding a Central Bank is NOT true?
A.
B.
C.
D.
It is a banker’s bank
It offers consumer and producer loans
It controls money supply
It determines prime rates of interest
22. The stock exchange does NOT perform which of the following functions?
A.
B.
C.
D.
Fix the foreign exchange rate
Provide a market for second hand shares
Prvode useful information about the health of a country
Values stock prices
23. The exchange rate between US dollars and Jamaican dollars is as follows;
US $1.00 = A $37
What is the amount that a Jamaican importer pay for a consignment of goods costing US $8000.00?
A.
B.
C.
D.
JA $8,000
JA $29,000
JA $29,600
JA $296,000
24. The following figures were obtained from a company’s accounts.
Turnover
$75,000
Fixed capital
$110,000
Total Expenses $40,000
What is the total profit of the firm?
A.
B.
C.
D.
$15,000
$35,000
$70,000
$75,000
25. A proportional tax is best described by which of the following statements?
A.
B.
C.
D.
All taxpayers pay the same amount of tax irrespective of their income
All taxpayers are allowed the same rate of statutory deduction
All taxpayers pay the same percentage rate of tax
All taxpayers are treated equally
26. The international organization that tries to reduce restrictios on international trade is known as
A.
B.
C.
D.
CARICOM
Free Trade Area of the Americas
International Monetary Fund
World Trade Organization
27. The GNP of a country does NOT include
A. Depreciation of capital
B. Property income earned abroad
C. Property income paid abroad
D. Total domestic production
28. Which of the following statements is NOT true about inflationary situations?
A.
B.
C.
D.
Cost of domestic production tends to increase
Inflation may sometimes get out of hand
Savers benefit more than borrowers
Wage rates tend to increase
29. The most likely effect of a subsidy imposed by a government may be one of the following:
A.
B.
C.
D.
Increase cost of production
Increase export prices
Reduce imports
Reduce total production
30. A developing nation is usually characterized by which one of the following features?
A.
B.
C.
D.
High standard of living, small primary sector
No shortage of capital
No shortage of natural resources
Small primary sector
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