CAP I - Paper 2B - MCQ

CHARTERED ACCOUNTANCY PROFESSIONAL I
(CAP-I)
Multiple Choice Questions Answers
Paper 2 B:
Fundamentals of Economics
Education Department
The Institute of Chartered Accountants of Nepal
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November 2019
Education Department
The Institute of Chartered Accountants of Nepal
MCQ Paper 2B: Fundamentals of Economics
Contents
Chapter One: .....................................................................................................................................
Introduction to Microeconomics ..................................................................................................... 2
Chapter Two: ....................................................................................................................................
Demand and Supply Analysis ......................................................................................................... 7
Chapter Three: ..................................................................................................................................
Theory of Production .................................................................................................................... 14
Chapter Four: ....................................................................................................................................
Costs and Revenues ...................................................................................................................... 20
Chapter Five: .....................................................................................................................................
Market Forms ................................................................................................................................ 26
Chapter Six: ......................................................................................................................................
International Trade ........................................................................................................................ 31
Chapter Seven: ..................................................................................................................................
Nepalese Economy........................................................................................................................ 36
© The Institute of Chartered Accountants of Nepal 1

Chapter One:
Introduction to Microeconomics
1. Economics is the subject concerned with:

a. Developing large products b. Innovation of new technology
c. Choice of best possible alternative d. Utilization of surplus commodities
2. Which of the following doesn’t relate to macroeconomics?

a. Individual firm b. International trade
c. Globalization d. National income
3. Scarcity in economics refers to

a. Limitation of money b. Limitation of natural resources
c. Limitation of land to cultivate d. Limited resources to fulfill
unlimited wants
4. If a person produces Potato of Rs 5000 instead of producing Maize of Rs 3000 or Tomato

of Rs. 4000, what is his/her opportunity cost of producing potato ?
a. Maize of Rs. 3000 b. Tomato of Rs. 4000
c. Maize and Tomato of Rs 7000 d. None of the above
5. If the government controls all the economic activities, the economy is said to be
a. Laissez-faire economy b. Capitalist economy
c. Command economy d. Free-enterprise economy
6. Welfare definition of economics was given by

a. Adam Smith b. Alfred Marshall
c. Lionel Robbins d. Paul Samuelson
7. What is the objective of microeconomics?

a. Optimum allocation of resources b. Full employment of resources
c. Growth of resources d. equitable distribution of income
8. The fundamental economic problem faced by all societies is

a. Unemployment b. Inequality
c. Poverty d. Scarcity
9. Microeconomics deals with

a. Policy Making b. International Trade
c. Economic growth d. Utility of consumers
10. Which of the following is the scope of macroeconomics?

a. Theory of consumer behavior b. theory of national income
c. theory of production d. theory of economic welfare
11. Capitalism refers to

a. Use of markets b. government control of resources

c. private ownership of capital goods d. private ownership of home and car
12. Which of the following statements is true?

a. Microeconomics and Macroeconomics both are b. Macroeconomics deals with the
developed in 1933AD. large industries with many sectors.
c. Micro and Macroeconomics are d. Microeconomics is the study of
interdependent. national income and employment.
13. Scarcity and choice with dynamic growth and development was given by:
c. L. Robbins d. P.A. Samuelson
14. Popular book “Principles of economics” was published by

c. L. Robbins d. P.A. Samuelson
15. The three fundamental questions for the society to answer are
a. What, how and for whom to produce? b. What, why and where to
produce?
c. What, how and when to produce? d. What, where and when to
produce?
16. Pure market economy works in favor of

a. Industries b. Government
c. Consumers d. Society
17. The problem of scarcity applies to

a. developing countries b. developed countries
c. poor developing countries d. all countries whether rich or poor
18. Microeconomics is also called as

a. Income Theory b. Demand Theory
c. Price Theory d. Supply Theory
19. Popular book of Adam smith “The wealth of nations” was published in
a. 1776 AD b. 1890 AD
c. 1931 AD d. 1936 AD
20. Economics as a social science was proved by

a. David Ricardo b. Alfred Marshall
c. Lionel Robbins d. Samuelson
21. Alternatives in economics creates

a. Best use of resources b. Insufficiency of resources
c. benefit to consumers d. choices in decision making

22. Current affairs of economics relating to “What is” is better explained by

a. Positive economics b. Normative economics
c. Micro economics d. Macro economics
23. Which of the following is not the scope of microeconomics?

a. Theory of demand b. Theory of trade
c. Theory of market d. Theory of distribution
24. Macroeconomics is also called as

a. Applied economics b. Welfare economics
c. Aggregate economics d. Practical economics
25. Opportunity cost is

a. Cost of production b. cost of second best alternative
c. Selling cost d. Transportation cost
26. Efficiency in economics is defined as

a. maximum output b. maximum profit
c. maximum output with no wastage of resources d. minimum price
27. Productive efficiency is maintained when

a. output is produced at minimum possible cost b. maximum output is produced
c. maximum profit is obtained d. price is equal to marginal cost
28. Allocative efficiency is maintained when

a. output is produced at minimum possible cost b. maximum output is produced
c. maximum profit is obtained d. price is equal to marginal cost
29. Scarcity and choice definition of economics was developed by

c. Lionel Robbins d. Samuelson
30. Classical and neo-classical economists believed in

a. laissez-faire economy b. command economy
c. mixed economy d. centralized economy
31. Which of the following is not forefathers of classical economic thought?

a. Adam Smith b. P.A. Samuelson
c. J.B. say d. J. S. Mill
32. The popular book published by Alfred Marshall is

a. wealth of nations b. the general theory
c. principle of economics d. economic theory
33. Economics according to Lionel Robbins is
a. positive science b. normative science
c. applied science d. human science

34. Rationality in economics means

a. no error b. goal oriented choices
c. same choice in all conditions d. no concern with resource
35. If change in Value Added Tax (VAT) negatively affects the capital formation rate of an
economy, this study is studied under
a. descriptive approach b. normative approach
c. microeconomic approach d. macroeconomic approach
36. Macroeconomic approach was developed by

a. Alfred Marshall b. J.M. Keynes
c. Lionel Robbins d. Adam Smith
37. According to Adam Smith, the main source of wealth is

a. rent b. wage
c. interest d. profit
38. If economics suggests for future using “what should be done” is

a. descriptive economics b. positive economics
c. normative economics d. applied economics
39. Relationship between the money supply and rate of inflation in the economy is studied
under
a. macroeconomics b. microeconomics
c. welfare economics d. tactical economics
40. Alfred Marshall defined economics as

a. science of wealth b. science of material welfare
c. science o scarcity and choice d. science of dynamic growth
41. The popular book published by Lionel Robbins is

a. wealth of nations b. principle of economics
c. nature and significance of economics d. the general theory
42. Robbins published his book in

a. 1776 AD b. 1890 AD
c. 1931 AD d. 1936 AD
43. Microeconomics believes in

a. partial equilibrium analysis b. general equilibrium analysis
c. aggregate equilibrium analysis d. trade equilibrium analysis
44. Which of the following is the objective of macroeconomics?

a. utilization of resources b. growth of resources
c. control of resources d. study of resources

45. In case of mixed economy

a. no role of the government b. no role of private sector
c. co-existence of private and public sector d. resources controlled by
government
46. Labor intensive production technique is mostly applied in

a. capital surplus countries b. developed countries
c. labor surplus countries d. developing countries
47. Capital intensive production technique is chosen in

a. capital surplus countries b. developed countries
c. labor surplus countries d. developing countries
48. Microeconomic analysis is also called as

a. lumping method b. slicing method
c. aggregate method d. collecting method
49. Macroeconomics analysis is also called as

a. lumping method b. slicing method
c. aggregate method d. collecting method
50. The basic difference between microeconomics and macroeconomics is

a. microeconomics has broad scope b. macroeconomics only deals with
individuals
c. macroeconomics has broad scope d. microeconomics concerns about
government
Answers:
1. c 2. a 3. d 4. b 5. c
6. b 7. a 8. d 9. d 10. b
11. c 12. c 13. d 14. b 15. a
16. c 17. d 18. c 19. a 20. b
21. d 22. a 23. b 24. c 25. b
26. c 27. a 28. d 29. c 30. a
31. b 32. c 33. a 34. b 35. d
36. b 37. b 38. c 39. a 40. b
41. c 42. c 43. a 44. b 45. c
46. c 47. a 48. b 49. a 50. c

Chapter Two:
Demand and Supply Analysis
1. Demand in economics refers to

a. desire to get something b. want of a commodity
c. asking for fulfillment of wants d. desire of commodity with ability and
willingness to pay
2. Demand expands when
a. price increases b. price decreases
c. income increases d. income decreases
3. Law of demand states

a. inverse relationship between price and b. direct relationship between
income demand and price
c. inverse relationship between price and d. inverse relationship between
quantity demanded demand and price
4. Demand of two or more products for single purpose is called

a. price demand b. income demand
c. joint demand d. composite demand
5. Demand curve in case of Giffen goods is

a. Negatively sloped b. Vertical
c. Positively sloped d. horizontal
6. Upward movement within the demand curve is called as

a. increase in demand b. decrease in demand
c. extension in demand d. contraction in demand
7. Which of the following is the exception of law of demand?

a. normal good b. giffen good
c. scarce good d. neutral good
8. What is most likely to increase the demand for mobile phones?

a. fall in disposable income b. fall in price of mobile phones
c. fall in government subsidy on mobile d. fall in number of consumers
phones
9. Which is the example of joint demand?

a. Pen and copy b. book and bag
c. mobile and sim card d. Tea and coffee
10. The price elasticity of demand is the:

a. percentage change in quantity demanded b. percentage change in price
divided by the percentage change in price divided by the percentage change in
quantity demanded

c. dollar change in quantity demanded d. percentage change in quantity

divided by the dollar change in price demanded divided by the
percentage change in quantity
supplied
11. Income elasticity of demand measures

a. Responsiveness of income towards b. Responsiveness of demand
demand towards income
d. Responsiveness of sellers
c. Responsiveness of market towards towards demand
income
12. If the demand function is given as Q = 50-4P, what is the value of elasticity at price Rs.
10?
a. -1 b. -0.25
c. -4 d. -2
13. Increase in price of X also increases the demand of Y, then two goods X and Y are said to
be;
a. substitute goods b. complementary goods
c. similar goods d. non-related goods
14. The demand for a product would be inelastic:

a. the greater is the time under consideration b. the greater is the number of
substitutes available to buyers
c. the less expensive is the product in relation d. more proportion of income spent on a
to incomes commodity
15. In case of luxurious goods, demand will be

a. more elastic b. less elastic
c. perfectly elastic d. perfectly inelastic
16. Cross elasticity between Coke and Pepsi will be

a. positive b. negative
c. zero d. infinite
17. If demand of a commodity increases with increase in income of the consumer, the type of
commodity is called as
a. giffen goods b. inferior goods
c. normal goods d. neutral goods
18. If quantity demanded by the commodity decreased by 15% due to increase in price from
Rs 10 to 12, the value of elasticity will be
a. 2 b. 0.75
c. 0.25 d. 1.33

19. If the quantity demanded of beef increases by 5% when the price of chicken increases by
20%, the cross-elasticity of demand between beef and chicken is:
a. 0.25 b. -4
c. 4 d. -0.25
20. What could not cause a shift in an individual’s demand curve for Good Z?
a. change in price of Z b. change in the individuals income
c. change in individuals taste d. change in advertising expenditure
21. The cross-elasticity of demand between two goods will be higher

a. greater the difference in price between two b. greater the income elasticities of
goods. demand for the two goods.
c. greater the price sensitivity of demand for d. more they are regarded as similar by
the two goods. consumers.
22. Normally, the shape of demand curve is

a. vertical b. horizontal
c. upward sloping d. downward sloping
23. Law of demand expresses the relationship between

a. Price and income of the consumer b. Price and quantity of the commodity
c. income and quantity demanded d. quantity demanded and supply
24. Which of the following is the assumption of law of demand?

a. price of the commodity should not b. demand should not change
change
c. income of the consumer should not d. supply should not change
change
25. If change in price of the commodity has no response to quantity demanded, it is the case
of
a. unitary elastic b. relatively elastic
c. perfectly elastic d. perfectly inelastic
26. Higher the number of substitutes, the value of price elasticity is

a. higher b. lower
c. unity d. zero
27. Demand is highly elastic in case of

a. necessity goods b. luxurious goods
c. neutral goods d. normal goods
28. If demand is unitary elastic, an increase in price results in

a. increase in total revenue b. decrease in total revenue
c. no change in total revenue d. increase in total sales

29. If demand is unitary elastic, 10% increase in price will result

a. 10% increase in quantity demanded b. 10% decrease in quantity demanded
c. 10% increase in income of the d. 10% decrease in income of the
consumer consumer
30. All the following except one shift demand curve,

a. change in income b. change in price of substitutes
c. change in fashion and taste d. change in price of commodity
31. The cross elasticity between laptop and desktop computers is

c. highly inelastic d. perfectly inelastic
32. Linear demand curve states

a. slope of demand curve is positive b. slope of demand curve is negative
c. slope of demand curve is constant d. slope of demand curve is variable
33. Which of the following is the example of linear demand function?

a. Q = aPxb b. Q = a Log Px
c. Q = a+bPx d. Q = aePx
34. Price and quantity demanded are positively correlated in case of

a. Luxurious goods b. Comfort goods
c. necessities goods d. giffen goods
35. Price of product falls by 10% due to which demand rises by 15%, the elasticity of
demand is
a. 5% b. 15%
c. 3 d. 1.5
36. Contraction in demand is the result of

a. increase in price of commodity b. decrease in price of the commodity
c. increase in income of the consumer d. decrease in income of the consumer
37. Market demand curve is ……………..summation of individual demand curves

a. arithmetic b. horizontal
c. geometric d. vertical
38. The word “equilibrium” in economics refers to

a. point of demand = supply b. point of cost= revenue
c. point of change d. point of stability
39. If demand is higher than supply in the market, then

a. price decreases b. price increases
c. there will be no change in price d. can’t say

40. Which is not the assumption of cardinal utility approach?

a. Marginal utility of money is constant b. utility can be ranked
c. utility is additive d. utility has numerical value
41. If the consumer consumes the homogeneous units of a commodity continuously,

Marginal utility will be
a. increasing b. decreasing
c. at the highest point d. zero
42. All of the following are the determinants of demand except

a. income of the consumer b. population
c. quantity supplied d. technology of production
43. In case of inferior goods, income elasticity of demand is

a. negative b. zero
c. positive d. infinite
44. Higher the proportion of income spent on a commodity

a. higher will be price elasticity b. lower will be price elasticity
c. no relationship with elasticity d. higher will be income elasticity
45. If demand curve is straight line touching both axis, price elasticity at midpoint will be
a. infinite b. less than one
c. equal to one d. greater than one
46. If demand increases keeping supply constant, then

a. only equilibrium price increases b. only equilibrium quantity increases
c. both equilibrium price and quantity d. both will remain unchanged
increase
47. If supply decreases without change in demand, then

a. equilibrium price increases, quantity b. equilibrium price decreases, quantity
decreases increases
c. both equilibrium price and quantity d. both equilibrium price and quantity
increase decrease
48. Law of diminishing marginal utility follows

a. ordinal utility approach b. cardinal utility approach
c. indifference curve approach d. market equilibrium approach
49. Total utility will be decreasing when

a. marginal utility is positive b. marginal utility is equal to one
c. marginal utility is negative d. marginal utility is zero
50. Increase in quantity supplied means

a. more supply at less price b. less supply at high price

c. more supply at same price d. less supply at same price
51. When Marginal utility becomes zero, it results

a. zero total utility b. increasing total utility
c. maximum total utility d. decreasing total utility
52. In which condition stock will be equal to supply

a. at reservation price b. at minimum expected price
c. maximum expected price is equal to d. at minimum market price
market price
53. What ensures that demand for a product is effective?

a. consumer must realize consumer b. consumer must have sufficient income
surplus to purchase a product
c. more supply at same price d. less supply at same price
54. Consumer Surplus refers to

a. difference between marginal revenue b. difference between marginal cost and
and price price
c. difference between marginal utility and d. difference between total utility and
price price
55. Ranking of utility is related to

a. cardinal utility approach b. ordinal utility approach
c. marginal utility approach d. total utility approach
56. Reservation price is

a. minimum expected price of the product b. willing price of the consumer
c. maximum expected price of the product d. price which maximizes profit
57. All Giffen goods are

a. inferior b. luxurious
c. normal d. perishable
58. If income demand curve passes through the origin with its extension, then income
elasticity of demand will be
a. equal to zero b. equal to unity
c. greater than unity d. less than unity
59. The concept of cardinal utility approach was initiated by

a. James Tobin b. F.Y. Edgeworth
c. Adam Smith d. H.H. Gossen
60. Ordinal utility approach was developed by

a. F.Y. Edgeworth b. H.H. Gossen
c. Alfred Marshall d. J.B. Say

Answers:
1. d 2. b 3. c 4. c 5. c
6. d 7. b 8. b 9. c 10. a
11. b 12. c 13. a 14. c 15. a
16. a 17. c 18. b 19. a 20. a
21. c 22. d 23. b 24. c 25. d
26. a 27. b 28. c 29. b 30. d
31. a 32. c 33. c 34. d 35. d
36. a 37. b 38. d 39. b 40. b
41. b 42. c 43. a 44. a 45. c
46. c 47. a 48. b 49. c 50. a
51. c 52. c 53. b 54. c 55. b
56. a 57. a 58. b 59. d 60. a

Chapter Three:
Theory of Production
1. Production function refers to

a. function of labor b. function of producer
c. relationship between inputs and output d. relationship between labor and capital
2. In short run production function

a. labor is variable b. labor and capital are variable
c. no any factor is variable d. all the factors are variable
3. Which of the following law follows short-run production function?

a. Law of returns to scale b. law of diminishing returns
c. law of consumer’s surplus d. law of producer’s surplus
4. Total Product (TP) will be maximum when

a. MP is zero b. AP is zero
c. MP is maximum d. AP is maximum
5. The increment in output with employment of one additional unit is measured by

a. Total Product b. Average Product
c. Marginal Product d. Minimum Product
6. Stage of increasing returns in short run concludes with

a. Equality between TP and AP b. equality between AP and MP
c. equality between TP and MP d. MP is equal to zero
7. Given the production function; Q = f(L, K), if L and K both are increased it reads as
HQ = f(2L, 2K), the law of increasing returns to scale operates when
a. L=K b. Q=4
c. H=4 d. H=2
8. In third stage of short run production function.

a. Only Total Product decrease b. Only total product and marginal
product decrease
c. Only total product and average product d. Total product and average product
decrease decrease, Marginal Product is negative
9. If proportionate increase in combination of inputs is just equal as the increment in output,

it is said to be
a. Increasing returns to scale b. Constant returns to scale
c. Decreasing returns to scale d. Negative returns to scale
10. The law of diminishing returns states; more and more of variable factor is used keeping
fixed factor constant, after a point
a. Total product begins to rise b. Marginal product rises

c. Marginal product falls d. Average product rises
11. The law of diminishing marginal returns is applicable because of

a. specialization of labor b. limited capital
c. increasing average fixed cost d. division of labor
12. Which of the following is the example of internal economies of scale?

a. technological economies b. managerial economies
c. environmental economies d. innovation economics
13. Which of the following returns is only applicable in short run?

a. Increasing returns b. Decreasing returns
c. Constant returns d. Negative returns
14. In second stage of law of diminishing returns

a. AP is greater than MP b. MP is greater than AP
c. AP is equal to TP d. AP is equal to zero
15. The production function Q = 10K0.5L0.5 is the example of

a. short run production function b. long run production function
c. single variable production function d. labor intensive production function
16. Total Product (TP) refers to

a. additional output of one extra labor b. output per unit of labor
c. gross output of all units of labor d. constant output
17. Average Product (AP) refers to

18. Marginal Product (MP) refers to

19. In law of decreasing returns to scale, 10% increase in combination of labor and capital
results into
a. 10% increase in output b. 8% increase in output
c. 8% decrease in output d. 12% increase in output
20. Second stage of law of diminishing returns starts with

a. equality between AP and MP b. equality between TP and AP
c. equality between TP and MP d. MP equal to zero
21. If 5 laborer are used to produce 60 units of product, then Average product of labor is
a. 10 b. 12
c. 5 d. 15

22. Which is the feature of labor?

a. immobile b. limited in supply
c. can’t be stored d. free gift of nature
23. If labor and capital are doubled, output is also just doubled; it is the case of
a. increasing returns to scale b. constant returns to scale
c. decreasing returns to scale d. negative returns to scale
24. If all three curves TP, AP and MP are falling in law of diminishing returns, it is the case
of
a. stage of increasing returns b. stage of diminishing returns
c. stage of constant returns d. stage of negative returns
25. Which of the following is the example of production function?

a. Q =f(L,K) b. L= f(K)
c. L= f(Q) d. K=f(Q)
26. Which is not the feature of land?

a. gift of nature b. passive factor
c. fixed supply d. constant quality
27. Capital is defined as

a. money b. wealth
c. man-made instruments to support d. free gift of nature
production
28. Physical goods such as building, plant, machines are called as

a. human capital b. social capital
c. tangible capital d. real capital
29. Which of the following is the example of human capital?

a. machine b. building
c. skill or ability d. raw materials
30. Capital formation is

a. process of earning money b. increase in stock of real capital
c. making profits d. developing new technology
31. Which of the following is not the stage of capital formation?

a. Creation of saving b. mobilization of saving
c. investment of saving d. storage of saving
32. “Innovation” is the function of

a. land b. labor
c. capital d. entrepreneurship

33. The objective of rational producer is

a. maximization of output b. maximization of cost
c. minimization of revenue d. minimizing price
Use the following table to answer the questions that follow:

Units of labor Total Product (TP)
1 10
2 30
3 60
4 80
5 90
6 90
7 80
34. Average product of 4th unit of labor is

a. 20 b. 15
c. 18 d. 10
35. Marginal product of 7th unit of labor is

a. 10 b. 0
c. -10 d. 20
36. Average product and marginal product are equal in ………..units of labor
a. 2 b. 3
c. 4 d. 5
37. The stage if increasing returns applied up to

a. 3 units of labor b. 4 units of labor
c. 6 units of labor d. 7 units of labor
38. The stage of decreasing returns is applied up to

39. The stage of negative returns is applicable in

a. 3rd unit of labor b. 4th unit of labor
th
c. 6 unit of labor d. 7th unit of labor
40. Marginal product of labor is zero at

41. The marginal product curve is above the average product curve when the average product
is
c. constant d. zero

42. The law of variable proportions is valid when

a. all factors are kept constant b. all inputs are varied in same
proportions
c. one input is variable and others are kept d. all inputs are changed in variable
constant proportions
43. Which is one of the assumption of law of variable proportions?

a. single input is used in production b. two inputs are used
c. dynamic production process d. technology is kept constant
44. At the point of inflexion, marginal product is

c. maximum d. negative
45. When Marginal Product is negative, Total Product is

a. increasing b. maximum
c. decreasing d. negative
46. Which of the following statement is false?

a. Average product is output per unit of labor b. marginal product is change in
c. Total product is sum total of marginal average product
product d. total product increase when
marginal product is positive
47. Which of the following statement is true?

a. AP is always greater than MP b. MP is always greater than AP
c. TP is always than greater AP for output d. TP is always equal to MP
more than one
48. To increase output level

a. cost must be reduced b. inputs must be increased
c. labor must be reduced d. capital must be reduced
49. If both labor and capital increased by 18% due to which output has increased by 8%, it is
the example of
a. increasing returns to scale b. constant returns to scale
c. negative returns to scale d. decreasing returns to scale
50. In production function, output is

a. dependent variable b. independent variable
c. decreasing function of input d. constant

Answers:
1. c 2. a 3. b 4. a 5. c
6. b 7. d 8. d 9. b 10. c
11. c 12. b 13. d 14. a 15. b
16. c 17. b 18. a 19. b 20. a
21. b 22. c 23. b 24. d 25. a
26. d 27. c 28. d 29. c 30. b
31. d 32. d 33. a 34. a 35. c
36. c 37. b 38. c 39. d 40. c
41. a 42. c 43. d 44. c 45. c
46. b 47. c 48. b 49. d 50. a

Chapter Four:
Costs and Revenues
1. Explicit cost is
a. opportunity cost b. money cost
c. real cost d. selling cost
2. An example of implicit cost is

a. cost of labor b. cost of raw materials
c. cost of own land d. cost of money borrowed
3. If a person produces X worth Rs 200 in place of either producing Y worth 190 or Z worth
180, what is the opportunity cost?
a. production of Y worth 190 b. production of Z worth 180
c. production of Y and Z worth 370 d. production of Y worth 180
4. The cost which is independent of level of output is called as

a. marginal cost b. variable cost
c. total cost d. fixed cost
5. The costs which can’t be recovered after spending is called as

a. accounting cost b. economic cost
c. implicit cost d. sunk cost
6. Imputed cost is
a. cost of self-owned factors b. cost of second best alternative
c. cost of labor d. cost of raw materials purchased
7. The relationship between average cost (AC) and Marginal cost (MC) is
a. AC intersects MC at its highest level b. AC intersects MC at its minimum point
c. MC intersects AC at its minimum point d. MC intersects AC at its minimum point
8. What is opportunity cost?

a. minimum amount of cost b. cost of best opportunity grabbed
c. real cost incurred in production d. second best alternative cost
9. Cost of advertisement is included in

a. Fixed cost b. imputed cost
c. selling cost d. opportunity cost

a. AC = AFC-AVC b. TFC = TC- TVC
c. MC = AC – AVC d. AFC = TC- AVC

11. The shape of total fixed cost (TFC) is

a. vertical b. horizontal
c. upward sloping d. downward sloping
12. TVC curve starts from

a. Y-axis b. X-axis
c. Origin d. negative Y-axis
13. TVC curve is

a. rectangular hyperbola shaped b. parallel to x-axis
c. parallel to y-axis d. inverse ‘S’ shaped
14. SAC curve is U-shaped due to

a. law of variable proportions b. law of returns to scale
c. excess supply of factors d. government regulation

a. marginal cost depends on fixed cost b. marginal cost depends on variable cost
c. marginal cost is independent of level of d. marginal cost never increases
output
16. Given the Total cost (TC) = Rs 200, total fixed cost (TFC) = 150, value of average
variable cost (AVC) for producing 10 units of output is
a. 20 b. 15
c. 10 d. 5
17. Long run average cost (LAC) is also called as

a. demand curve b. supply curve
c. planning or decision making curve d. revenue curve
18. According to classical economists, LAC curve is

a. U-shaped b. vertical
c. L-shaped d. horizontal
19. Which is one of the causes of L-shaped LAC curve?

a. scarcity of time b. increase in repair cost
c. scarcity of labor d. technological advancement
20. Total revenue is

a. product of price and quantity b. sum of price and quantity
c. revenue per unit of output d. additional revenue obtained by the
seller
21. If we divide total revenue by the units of output produced the result is
a. Average revenue b. marginal revenue
c. profit d. actual cost

22. In perfect competition market structure,

a. AC = MC b. AR = MR
c. AFC = AVC d. MC = AR
23. Average revenue curve in monopoly market will be

a. upward sloping b. vertical
c. horizontal d. downward sloping
24. At highest point of total revenue curve, marginal revenue would be

c. zero d. equal to unity
25. Value of price elasticity at increasing part of total revenue would be

a. less than one b. equal to one
c. greater than one d. equal to zero
26. If elasticity is equal to one, marginal revenue is

a. positive b. zero
c. negative d. equal to price
27. The difference between average total cost and average fixed cost is
a. total fixed cost b. diminishing in nature
c. average variable cost d. increasing in nature
28. Marginal cost changes due to change in

a. total cost b. average cost
c. output level d. variable cost
29. Average revenue curve is also called as

a. indifference curve b. profit curve
c. demand curve d. average cost curve
30. When elasticity is greater than one, MR is

a. zero b. one
c. negative d. positive
31. Which of the following is an implicit cost of a firm that produces a good or service?
a. labor cost b. cost of machinery
c. foregone profits of producing different d. cost of buying land
good or service
32. Which of the following is an implicit cost of going to college?

a. Tuition cost b. Cost of books
c. Rent for room d. Foregone wages

33. The opportunity cost of receiving ten rupees in the future as opposed to getting that ten
rupees today is :
a. taxes paid to earnings b. value of 10 rupees earned by the person
c. value of 10 rupees earned by the d. foregone interest that could be earned if
economy you had that money today.
Use the following table to answer the questions that follow:

Quantity of production Total Revenue Total Cost
0 0 50
1 100 90
2 180 180
3 250 230
4 290 270
5 310 350
34. Total fixed cost in the above production system is

a. 50 b. 100
c. 90 d. 180
35. Marginal cost of producing 4th unit is

a. 90 b. 50
c. 40 d. 80
36. Marginal revenue of selling 4th unit is

a. 50 b. 40
c. 20 d. 70
37. At what output level Marginal revenue is just equal to marginal cost?
a. 1 b. 2
c. 3 d. 4
38. Average cost of producing 5 units of output is

a. 50 b. 70
c. 90 d. 100
39. Price of selling 5th unit of output is

a. 10 b. 20
c. 30 d. 90
40. What level of output is break-even level of output?

a. 1 b. 2
c. 3 d. 4
41. Revenue function is

a. R = f (Q) b. Q = f(R)
c. Q = f (L, K) d. Q = f (L)


a. AR is always equal to MR b. AR is always equal to price
c. AR is always equal to TR d. AR is always equal to MC
43. Total variable cost curve is

a. parallel to x-axis b. parallel to y-axis
c. downward sloping d. inverse s-shaped
44. Average total cost (ATC) is

a. sum total of MC and AC b. sum total of AFC and AVC
c. Sum total of TFC and TVC d. sum total of AFC and AVC
45. Implicit costs are

a. always equal in all conditions b. equal to total costs
c. payments made for self-employed d. equal to variable costs
resources
46. If a firm’s revenues just cover all its opportunity cost, then
a. normal profit is zero b. economic profit is zero
c. firm will be at abnormal profit d. firm will maximize sales
47. Which of the following is the example of sunk costs?

a. labor cost b. raw-material cost
c. depreciation d. electricity charge
48. Economic cost is

a. explicit cost b. implicit cost
c. explicit - implicit cost d. explicit cost + implicit cost
49. Accounting cost is

a. equal to money cost b. equal to real cost
c. equal to opportunity cost d. equal to total cost
50. If Total Revenue is less than Total Cost, then the firm will be at
a. normal profit b. loss
c. excess profit d. abnormal profit

Answers:
1. b 2. c 3. a 4. d 5. d
6. a 7. c 8. d 9. c 10. b
11. b 12. c 13. d 14. a 15. b
16. d 17. c 18. a 19. d 20. a
21. a 22. b 23. d 24. c 25. c
26. b 27. c 28. d 29. c 30. d
31. c 32. d 33. d 34. a 35. c
36. b 37. d 38. b 39. b 40. b
41. a 42. b 43. d 44. d 45. c
46. b 47. c 48. d 49. a 50. c

Chapter Five:
Market Forms
1. Monopoly is
a. market with single buyer b. market with single seller
c. market with no government d. market with many substitutes
2. Market in economics is defined as

a. place where goods are sold b. place where buyers bargain
c. place where sellers make profit d. place where buyers and suppliers interact
to determine price and quantity
3. A monopolist firm is a price

a. taker b. maker
c. follower d. leader
4. Which of the following is not the feature of perfect competition market?

a. large number of buyers and sellers b. heterogeneous product
c. free entry and exit of firms d. perfect mobility of factors
5. If price of the commodity is determined as Rs 10 in perfect competition market, value of

marginal revenue is
a. Rs 5 b. Rs 20
c. Rs 10 d. Rs 15
6. The necessary condition for firm’s equilibrium is

a. AC = MC b. AR = MR
c. AFC = AVC d. MC = MR
7. Secular period in economics refers to

a. short period b. very short period
c. long period d. very long period
8. All the competitive firms are

a. price takers b. price makers
c. profit earners d. loss makers
9. Second order condition for firm’s equilibrium is

a. slope of MC > slope of MR b. slope of MR > slope of MC
c. slope of AC > slope of AR d. slope of AR > slope of AC
10. The firm obtains abnormal profit if

a. AR= AC b. AR > AC
c. AR < AC d. MR >MC

11. The firm obtains normal profit if

12. The firm operates in loss if

13. In short run, all the perfect competitive firms will

a. obtains excess profit b. obtains normal profit
c. operates in loss d. all three cases are possible
14. Price rigidity is the feature of

a. monopoly market b. competitive market
c. controlled market d. systematic market
15. In long run, the firm operating in perfect competition market will always obtain
a. excess profit b. normal profit
c. loss d. all three cases are possible
16. Firm itself denotes industry in

a. perfect competition b. monopolistic competition
c. oligopoly d. monopoly
17. In perfect competition market, price is determined by

a. government b. firms
c. industry d. cartel
18. Monopoly firm in short firm obtains

19. Monopoly firm in long run always obtains

20. Which of the following is not the feature of monopoly market?

a. single seller b. no substitutes of the product
c. no barriers to entry of new firms d. firm itself is price maker
21. What would be your suggestion to a firm whose revenue is not sufficient to even recover
the variable cost in the long run?
a. increases the price b. waits for longer period
c. decreases the output d. shut down the firm

22. What is meant by equilibrium price in the market?

a. price charged by firm b. price accepted by the buyers
c. price set by the government d. price accepted by both buyers and sellers
23. Break even situation of firm states;

a. TR = TVC b. TR = TC
c. TR = TFC d. price = AVC
24. Break even situation in economics states the firm is obtaining

a. no profit no loss b. normal profit
c. loss d. profit
25. Monopolistic competition market is characterized by

a. single seller b. single buyer
c. differentiated products d. barriers to entry of new firms
26. In short run, the firm operating in monopolistic competition market obtains
27. In long run, the firm operating in monopolistic competition market operates in
28. If the seller charges different price for different consumer according to their willing price
it is called
a. first degree price discrimination b. second degree price discrimination
c. third degree price discrimination d. no price discrimination
29. In second degree price discrimination

a. actual price = willing price b. price same for all
c. actual price < willing price d. actual price ≥ willing price
30. Third degree price discrimination is applied on the basis of

a. location of market b. size of market
c. elasticity of market d. capacity of market
31. The precondition for price discrimination is

a. many sellers b. control over the supply of product
c. minimum cost of production d. high advertisement
32. If there are only two sellers in the market, the market is called as
a. monopoly b. duopoly
c. oligopoly d. competitive

33. Which of the following is the feature of oligopoly market?

a. large number of buyers and sellers b. homogeneous product
c. interdependency in decision making d. firms are price takers
34. If all firms agree on a price decided by a centralized body in oligopoly, it is called
a. full oligopoly b. partial oligopoly
c. collusive oligopoly d. perfect oligopoly
35. Pure oligopoly is characterized by

a. homogeneous products b. differentiated oligopoly
c. unrelated products d. substitute products
36. Abnormal profit is the condition where

a. AR>AC b. AR>AFC
c. AR>AVC d. AR>MC
37. Which of the following better explain the oligopoly market Nepal?
a. schools and colleges b. hotels and restaurants
c. telecommunication service market d. banks and financial market
38. Price of the commodity in competitive market is

a. less than monopoly price b. more than monopoly price
c. always remain constant d. keeps on changing for different output
39. Indeterminate price and output is the feature of

a. competitive market b. monopoly market
c. monopolistic competition market d. oligopoly market
40. In unregulated monopoly,

a. sellers are better off b. buyers are better off
c. sellers are worse off d. both are better off
41. Which market has the least number of firms?

a. perfect competition b. monopoly
c. oligopoly d. monopolistic competition
42. If the market is perfectly competitive, demand curve is

a. perfectly elastic b. perfectly inelastic
c. relatively elastic d. relatively inelastic
43. In short run, profit maximizing firm expands its output when
a. total cost is equal to total revenue b. marginal cost equal to average variable
cost
c. marginal cost start to rise d. marginal revenue is greater than
marginal cost

44. In perfect competition market, marginal revenue is always equal to

a. total cost b. variable cost
c. product price d. average cost
45. A firm should continue to operate at a loss in the short run if,
a. it recovers total costs b. it recovers fixed costs
c. it obtains excess profit d. it recovers all its variable costs
46. In perfect competition market price is constant because

a. there is government control b. all the firms are producing and selling
homogeneous products
c. there is no supply d. demand is very high
47. Under the condition of pure monopoly

a. firm is price taker b. there are close substitutes
c. there is no selling cost d. there is barrier to entry of new firms
48. Which of the following creates barrier to entry in the market?

a. profit b. patent right
c. elasticity of market d. revenue
49. Price discrimination is possible when

a. there is prefect competition b. firms are producing differentiated goods
c. firms are price takers d. buyers are limited
50. Monopoly prevails for long run due to

a. government protects b. consumer boycotts
c. supply increases d. demand decreases
Answers:
1. b 2. d 3. b 4. b 5. c
6. d 7. d 8. a 9. a 10. b
11. a 12. c 13. d 14. b 15. b
16. d 17. c 18. d 19. a 20. c
21. d 22. d 23. b 24. b 25. c
26. d 27. b 28. a 29. d 30. c
31. b 32. b 33. c 34. c 35. a
36. a 37. c 38. c 39. d 40. a
41. b 42. a 43. d 44. c 45. d
46. b 47. d 48. b 49. b 50. a

Chapter Six:
International Trade
1. Trade deficit occurs when

a. Export > Import b. Import > Export
c. Import = Export d. Import ≤ Export
2. International trade helps an economy by

a. mobilization of resources b. increasing wage rate
c. decreasing domestic employment d. increasing inflation rate
3. Surplus in trade is characterized by

a. Export > Import b. Import > Export
c. Import = Export d. Import ≤ Export
4. The current feature of Nepal’s foreign trade is

a. trade surplus is increasing b. trade is in balance
c. trade deficit is increasing d. trade volume is decreasing
5. Which is the most dominating import item of Nepal?

a. cement b. food items
c. fuel d. medicines
6. Capital account of BOP includes

a. merchandise exports b. merchandise imports
c. investment income d. foreign investment
7. Which of the following facilitates foreign trade?

a. liberalization policy b. industrial policy
c. environment policy d. wage policy
8. Protection policy is used to

a. increase foreign trade b. decrease foreign trade
c. protects domestic industries d. attracts foreign investors
9. Which of the following is not the advantage of international trade?

a. high cost of production b. availability of goods at cheaper price
c. availability of inputs at cheaper price d. specialization in the production of goods
10. Balance of payments is the systematic record of all the economic transactions,
……………………for one fiscal year.
a. exports and imports of a country b. payment due to a country
c. receipts and payments of a country d. inflows and outflows of a country

11. One of the main disadvantage of international trade is

a. Dependency on foreign goods b. foreign currency earnings
c. utilization of natural resources d. increase in domestic employment
12. Nepal’s foreign trade is

a. concentrated with China b. concentrated with India
c. concentrated with European countries d. concentrated with America
13. Foreign trade within south Asian nations is facilitated by

a. SAFTA b. ASEAN
c. BIMSTEC d. BRICS
14. Nepal’s import in 2018 is …………. times higher than export

a. 2 b. 3
c. 5 d. 9
15. Out of total foreign trade of Nepal, India’s share is

a. less than 20% b. more than 60%
c. 20% to 40% d. 40% to 60%
16. Increase in trade deficit creates pressure in

a. number of labor available domestically b. foreign currency reserves
c. external supply of labor d. employment situation of the country
17. Nepal’s major exporting item is

a. agricultural goods b. readymade garments
c. iron materials d. electronic goods
18. Which of the following is the main constraint of Nepalese export?

a. Scarcity of labor b. lack of natural resources
c. lack of trade competitiveness d. lack of government policy
19. International trade flourishes especially in

a. free enterprise economy b. command economy
c. mixed economy d. communist economy
20. Nepal’s export trade is mainly contributed by

a. capital goods b. manufacturing goods
c. raw materials and semi-furnished goods d. final consumption goods
21. The probable solution for Nepal’s increasing trade deficit is

a. increase export of goods b. stop import of goods
c. make equality between export and d. increase import tax
import

22. Surplus in balance of payment signifies

a. export < Import b. export > import
c. total outflows > total inflows in a d. total outflows < total inflows in a
country country
23. Currently in Nepalese economy, huge trade deficit is compensated by

a. increasing foreign grants b. increasing remittance
c. decreasing import d. increasing government expenditure
24. “Infant industry argument” in international trade is given in support of

a. free trade b. protectionism
c. export encouragement d. increasing trade volume
25. Which of the following is international trade?

a. trade between provinces b. trade between regions
c. trade between countries d. trade between industries
26. Which of the following international organization works in favor of international trade?
a. United nations b. International monetary fund
c. World Trade Organization d. International labor organization
27. Trade between two countries occur if cost of producing the goods in different countries
a. differs b. equals
c. decreases d. increases
28. Foreign trade creates ……………. among the trading nations

a. conflict b. cooperation
c. distance d. hatred
29. Net exports is

a. Exports × Imports b. Exports + imports
c. Exports – Imports d. exports only
30. Tariff rate imposed by the government

a. increases the volume of trade b. decreases the volume of trade
c. has no effect on volume of trade d. facilitates imports
31. Which of the following facilitates international trade?

a. globalization b. protection policy
c. tariff system d. blockade
32. All are the advantages of foreign trade Except,

a. nations competitiveness increase b. people get foreign exchange
c. goods are cheaper d. optimum utilization of resources

33. International trade differs with domestic trade because of

a. different language b. different persons
c. different cost and price structure d. different environment
34. Developing countries generally face unfavorable terms of trade because

a. they export primary goods only b. they import few goods
c. they have no trade d. they have less resources
35. If a country applies free trade system then,

a. per-capita income of people increases b. real GDP of country decreases
c. increases the efficiency of domestic d. decreases the efficiency of domestic
industries industries
36. The government policy including export and import policy is called
a. fiscal policy b. tax policy
c. commercial policy d. finance policy
37. Trade between two countries is encouraged by

a. tariff restrictions b. tariff reductions
c. forex differences d. frontier checks
38. Which of the following is the drawback of free trade?

a. price of goods decrease b. national resources are underutilized
c. public revenue will decrease d. employment level will increase
39. The advantage of international trade is

a. can preserve natural resources b. new technology comes to the country
c. people need to work abroad d. people can play with foreign currency
40. Foreign trade

a. benefits developed countries b. benefits developing countries
c. benefits exporting countries d. benefits all countries
41. Protection policy means

a. restriction in exports b. restriction in imports
c. restriction in production of goods d. restriction in foreign exchange
42. Balance of payments means

a. balance of payment and receipt by all b. balance of receipts and payments by
banks central bank
c. Balance of government payments and d. balance of receipts and payments by a
grants country
43. A country without foreign trade is called

a. developed economy b. open economy
c. closed economy d. developing economy

44. Nepal exports some goods and imports many goods because of
a. free supply of goods b. comparative advantage in trade
c. government tax d. government subsidy
45. To increase its exports, Nepal must

a. decrease the value of its currency b. improve trade competitiveness
c. stop exporting labor d. increase domestic consumption
46. Which is the most dominating export from Nepal to India in recent years?
a. rice b. Juice
c. polyester thread d. ginger
47. Which is the dominating export from Nepal to China?

a. incense sticks b. Pashmina
c. readymade garments d. handmade goods
48. Which is the dominating import from India to Nepal?

a. Fuel b. medicine
c. vegetables d. electrical appliances
49. Which is the dominating import from China to Nepal?

a. Electric goods b. stationery goods
c. readymade garments d. medicine
50. Which of the following is the dominating import from third countries to Nepal?
a. palm oil b. computer parts
c. copper wire d. gold
Answers:
1. b 2. a 3. a 4. c 5. c
6. d 7. a 8. c 9. a 10. d
11. a 12. b 13. a 14. d 15. b
16. b 17. b 18. c 19. a 20. c
21. a 22. d 23. b 24. b 25. c
26. c 27. a 28. b 29. c 30. b
31. a 32. b 33. c 34. a 35. c
36. c 37. b 38. c 39. b 40. d
41. b 42. d 43. c 44. b 45. b
46. c 47. d 48. a 49. c 50. d

Chapter Seven:
Nepalese Economy
1. Which is not the feature of Nepalese economy?

a. Nepal has abundant natural resources b. Nepal is a landlocked country
c. Nepal is independent in energy and fuel d. Nepal is agricultural country
2. GDP Growth rate of Nepal for the year 2017 was

a. 6.2% b. 6.3%
c. 7.9% d. 8.2%
3. First national plan was started in Nepal in

a. 1956 AD b. 1957 AD
c. 1958 AD d. 1957 AD
4. Which is the most highlighted feature of Nepalese economy?

a. Nepal is one of the leading developing b. Nepal has lack of resources
countries of the world.
c. Nepal is using its available resources in d. Nepal is facing the huge deficit in
best possible way balance of trade
5. The contribution of remittance in GDP in FY 2017/18 was

a. 8.9% b. 11.9%
c. 21.9% d. 29.1%
6. Which is contributing the most to Nepalese economy in current years?

a. Tourism sector b. Industrial sector
c. remittance d. banking sector
7. Which of the following feature don’t suit the Nepalese economy?

a. labor intensive economy b. high per capita income
c. low rate of savings d. least developed country
8. Which of the following sector contributes the most in GDP of Nepal?

a. Industry sector b. service sector
c. agriculture sector d. supply sector
9. Primary sector of Nepalese economy is

a. agriculture sector b. production sector
c. service sector d. foreign sector
10. One of the main problem of Nepalese agriculture sector is

a. bank credit b. market access
c. supply of labor d. suitable environment

11. Small scale industries will have high average production cost because of
a. labor intensive production technique b. high investment
c. less output production d. government subsidy
12. Three sector economy doesn’t include

a. Household sector b. Production sector
c. government sector d. foreign sector
13. Open economy is

a. only two sector economy b. only three sector economy
c. two sector and three sector economy d. only four sector economy
14. One of the main problem of large scale industries is

a. lack of factors of production b. lack of policies
c. foreign competition d. no market
15. Which of the following is contributing the most in generating employment in the
country?
a. household sector b. industrial sector
c. production sector d. service sector
16. Which one of the following is the most potential industry of Nepal?
a. tourism industry b. manpower industry
c. health industry d. education industry
17. Banking service in Nepal was started with established with

a. Nepal Rastra Bank b. Nepal Bank
c. Rastriya Banijya Bank d. Agricultural Development Bank
18. Which is the central bank of Nepal?

a. Nepal Rastra Bank b. Nepal Bank
c. Rastriya Banijya Bank d. Agricultural Development Bank
19. Foreign Direct Investment (FDI) refers to

a. investment by government b. investment by foreigners in shares
c. investment by foreigners in production d. investment by domestic nationals
units
20. Which of the following is not the role of agriculture sector in Nepal?
a. Providing employment b. increasing import of goods and services
c. supporting industries d. increasing GDP
21. Agricultural marketing is concerned with

a. expanding agriculture education b. expanding foreign investment in
agriculture

c. Providing necessary and efficient market d. providing suitable agriculture policy by

for agricultural goods the government

a. Nepal is a developed country b. Nepal has highest per capita income
c. Nepal is independent country d. Nepal is landlocked country
23. The companies established in one country which is invested by foreign company with
headquarter in home country are called as
a. international companies b. multi-national companies
c. trans-national companies d. foreign companies
24. Labor productivity in Nepal is very low because of

a. lack of school and colleges b. lack of teachers
c. lack of quality education d. lack of students
25. Nepal has huge potential in tourism sector because of

a. human resources b. mineral resources
c. man-made resources d. natural resources
26. The economic system implemented by Nepal is

a. free-enterprise economy b. command economy
c. mixed economy d. closed economy
27. Fiscal policy of Nepal is formulated by

a. Nepal Rastra Bank b. National Planning commission
c. Ministry of Finance d. Ministry of Home affairs
28. The authoritative body of plan formulation in Nepal is

a. Nepal Rastra Bank b. National Planning commission
c. Ministry of Finance d. Ministry of Home affairs
29. Which of the following is the strength of Nepal?

a. abundant natural resources b. open border with India
c. Himalayan range d. growing economy
30. Which of the following is not included in service sector?

a. Banking b. insurance
c. health and education d. electricity
31. Which of the following is the feature of cottage industries?

a. industry run by proprietor himself b. with fixed capital up to 5 lakh
c. not exceeding nine employees d. labor intensive with use of local
resources and local technology

32. The industries with fixed capital up to ten crores are called as
a. cottage industries b. small scale industries
c. medium scale industries d. Large industries
33. The industries with fixed capital more than 10 crores and less than 25 crores are called
34. The industries with fixed capital more than 25 crores are called as
35. Which of the following is not included in agro-based industry?

a. tea farming b. organic restaurant
c. animal husbandry d. horticulture
Answers:
1. c 2. c 3. a 4. d 5. d
6. c 7. b 8. b 9. a 10. a
11. c 12. d 13. c 14. c 15. d
16. a 17. b 18. a 19. c 20. b
21. c 22. d 23. b 24. c 25. d
26. c 27. c 28. b 29. a 30. d
31. d 32. b 33. c 34. d 35. b

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CHARTERED ACCOUNTANCY PROFESSIONAL I

Multiple Choice Questions Answers

© The Institute of Chartered Accountants of Nepal

© The Institute of Chartered Accountants of Nepal 1

1. Economics is the subject concerned with:

2. Which of the following doesn’t relate to macroeconomics?

3. Scarcity in economics refers to

4. If a person produces Potato of Rs 5000 instead of producing Maize of Rs 3000 or Tomato

6. Welfare definition of economics was given by

7. What is the objective of microeconomics?

8. The fundamental economic problem faced by all societies is

9. Microeconomics deals with

10. Which of the following is the scope of macroeconomics?

11. Capitalism refers to

© The Institute of Chartered Accountants of Nepal 2

a. Use of markets b. government control of resources

12. Which of the following statements is true?

14. Popular book “Principles of economics” was published by

16. Pure market economy works in favor of

17. The problem of scarcity applies to

18. Microeconomics is also called as

20. Economics as a social science was proved by

21. Alternatives in economics creates

© The Institute of Chartered Accountants of Nepal 3

22. Current affairs of economics relating to “What is” is better explained by

23. Which of the following is not the scope of microeconomics?

24. Macroeconomics is also called as

25. Opportunity cost is

26. Efficiency in economics is defined as

27. Productive efficiency is maintained when

28. Allocative efficiency is maintained when

29. Scarcity and choice definition of economics was developed by

30. Classical and neo-classical economists believed in

31. Which of the following is not forefathers of classical economic thought?

32. The popular book published by Alfred Marshall is

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34. Rationality in economics means

36. Macroeconomic approach was developed by

37. According to Adam Smith, the main source of wealth is

38. If economics suggests for future using “what should be done” is

40. Alfred Marshall defined economics as

41. The popular book published by Lionel Robbins is

42. Robbins published his book in

43. Microeconomics believes in

44. Which of the following is the objective of macroeconomics?

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45. In case of mixed economy

46. Labor intensive production technique is mostly applied in

47. Capital intensive production technique is chosen in

48. Microeconomic analysis is also called as

49. Macroeconomics analysis is also called as

50. The basic difference between microeconomics and macroeconomics is

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1. Demand in economics refers to

3. Law of demand states

4. Demand of two or more products for single purpose is called

5. Demand curve in case of Giffen goods is

6. Upward movement within the demand curve is called as

7. Which of the following is the exception of law of demand?