MCQ PAPER
MCQ PAPER
1. The basic economic problem is best described as:
A. Inflation and deflation.
B. Unemployment and underemployment.
C. Scarcity and choice.
D. Production and consumption.
2. Which of the following is a factor of production?
A. Wages
B. Capital
C. Interest
D. Profit
3. What is an opportunity cost?
A. The money cost of goods.
B. The cost of resources used.
C. The next best alternative foregone.
D. The financial risk of production.
4. In a market economy, who determines the allocation of resources?
A. The government.
B. Producers and consumers.
C. Banks and financial institutions.
D. Charities and non-profit organizations.
5. What is meant by a mixed economy?
A. All resources are allocated by the market.
B. Resources are owned by the government.
C. A combination of private and public sector involvement.
D. The economy focuses only on manufacturing and services.
6. What does a supply curve show?
A. The relationship between price and demand.
B. The relationship between price and quantity supplied.
C. Total costs at each level of production.
D. Total revenue at different price levels.
7. Which of the following is most likely to cause a shift in the demand curve
for smartphones?
A. A reduction in the price of smartphones.
B. An increase in the cost of manufacturing smartphones.
C. A change in consumer tastes in favor of smartphones.
D. An increase in the quantity of smartphones supplied.
8. A country produces only food and clothing. Its production possibility curve
shifts outward. What is the most likely cause?
A. Increased unemployment.
B. Discovery of new resources.
C. A rise in prices of goods.
D. Higher levels of government spending.
9. What is the primary aim of a monopoly?
A. To maximize consumer welfare.
B. To produce at the lowest cost.
C. To dominate the market and maximize profits.
D. To reduce government intervention.
10. If the price elasticity of demand for a product is greater than 1, the
product is:
A. Price inelastic.
B. Price elastic.
C. A necessity.
D. A public good.
11. What is a public good?
A. A good provided for free by private firms.
B. A good that is non-rivalrous and non-excludable.
C. A good produced only in mixed economies.
D. A good always consumed in large quantities.
12. What is the purpose of specialization in production?
A. To increase unemployment.
B. To reduce the quality of goods.
C. To improve efficiency.
D. To increase taxes.
13. Which of the following is a merit of a planned economy?
A. Innovation is encouraged.
B. Efficient allocation of resources.
C. Income equality is prioritized.
D. Consumer choice is maximized.
14. A firm increases output but the average cost of production decreases. This
is due to:
A. Diseconomies of scale.
B. Economies of scale.
C. Fixed costs.
D. Marginal utility.
15. What is a tariff?
A. A tax on imports.
B. A limit on the quantity of exports.
C. A subsidy for local industries.
D. A tax on domestic production.
16. Which of the following is a characteristic of a perfectly competitive
market?
A. Many buyers and sellers.
B. Firms have significant control over prices.
C. Unique products.
D. High barriers to entry.
17. A rise in interest rates is likely to:
A. Encourage borrowing.
B. Discourage saving.
C. Reduce consumer spending.
D. Increase inflation.
18. Which of the following is a measure of economic growth?
A. Gross Domestic Product (GDP).
B. Consumer Price Index (CPI).
C. Unemployment rate.
D. Balance of payments.
19. A country with a higher birth rate than death rate is likely to experience:
A. Negative population growth.
B. Zero population growth.
C. An ageing population.
D. Population growth.
20. What is a subsidy?
A. A tax on producers.
B. A payment by the government to producers to reduce costs.
C. A payment by consumers to increase production.
D. A tax on imported goods.
21. Which of the following is an advantage of international trade?
A. Dependency on foreign nations.
B. Encouraging self-sufficiency.
C. Access to a wider variety of goods and services.
D. Elimination of competition.
22. An increase in demand for a product will generally lead to:
A. A fall in price.
B. An increase in price.
C. A reduction in supply.
D. No change in the market.
23. Which of the following is a reason for unemployment?
A. High levels of investment.
B. Technological advancements replacing workers.
C. Increased exports.
D. High consumer spending.
24. A decrease in the value of a country's currency is called:
A. Appreciation.
B. Depreciation.
C. Inflation.
D. Deflation.
25. What does the term ‘inflation’ mean?
A. A sustained increase in general price levels.
B. A decrease in the value of money.
C. An increase in national output.
D. A decrease in employment levels.
26. A government imposes a minimum wage to:
A. Encourage lower labor costs.
B. Protect workers' living standards.
C. Reduce income inequality completely.
D. Increase unemployment levels.
27. Which of the following is an example of horizontal integration?
A. A car manufacturer merges with a steel producer.
B. A bakery merges with a supermarket.
C. A clothing retailer merges with another clothing retailer.
D. A farmer buys more land for agriculture.
28. Which of the following best describes a developing country?
A. High levels of industrialization.
B. Low GDP per capita.
C. Low birth rates.
D. A large service sector.
29. What is the role of a central bank?
A. To control inflation, issue currency, and regulate banks.
B. To collect taxes from businesses and individuals.
C. To produce goods and services for consumers.
D. To finance government projects.
30. Which of the following is an example of direct tax?
A. Sales tax.
B. Income tax.
C. Value-added tax (VAT).
D. Import duties.