70 Powerful Microeconomics MCQs for Guaranteed Exam Success
1. What is Economics?
A) Study of plants
✔️ B) Study of wealth and scarcity
C) Study of stars
D) Study of history
2. What is Microeconomics?
A) Study of entire economy
✔️ B) Study of individual economic units
C) Study of weather
D) Study of politics
3. Scarcity means:
A) Unlimited resources
✔️ B) Limited resources and unlimited wants
C) No resources
D) No wants
4. Opportunity Cost is:
A) Market price
B) Cost of production
✔️ C) Next best alternative forgone
D) Tax paid
5. Utility means:
A) Profit
✔️ B) Satisfaction from consumption
C) Income
D) Wealth
6. Economic goods are:
A) Free goods
✔️ B) Goods with scarcity and value
C) Air and sunlight
D) None of these
7. Non-economic goods are:
A) Scarce goods
B) Valuable goods
✔️ C) Free goods like air
D) Luxury goods
8. Wealth refers to:
✔️ A) Collection of valuable assets
B) Money only
C) Gold only
D) Income only
9. Marginal Analysis studies:
A) Total cost
✔️ B) Additional benefits and costs
C) Taxes
D) Inflation
10. Trade-off means:
A) Getting everything
✔️ B) Giving up one thing for another
C) Saving money
D) Borrowing money
11. Positive Economics deals with:
A) Opinions
✔️ B) Facts and testable statements
C) Ethics
D) Values
12. Normative Economics deals with:
A) Facts only
✔️ B) Opinions and value judgments
C) Statistics only
D) Demand only
13. Macroeconomics studies:
A) Individual consumers
B) Individual firms
✔️ C) Whole economy
D) Single market
14. A model is:
A) Real object
✔️ B) Simplified representation of reality
C) Law
D) Theory only
15. Growth occurs when:
A) Resources decrease
✔️ B) Production capacity increases
C) Prices increase
D) Demand decreases
Demand and Supply MCQs
16. Demand refers to:
A) Desire only
B) Ability only
✔️ C) Desire backed by ability to pay
D) Need only
17. The law of demand states:
A) Price rises, demand rises
✔️ B) Price falls, demand rises
C) Price and demand move together
D) None
18. Demand curve generally slopes:
A) Upward
✔️ B) Downward
C) Vertical
D) Horizontal
19. Market demand is:
A) One consumer’s demand
✔️ B) Sum of all individual demands
C) Government demand
D) Firm demand
20. Which shifts demand curve?
A) Change in price of the good
✔️ B) Income change
C) Same price
D) Quantity demanded
21. Increase in income for normal goods causes:
A) Demand decreases
✔️ B) Demand increases
C) Supply increases
D) Supply decreases
22. Supply means:
A) Desire to sell
✔️ B) Quantity producers are willing and able to sell
C) Stock only
D) Inventory only
23. Law of Supply states:
✔️ A) Price rises, supply rises
B) Price rises, supply falls
C) Price falls, supply rises
D) None
24. Supply curve usually slopes:
A) Downward
✔️ B) Upward
C) Vertical
D) Horizontal
25. Market supply is:
A) Supply of one firm
✔️ B) Sum of all firms’ supplies
C) Government supply
D) Imports only
26. Improvement in technology causes:
A) Supply decreases
✔️ B) Supply increases
C) Demand increases
D) Demand decreases
27. Equilibrium occurs when:
A) Demand > Supply
B) Supply > Demand
✔️ C) Demand = Supply
D) Price = Cost
28. Excess demand creates:
A) Surplus
✔️ B) Shortage
C) Equilibrium
D) Profit
29. Excess supply creates:
A) Shortage
B) Deficit
✔️ C) Surplus
D) Demand
30. If demand increases and supply remains constant:
A) Price falls
✔️ B) Price rises
C) Supply falls
D) Revenue falls
Welfare Economics MCQs
Questions 31–35
31. Consumer surplus is:
A) Producer profit
✔️ B) Difference between willingness to pay and actual price
C) Cost of production
D) Tax revenue
32. Producer surplus is:
A) Consumer benefit
✔️ B) Difference between selling price and production cost
C) Tax collection
D) Government revenue
33. Market efficiency occurs when:
✔️ A) Total surplus is maximized
B) Prices are highest
C) Taxes are highest
D) Imports increase
34. Total surplus equals:
A) Consumer surplus only
B) Producer surplus only
✔️ C) Consumer surplus + Producer surplus
D) Tax revenue
35. Efficient markets maximize:
A) Waste
✔️ B) Total welfare
C) Inflation
D) Costs
Externalities MCQs
Questions 36–40
36. An externality is:
A) Internal cost
✔️ B) Benefit or cost affecting others
C) Tax
D) Subsidy
37. Pollution is an example of:
A) Positive externality
✔️ B) Negative externality
C) Private benefit
D) Equilibrium
38. Education creates:
A) Negative externality
✔️ B) Positive externality
C) Market failure only
D) Surplus
39. Negative externalities cause:
A) Market efficiency
✔️ B) Market failure
C) Consumer surplus
D) Equilibrium
40. Government can reduce negative externalities through:
A) Subsidies only
✔️ B) Taxes and regulations
C) Ignoring them
D) Price cuts
Elasticity MCQs
Questions 41–54
41. Elasticity measures:
A) Profit
✔️ B) Responsiveness of quantity demanded or supplied
C) Revenue
D) Cost
42. Price Elasticity of Demand measures:
A) Income changes
✔️ B) Response of demand to price changes
C) Supply changes
D) Cost changes
43. Demand is elastic when elasticity is:
A) Less than 1
B) Equal to 1
✔️ C) Greater than 1
D) Zero
44. Demand is inelastic when elasticity is:
A) Greater than 1
✔️ B) Less than 1
C) Equal to 2
D) Infinite
45. Perfectly inelastic demand curve is:
A) Horizontal
✔️ B) Vertical
C) Downward
D) Upward
46. Perfectly elastic demand curve is:
A) Vertical
✔️ B) Horizontal
C) Upward
D) Curved
47. Total Revenue equals:
✔️ A) Price × Quantity
B) Cost × Quantity
C) Profit × Quantity
D) Revenue − Cost
48. When demand is elastic and price falls:
✔️ A) Total revenue rises
B) Total revenue falls
C) No change
D) Profit becomes zero
49. Income Elasticity measures response to:
A) Price changes
✔️ B) Income changes
C) Cost changes
D) Supply changes
50. Cross Price Elasticity measures:
A) Income changes
✔️ B) Relationship between two goods
C) Supply changes
D) Revenue changes
51. Elasticity of Supply measures:
A) Consumer response
✔️ B) Producer response to price changes
C) Income changes
D) Tax changes
52. Supply is more elastic when:
✔️ A) Time period is longer
B) Time period is shorter
C) Resources unavailable
D) Price fixed
53. Perfectly inelastic supply curve is:
A) Horizontal
✔️ B) Vertical
C) Upward
D) Downward
54. Perfectly elastic supply curve is:
✔️ A) Horizontal
B) Vertical
C) Curved
D) Downward
Consumer Behavior MCQs
Questions 55–70
55. An indifference curve shows:
A) Equal cost combinations
✔️ B) Equal satisfaction combinations
C) Equal income combinations
D) Equal prices
56. Higher indifference curves indicate:
A) Lower satisfaction
B) Same satisfaction
✔️ C) Higher satisfaction
D) No satisfaction
57. Budget line shows:
A) Consumer preferences
✔️ B) Affordable combinations of goods
C) Supply schedule
D) Demand schedule
58. Consumer equilibrium occurs where:
A) Demand equals supply
✔️ B) IC touches Budget Line
C) Price equals cost
D) Revenue equals cost
59. Slope of budget line depends on:
A) Income only
✔️ B) Prices of goods
C) Utility only
D) Demand only
60. If income increases:
A) Budget line shifts inward
✔️ B) Budget line shifts outward
C) IC shifts inward
D) Supply decreases
61. Rational consumers try to:
A) Minimize satisfaction
✔️ B) Maximize satisfaction
C) Increase costs
D) Reduce choices
62. Consumer choice is influenced by:
✔️ A) Income and prices
B) Weather only
C) Government only
D) Firms only
63. Which is a determinant of demand?
✔️ A) Income
B) Technology
C) Production cost
D) Taxes on producers
64. Which is a determinant of supply?
A) Consumer income
B) Consumer tastes
✔️ C) Technology
D) Population
65. Scarcity forces people to:
A) Ignore choices
✔️ B) Make choices
C) Spend freely
D) Avoid trade-offs
66. Economics mainly studies:
✔️ A) How society manages scarce resources
B) Geography
C) Biology
D) Physics
67. Circular Flow Diagram shows:
A) Weather patterns
✔️ B) Flow of goods, services, and money
C) Population growth
D) Inflation rate
68. In the circular flow model, households provide:
A) Goods only
✔️ B) Factors of production
C) Taxes only
D) Imports only
69. Firms demand:
A) Goods and services
✔️ B) Factors of production
C) Consumer surplus
D) Taxes
70. The central problem of economics is:
A) Inflation
✔️ B) Scarcity
C) Taxation
D) Unemployment
