FREE ECONOMICS PRACTICE QUESTIONS AND ANSWERS
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One main quality of a good is that A. Is sold in the market B. Satisfies wants C. Is made in the factory D. Is always tangible
The interdependence between households and business enterprises illustrated in the figure is known as A. Market interaction B. Cash flow C. Circular flow of income D. Supply and demand for goods and services
An example of a regressive tax is A. The personal income tax B. The graduated corporation income tax C. A general sales tax D. The inheritance taxes
Which of the following is NOT a part of the fixed costs of a limited liability company? A. Interest on loans B. Rent on building C. Depreciation reserves D. Wages
Output | Total Cost(N) |
1 2 3 4 5 | 20 56 96 144 160 |
In the table, the marginal cost when output is two units is A. N16.00 B. N20.00 C. N36.00 D. N48.00
A production possibility curve shows A. How much of the resources of society are used to produce a particular commodity B. The rate of inflation C. The rate of unemployment in the economy D. The various combinations of two commodities that can be produced
Average Fixed Cost is A. Average Total Cost less the sum of Average Variable Cost B. half the sum of all cost
C. Total Fixed Cost divided by the level of output D. Total Fixed Cost plus Marginal Cost
The shut-down point for a firm in a short run is the output at which A. The price of the product is lowest B. Marginal Cost is constant C. Average variable cost is not covered D. Average Cost is minimum
For normal goods the income elasticity of demand is A. Positive B. Negative C. Zero D. Infinite
The difference between personal income and personal disposable income is A. Personal income tax B. Investment income C. Personal savings D. Consumption expenditure
In its simplified form, the circular flow of concept refers to the A. Real flows in goods and services between the product and factor markets
B. Monetary payments for goods and services produced by individual firms
C. Transactions in goods and services and payments for such transactions between individual firms and households
D. Money flows associated with transactions between individual firms and households
A shift in the production possibility frontier could result from A. Unemployment B. Changes in the combination of goods produced C. Inflation D. Changes in production techniques
If at 10K per kg, 1000kg of yam were purchased and at 5K per kg, 1500kg were purchased, the resultant point elasticity of demand is A. 0.33 B. 0.0001 C. 1 D. 10000
A tax is defined as regressive if A. The proportion of income paid as tax increases as the income level increases B. All income groups pay the same percentage of their income as taxes C. The proportion of income taken by the tax falls as income increases D. The proportion of income taken by the tax is a fixed nominal amount of income for all income groups
The multiplier is defined as A. The ratio of change of income to change in investment B. The change in investment is divided by the change in income C.
If the marginal propensity to consume is 0.80 and the investment expenditure changes from N100 million to N140 million in a given economy, find the level of equilibrium in the given economy, using the formula K=
The diagram represents a production function. At which of the point does diminishing returns set in? A. I B. J C. K D. L
If the economy of the country is operating at X, the implication is that A. The production capacity is being fully utilize B. The productive capacity is not being fully utilized C. Too little of consumer goods is being produced D. There is a disequilibrium between the production of capital and consumer goods
Cross elasticity of demand can be mathematically expressed as the A.
The national income of a country indicates that the gross national income was N17700 million and gross domestic product was N16800 million. The difference of N900 million represents A. Debt repayments B. Investments abroad C. Net income from abroad D. Capital Consumption
Given that TC = TFC + TVC AND TR = AR * Q, profit is equal to A. (AR+Q) – TFC B.
The opportunity cost of the use of productive resources which a producer owns and so does not pay for constitutes A. A fixed cost B. An implicit cost C. A variable cost D. A prime cost
The effect of changes in the condition of demand on a demand schedule with the prime constant is A. Movement along the demand curve B. Deflation of the demand curve C. Hyperbola formation by the demand curve D. Shift of the demand curve
Which of the following statement is TRUE of the effect of changes in demand and supply on price? A. A decrease in supply will lead to a fall in price and a fall in the quantity bought and sold B. An increase in demand will lead to a fall in price and in the quantity bought and sold C. A decrease in demand will lead to a rise in price and in the quantity bought and sold D. An increase in supply will lead to a fall in the price and a rise in the quantity bought and sold
Infant industries denote industries which A. Are introducing new products B. Are too young to compete in the world market C. Produce baby foods and mother care product D. Are allowed time enough to mature for recognition
Point P suggests that the economy is A. Reaching full employment but full production B. Attaining full production but not full employment C. Undercapitalized D. Attaining both full employment and full production
In the diagram below, the curve which represents the firm’s short-run average variable cost is curve A. I B. II C. III D. IV
Given a market demand curve Q = 120 – 2p and a supply curve Q = 4p. The equilibrium price and quantity respectively are A. 20 and 80 B. 30 and 120 C. 40 and 60 D. 60 and 240
One of the factors which is likely to check the growth of public debts A. Bridging the resource gap B. Debt repudiation C. Debt rescheduling D. Debt-equity swap
If the marginal propensity to consume is 0.75 and private investment increases by N10 billion while government expenditure decreased by N15 billion. GOP will decrease by A. N12 billion B. N15 billion C. N20 billion D. N25 billion
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