Economics MCQs

Page No. 352

New classical economists advocate reducing welfare payments to people who are unemployed or single parents. The economic reasoning used was that this would ?


areduce poverty


breduce unemployment


c weaken the power of trade unions


dhelp small businesses


View Answer reduce unemployment

According to Supply-side economists. if taxes are cut so that people have an increased incentive to work and businesses have an increased incentive to invest ?


aaggregate supply will increase will increase aggregate demand will decrease and the price level will decrease


baggregate supply will increase will increase aggregate output will increase and the price level will decrease


caggregate supply will increase will increase aggregate output will increase and the price level will increase


dboth aggregate supply and demand will increase will increase and the price level will increase



A group of economists argue that the real problem with the economy is high rates of taxation and heavy regulation that reduce the incentives to work, save and invest. These economists are?


aSupply-side economics


b neo-Keynesian economists


c rational-expectations economists.


dnew classical economists.


View Answer Supply-side economics

If a market generates a side effect or externlity then free market solutions ?


amaximize producer surplus


bare efficient


care inefficient


dare equitable


View Answer are inefficient

If a producer has market power (can influence the price of the product in the market) then free market solutions ?


aare equitable.


bare efficient


cmaximize consumer surplus


dare inefficient


View Answer are inefficient

If buyers are rational and there is no market failure ?


a free market solutions are efficient


bfree market solutions maximize total surplus


call of these answers


dfree market solutions are efficient and free market solutions maximize total surplus



Adam smith’s invisible hand concept suggests that a competitive market outcome ?


amaximizes total surplus


bgenerates equality among the members of society


c minimizes total surplus


dboth maximizes total surplus and generates equality among the members of society



Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike ?


aRs500


bRs300


cRs200


d Rs400


View Answer Rs300

The seller’s cost of production is ?


a none of these answers.


b the minimum amount the seller is willing to accept for a good


c the seller’s producer surplus


dthe seller’s consumer surplus



If a benevolent social planner chooses to producer less than the equilibrium quantity of a good, then ?


a total surplus is maximized


b the value placed on the last unit production by buyers exceeds the cost of production.


cproducer surplus is maximized


dconsumer surplus is maximized



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