Business Economics Quiz | Business Economics Multiple Choice Questions with Answers

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Questions
61 Income flow is also known as --.
A Product Flow
B Money flow
C Profit flow
D Cash flow

Answer: Money flow
62 According to profit maximization theory of the firm, management.
A Decides output level which maximizes revenue
B Output level which minimizes cost.
C Output level which maximizes difference between the two
D None of these

Answer: Output level which maximizes difference between the two
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63 According to Simon if a firm fails to achieve its target initially results in:
A A sense of helplessness
B Search behavior
C Sacking of its managerial team
D Appropriate revision of the aspiration level

Answer: Search behavior
64 It is the difference between total revenue and total economic cost
A Accounting Profit
B Economic Profit
C Gross Profit
D Net Profit

Answer: Net Profit
65 Which of the following issues is related to microeconomics?
A The impact of oil prices on car production
B The impact of money on inflation
C The impact of technology on economic growth
D The impact of the deficit on saving

Answer: The impact of oil prices on car production
66 The word economy comes from the Greek word for
A "Environment."
B "One who participates in a market."
C "One who manages a household."
D "Conservation.“

Answer: "One who manages a household."
67 Economics deals primarily with the concept of
A Poverty.
B Scarcity.
C Change.
D Power.

Answer: Scarcity.
68 The opportunity cost of an item is
A The number of hours needed to earn money to buy it.
B What you give up to get that item.
C Always less than the dollar value of the item.
D Always equal to the dollar value of the item

Answer: What you give up to get that item.
69 Factors of production are :
A Inputs into the production process.
B Weather, social, and political conditions that affect production.
C The physical relationships between economic inputs and outputs.
D The mathematical calculations firms make to determine production.

Answer: Inputs into the production process.
70 In the circular-flow diagram,
A Firms are sellers in the resource market and the product market.
B Households are sellers in the resource market.
C Firms are buyers in the product market.
D Spending on goods and services flow from firms to households.

Answer: Households are sellers in the resource market.
71 In the circular-flow diagram,
A Spending on goods and services flow from firms to households.
B Goods and services flow from households to firms.
C Factors of production flow from firms to households.
D Income from factors of production flows from firms to households.

Answer: Spending on goods and services flow from firms to households.
72 Scarcity is a condition that exists when
A There is a fixed supply of resources.
B There is a large demand for a product.
C Resources are not able to meet the entire demand for a product.
D All of the above.

Answer: Resources are not able to meet the entire demand for a product.
73 One of the most important differences between a firm‟s economic profit and its accounting profit is the subtraction of:
A Costs incurred when hiring labor, capital, and land.
B Any explicit cost incurred by the entrepreneur for risk taking.
C Any implicit charges for the use of capital owned by the entrepreneur.
D Any taxes on the retained earnings of the firm.

Answer: Any implicit charges for the use of capital owned by the entrepreneur.
74 That profit functions as an incentive for innovation was among the key contributions to economic thought by:
A Karl Marx.
B Frank Knight.
C Joseph Schumpeter.
D Adam Smith.

Answer: Joseph Schumpeter.
75 Economic profit is…
A Negative when costs exceed revenues.
B Generally larger than accounting profit.
C a theoretical measure of a firm's performance and has little value in real world decision- making.
D Calculated by subtracting implicit costs of using owner-supplied resources from the firm's total revenue.

Answer: Negative when costs exceed revenues.
76 In a circular flow model, the real variables are:
A Money that flows from the factor market to the households.
B Only the goods and services that are produced.
C Only the resources that are used.
D Both the goods and services produced and the resources that are used.

Answer: Both the goods and services produced and the resources that are used.
77 Income and revenues that are created within a country
A always will remain within that country
B Can leave that country only when goods are exported.
C Can leave that country when goods are imported
D Can leave that country when capital flows into that country's financial institutions.

Answer: Can leave that country when goods are imported
78 The three fundamental questions of economic organization are:
A When, for whom, and how.
B How, what, and for whom.
C Who, how, and when.
D What, who, and why.

Answer: How, what, and for whom.
79 The ultimate effect of the "invisible hand" of Adam Smith is that, in a competitive economy, everyone:
A Benefits if each acts in his/her own interest.
B Will increase their profits in a free market.
C Should act to maximize economic growth.
D Should act to promote the public interest.

Answer: Benefits if each acts in his/her own interest.
80 Invisible hand theory is give by :
A Lord Robbins
B Samuelson
C Marshal
D Adam Smith

Answer: Adam Smith

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