Business Economics Quiz | Business Economics Objective Type Questions and Answers

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Questions
21 The development of money as a medium of exchange has facilitated the expansion of trade because
A Holding money increases people's income
B No other mediums of exchange are available
C Money eliminates the "double coincidence of wants" problem
D Holding money increases people's wealth

Answer: Money eliminates the "double coincidence of wants" problem
22 Money is
A Backed by gold in Fort Knox
B The same as income.
C The value of all coins and currency in circulation at any time.
D Anything that is generally accepted as a medium of exchange.

Answer: Anything that is generally accepted as a medium of exchange.
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23 In a free-market economy the allocation of resources is determined by:
A Votes taken by consumers
B A central planning authority
C By consumer preferences
D The level of profits of firms

Answer: By consumer preferences
24 A rational person does not act unless:
A The action is ethical
B The action produces marginal costs that exceed marginal benefits
C The action produces marginal benefits that exceed marginal costs
D The action makes money for the person

Answer: The action produces marginal benefits that exceed marginal costs
25 Economics is a science which deals with human wants and their satisfaction.
A Social
B Political
C Natural
D Physical

Answer: Social
26 .....defined economics as a study of mankind in the ordinary business of life.
A Adam smith
B Lionel Robbins
C Samuelson
D Alfred Marshall

Answer: Alfred Marshall
27 The growth of an economy is indicated by an
A Increase in savings
B Increase in investment
C Increase in general prices
D Increase in national income

Answer: Increase in national income
28 .......equals revenue minus all explicit costs.
A Accounting profit
B Economic profit
C Normal profit
D Loss

Answer: Accounting profit
29 The father of New Economics is :
A Marshall
B J.M.Keynes
C Adam Smith
D Karl Marx

Answer: J.M.Keynes
30 The problem refers to the possibility that owners and their managers may have different objectives.
A Company- Manager problem
B Principal-Agent Problem
C Firm-Employee problem
D Problem of different objectives

Answer: Principal-Agent Problem
31 Economic profit refers to.....minus all relevant costs , both explicit and implicit.
A Profit
B Cost
C Expenses
D Revenues

Answer: Revenues
32 The interaction of individuals and firms in a market can be described as a......of money, goods and services and resources through product and factor markets.
A Constant flow
B Stable flow
C Circular Flow
D Regular Flow

Answer: Circular Flow
33 An economic system:
A Requires a grouping of private markets linked to one another.
B Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
C Requires some sort of centralized authority (such as government) to coordinate economic activity.
D Is a plan or scheme that allows a firm to make money at some other firm's expense

Answer: Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
34 The regulatory mechanism of the market system is:
A Self-interest
B Private property.
C Competition.
D Specialization.

Answer: Competition.
35 Which of the following is not an economic cost?
A Wages.
B Rents
C Economic profits.
D Payments made to the entrepreneur for organizing production

Answer: Economic profits.
36 From society's point of view the economic function of profits and losses is to:
A Promote the equal distribution of real assets and wealth.
B Achieve full employment and price level stability.
C Contribute to a more equal distribution of income.
D Reallocate resources from less desired to more desired uses.

Answer: Reallocate resources from less desired to more desired uses.
37 The invisible hand refers to the:
A Fact that the U.S. tax system redistributes income from rich to poor.
B Notion that, under competition, decisions motivated by self-interest promote the social interest.
C Tendency of monopolistic sellers to raise prices above competitive levels.
D Fact that government controls the functioning of the market system.

Answer: Notion that, under competition, decisions motivated by self-interest promote the social interest.
38 The invisible-hand concept suggests that: .
A Market failures imply the need for a national economic plan.
B Big businesses are inherently more efficient than small businesses.
C The competitiveness of a capitalistic market economy invariably diminishes over time.
D Assuming competition, private and public interests will coincide

Answer: Assuming competition, private and public interests will coincide
39 Two major virtues of the market system are that it:
A Allocates resources efficiently and allows economic freedom.
B Results in an equitable personal distribution of income and always maintains full employment.
C Results in price level stability and a fair personal distribution of income.
D Eliminates discrimination and minimizes environmental pollution.

Answer: Allocates resources efficiently and allows economic freedom.
40 The simple circular flow model shows that:
A Households are on the buying side of both product and resource markets.
B Businesses are on the selling side of both product and resource markets.
C Households are on the selling side of the resource market and on the buying side of the product market.
D Businesses are on the buying side of the product market and on the selling side of the resource market.

Answer: Households are on the selling side of the resource market and on the buying side of the product market.

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