Business Economics MCQs 2025 [Multiple Choice Questions and Answers 2025]

Business Economics MCQs 2025
Multiple Choice Questions and Answers 2025

Part A: MCQs (Q.1 – Q.35)

Q.1. Business Economics is _______ in nature.

a) Microeconomics

b) Macroeconomics

c) Both

d) None of the above

Answer: – Microeconomics

Q.2. Business Economics is also known as _______.

a) Applied Economics

b) Managerial Economics

c) Development Economics

d) Welfare Economics

Answer: – Managerial Economics

Q.3. Demand for a commodity means:

a) Desire for a commodity

b) Need for a commodity

c) Desire backed by ability to pay

d) Ability to pay for a commodity

Answer: – Desire for a commodity backed by ability to pay

Q.4. Which of the following is an example of joint demand?

a) Tea and Coffee

b) Car and Petrol

c) Ink and Pen

d) Bread and Butter

Answer: – Ink and Pen

Q.5. Mention one example of selling cost.

a) Storage cost

b) Transport cost

c) Advertisement

d) None of the above

Answer: – Advertisement

Q.6. The type of market where a particular commodity is sold at a uniform price is:

a) Monopoly

b) Oligopoly

c) Monopolistic competition

d) Perfect competition

Answer: – Perfect competition

Q.7. The price at which quantity demanded equals quantity supplied is called:

a) Support price

b) Market price

c) Equilibrium price

d) None of the above

Answer: – Equilibrium price

Q.8. Which rule of revenue and cost is followed by the monopolist to earn maximum profit?

a) AR = MR

b) TR = TC

c) MR = MC

d) AC = AR

Answer: – MR = MC

Q.9. In monopoly market, how many firms are there?

a) Two

b) One

c) Many

d) Several small firms

Answer: – One

Q.10. Under which market form is a firm a price taker?

a) Monopoly

b) Oligopoly

c) Perfect competition

d) Monopolistic competition

Answer: – Perfect competition

Q.11. Elasticity of demand at the midpoint of a straight-line demand curve is:

a) Greater than 1

b) Equal to 1

c) Less than 1

d) Zero

Answer: – Equal to 1

Q.12. A perfectly inelastic demand curve is:

a) Parallel to base

b) Vertical to vertical axis

c) Parallel to vertical axis

d) None of the above

Answer: – Parallel to vertical axis

Q.13. Which curve shows the functional relationship between factors of production and output?

a) Isoquant

b) Demand curve

c) Production function

d) Cost curve

Answer: – Production function

Q.14. Cross-price elasticity of demand between tea and coffee (substitute goods) will be:

a) Zero

b) Negative

c) Positive

d) None of the above

Answer: – Positive

Q.15. Which of the following is not a characteristic of Business Economics?

a) Economics of the firm.

b) Both Science and Art.

c) Decision making at managerial level.

d) Firm and industry are synonym.

Ans: (D) Firm and industry are synonym.

Q.16. In long-run equilibrium under perfect competition, a firm earns:

a) Supernormal profit

b) Normal profit

c) Loss

d) None of the above

Answer: – Normal profit

Q.17. When firms under oligopoly reach an understanding in price and output determination, it is called:

a) Pure oligopoly

b) Collusive oligopoly

c) Monopoly

d) Perfect competition

Answer: – Collusive oligopoly

Q.18. In a planned economy, all economic decisions are made by:

a) The Government

b) Individuals

c) Elders of society

d) Labourers

Answer: – The Government

Q.19. In the long-run equilibrium of a perfectly competitive firm, price is equal to:

a) Short-run MC

b) Short-run average total cost

c) Marginal revenue

d) None of the above

Answer: – Short-run average total cost

Q.20. The law of diminishing returns only applies in cases where:

a) there is increasing scarcity of factors of production.

b) the price of extra units of a factor is increasing.

c) there is at least one fixed factor of production.

d) Capital is a valuable factor.

Ans: (C) there is at least one fixed factor of production.

Q.21. Business Economics is best defined as the economic study of:

a) How maximum profit can be made in a business

b) How business can make maximum use of resources

c) How the problems of business can be solved

d) How most of the products can be sold

Answer: – How the problems of business can be solved

Q.22. Which of the following is a basic problem of an economy?

a) How to consume?

b) What to produce?

c) How to distribute wealth?

d) None of the above

Answer: – What to produce?

Q.23. A perfectly elastic demand curve is:

a) Parallel to the base

b) Perpendicular to the base

Answer: – Parallel to the base

Q.24. Higher iso-product curve represents:

a) Lower level of production

b) Higher level of production

c) Same production level

d) None

Answer: – Higher level of production

Q.25. Iso-product curve can never be:

a) Horizontal or vertical to the base

b) Convex to origin

c) Concave to origin

d) None

Answer: – Horizontal or vertical to the base

Q.26. The classification of market depends mainly on:

a) Number of firms and nature of goods

b) Technology

c) Government control

d) Demand curve

Answer: – Number of firms and nature of goods

Q.27. All the following curves are U-shaped except:

a) Average Variable Cost Curve.

b) Average Fix Cost Curve.

c) Average Cost Curve.

d) Marginal Cost Curve.

Ans: b) Average Fix Cost Curve.

Q.28. Demand is called perfectly elastic when elasticity is:

a) Zero

b) Less than one

c) Infinity

d) Equal to one

Answer: – Infinity

Q.29. The law of supply assumes that:

a) Income of consumers remains constant

b) Input prices do not change

c) Demand remains constant

d) None of the above

Answer: – Input prices do not change

Q.30. Business Economics is specially associated with:

a) Government policies

b) Business firms

c) Society as a whole

d) International trade

Answer: – Business firms

Q.31. The main objective of a firm is:

a) Sales maximisation

b) Profit maximisation

c) Market share maximisation

d) Growth maximisation

Answer: – Profit maximisation

Q.32. When marginal product is zero, total product becomes:

a) Zero

b) Constant

c) Maximum

d) Negative

Answer: – Maximum

Q.33. Implicit costs are:

a) equal to total fixed cost.

b) comprised entirely of variable cost.

c) ‘payments’ for self-employed resources.

d) always greater in the short-run than in the long-run.

Ans: c) ‘payments’ for self-employed resources.

Q.34. In the case of Giffen good:

a) the substitution effect is more than the income effect.

b) the substitution effect and income effect are same.

c) the income effect is more than the substitution effect.

d) the income and substitution effect cancel out each other.

Ans: c) the income effect is more than the substitution effect.

Q.35. When Average Revenue (AR) is constant, Marginal Revenue (MR) is:

a) More than AR.

b)  Less than AR.

c) Equal to AR.

d) Equal to zero.

Ans: c) Equal to AR.

Part B: Fill in the blanks (Q.36 – Q.60)

Q.36. _________ is regarded as the Father of Economics.
Answer: – Adam Smith

Q.37. The book Wealth of Nations was published in the year _________.
Answer: – 1776

Q.38. Economics is a _________ science.
Answer: – Social Science

Q.39. Microeconomics deals with _________ units.
Answer: – Individual units

Q.40. Macroeconomics deals with _________ units.
Answer: – Aggregate units

Q.41. The branch of economics concerned with scarcity and choice is _________.
Answer: – Microeconomics

Q.42. Positive economics is concerned with _________ statements.
Answer: – What is

Q.43. Normative economics is concerned with _________ statements.
Answer: – What ought to be

Q.44. Opportunity cost is also known as _________ cost.
Answer: – Alternative cost

Q.45. Demand curve usually slopes _________ from left to right.
Answer: – Downward

Q.46. The law of demand states that other things remaining the same, demand varies _________ with price.
Answer: – Inversely

Q.47. Giffen goods show an _________ demand curve.
Answer: – Upward sloping

Q.48. The responsiveness of demand to a change in price is called _________.
Answer: – Price Elasticity of Demand

Q.49. Income elasticity of demand measures the responsiveness of demand to a change in _________.
Answer: – Income

Q.50. Cross elasticity of demand measures the responsiveness of demand for one good to the change in _________ of another good.
Answer: – Price

Q.51. Total utility is the _________ satisfaction derived from consumption.
Answer: – Aggregate

Q.52. Marginal utility is the _________ in total utility due to an additional unit consumed.
Answer: – Change

Q.53. The law of diminishing marginal utility was first propounded by _________.
Answer: – H.H. Gossen

Q.54. The point at which marginal utility becomes zero, total utility is _________.
Answer: – Maximum

Q.55. The cost incurred in the past and which cannot be recovered is known as _________.
Answer: – Sunk Cost

Q.56. The cost of the next best alternative foregone is called _________.
Answer: – Opportunity Cost

Q.57. In the short run, some factors are _________ and some are variable.
Answer: – Fixed

Q.58. In the long run, all factors of production are _________.
Answer: – Variable

Q.59. Perfect competition is a market situation with _________ number of buyers and sellers.
Answer: – Large

Q.60. Monopoly is a market situation where there is only _________ seller.
Answer: – One

Part B – True / False (Q.61 – Q.85)

Q.61. Economics is only concerned with the production of wealth. (True/False)
Answer: – False

Q.62. Microeconomics studies the economy as a whole. (True/False)
Answer: – False

Q.63. Macroeconomics is concerned with aggregate demand and supply. (True/False)
Answer: – True

Q.64. Positive economics involves value judgments. (True/False)
Answer: – False

Q.65. Normative economics deals with “what ought to be.” (True/False)
Answer: – True

Q.66. Opportunity cost means cost of foregone alternative. (True/False)
Answer: – True

Q.67. Law of demand states that demand increases with rise in price, other things remaining constant. (True/False)
Answer: – False

Q.68. Giffen goods violate the law of demand. (True/False)
Answer: – True

Q.69. Price elasticity of demand for necessities is usually inelastic. (True/False)
Answer: – True

Q.70. Cross elasticity of demand between substitute goods is positive. (True/False)
Answer: – True

Q.71. Total utility always decreases with more consumption. (True/False)
Answer: – False

Q.72. Marginal utility can be negative. (True/False)
Answer: – True

Q.73. The law of diminishing marginal utility applies only to money. (True/False)
Answer: – False

Q.74. In the short run, all inputs are variable. (True/False)
Answer: – False

Q.75. In the long run, there are no fixed factors. (True/False)
Answer: – True

Q.76. Perfect competition has homogeneous products. (True/False)
Answer: – True

Q.77. Under monopoly, price is determined by both buyer and seller. (True/False)
Answer: – False

Q.78. Oligopoly is a market with few sellers. (True/False)
Answer: – True

Q.79. Monopolistic competition combines features of monopoly and perfect competition. (True/False)
Answer: – True

Q.80. Fixed cost varies with the level of output. (True/False)
Answer: – False

Q.81. Variable cost increases as output increases. (True/False)
Answer: – True

Q.82. Marginal cost is the cost of producing one more unit of output. (True/False)
Answer: – True

Q.83. Average cost is equal to total cost divided by quantity produced. (True/False)
Answer: – True

Q.84. Economic profit and accounting profit are always the same. (True/False)
Answer: – False

Q.85. In the long run, firms in perfect competition earn only normal profit. (True/False)
Answer: – True