FPSC Economics Sample Questions

FPSC Economics Lecturer Test Sample questions. Following are the sample questions for Economics Lecturer Test Papers. Find answers to the questions at the bottom of the page.

1. The market value of the annual output of a country is called?
(A) GDP
(B) GNP
(C) NNP
(D) NNI

2. The nominal GDP of a certain country in 2010 was $80 billion and in 2013 was $63 billion. And the average prices were dropped by 10%. What is the real GDP in 2013?
(A) $70 billion
(B) $65 billion
(C) $60 billion
(D) $55 billion

3. When demand is price-elastic, a price decrease
(A) reduces total revenue
(B) increases total revenue
(C) reduces total demand
(D) increases total demand

4. According to Say’s Law?
(A) Supply creates its own demand
(B) Demand creates its own supply
(C) Supply creates Revenue
(D) Demand creates Revenue

5. The change in revenue that is generated by an additional unit of sales is called?
(A) Net Revenue
(B) Surplus Revenue
(C) Marginal Revenue
(D) Deficit

6. When demand is elastic, the Marginal Revenue (MR) is?
(A) Positive
(B) Negative
(C) Zero
(D) Unity

7. Under Perfect Competition, the condition for maximum profit is?
(A) MR > MC
(B) MR < MC
(C) MR = MC
(D) (MR)(MC) = 1

8. The Agriculture sector contributes about __________ % to GDP.
(A) 19
(B) 21
(C) 23
(D) 25

9. The Manufacturing sector contributes about __________ % to GDP.
(A) 11
(B) 13
(C) 15
(D) 17

10. The Manufacturing sector employs about __________ % labour force.
(A) 14
(B) 16
(C) 18
(D) 20

ANSWERS: FPSC ECONOMICS SAMPLE QUESTIONS
1(B) 2(A) 3(B) 4(A) 5(C)
6(A) 7(C) 8(B) 9(B) 10(A)

11. A movement along the demand curve may be caused by
(A) A change in income
(B) A change in the number of buyers
(C) A change in advertising
(D) A shift in supply

12. A subsidy paid to producers
(A) Shifts the supply curve
(B) Shifts the demand curve
(C) Leads to a contraction in supply
(D) Leads to an extension of supply

13. Which best describes consumer surplus?
(A) The price consumers are willing to pay for a unit
(B) The cost of providing a unit
(C) The profits made by a firm
(D) The difference the price a consumer pays for an item and the price he/she is willing to pay

14. Asymmetric information occurs when
(A) Information is free
(B) Buyers and sellers have access to different information
(C) Community surplus is maximized
(D) Community surplus is minimized

15. A public good
(A) Is provided by the government
(B) Is free
(C) Has the properties of being non-excludable and non-diminishable
(D) Has external costs

16. Nationalization occurs when
(A) The government sells assets to a the private sector
(B) The government bans a product
(C) The government takes ownership of a business
(D) The government taxes a product to a raise its price

17. Which one of the following statements is true?
(A) If the marginal cost is greater than the average cost the average cost falls
(B) If the marginal cost is greater than the average cost the average cost increases
(C) If the marginal cost is positive total costs are maximized
(D) If the marginal cost is negative total costs increase at a decreasing rate if output increases

18. According to the law of diminishing returns
(A) The marginal product eventually falls as more units of a variable factor are added to a fixed factor
(B) Marginal utility falls as more units of a product are consumed
(C) The total product falls as more units of a variable factor are added to a fixed factor
(D) The marginal product eventually increases as more units of a variable factor are added to a fixed factor

19. If a 4% increase in price leads to a increase in the quantity supplied of 8%, then
(A) Supply is price elastic
(B) Supply is income elastic
(C) Price elasticity of demand is –2
(D) Price elasticity of supply is –2

20. An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is
(A) +2
(B) +0.5
(C) –2
(D) –0.5

ANSWERS: FPSC ECONOMICS LECTURER TEST SAMPLE
11(D) 12(A) 13(D) 14(B) 15(C)
16(C) 17(B) 18(A) 19(A) 20(B)

21. Which best describes price discrimination?
(A) Charging different prices for different products
(B) Charging the same prices for different products
(C) Charging the same prices for the same products
(D) Charging different prices for the same products

22. If the price elasticity of demand for a product in market A is -0.2 and in market B is -3 a price discriminator will charge
(A) The higher price in market A
(B) The higher price in market B
(C) The same price in both markets
(D) Cannot tell which price will be higher

23. Barriers to entry
(A) Enable abnormal profits to be made in the long run
(B) Enable losses to be made in the long run
(C) Enable abnormal profits to be made in the short run only
(D) Occur in perfect competition

24. A decrease in the supply of labour is likely to lead to
(A) A lower equilibrium wage and lower quantity of labour employed
(B) A lower equilibrium wage and higher quantity of labour employed
(C) A higher equilibrium wage and higher quantity of labour employed
(D) A higher equilibrium wage and lower quantity of labour employed

25. Which of the following is a macroeconomic issue?
(A) The price of houses in Oxford
(B) The wage rate for plumbers in London
(C) Your decision to work or stay at home
(D) The level of unemployment in the UK

26. Which of the following is not involved with fiscal policy?
(A) Income tax
(B) National insurance
(C) VAT
(D) Interest rates

27. An increase in national income is
(A) Likely to increase exports
(B) Likely to decrease savings
(C) Likely to decrease investment
(D) Likely to increase spending on imports

28. Which of the following is an injection into the economy?
(A) Investment
(B) Savings
(C) Taxation
(D) Import spending

29. Net National Product equals
(A) Gross National Product adjusted for inflation
(B) Gross Domestic Product adjusted for inflation
(C) Gross Domestic Product plus net property income from abroad
(D) Gross National Product minus depreciation

30. In a recession
(A) Unemployment is likely to be low
(B) Prices are likely to increase
(C) Growth is negative
(D) Growth is slow

ANSWERS: ECONOMICS LECTURER SAMPLE PAPER
21(D) 22(A) 23(A) 24(D) 25(D)
26(D) 27(D) 28(A) 29(D) 30(C)

31. If new firms enter a market, but demand stays the same, it can be predicted that
(A) Consumer surplus will fall
(B) Prices are likely to fall
(C) There will be reduced economic welfare
(D) Prices are likely to rise

32. If an indirect tax is imposed on a good which has a very elastic PED, the burden, or incidence, of the tax is
(A) Mainly on the consumer
(B) Mainly on the producer
(C) Equally shared
(D) All on the producer

33. The effect of a subsidy is to
(A) Shift the supply curve downwards and to the right
(B) Shift the supply curve upwards and to the left
(C) Reduce demand
(D) Reduce consumer surplus

34. If the government imposes a minimum price below the existing market price it will
(A) Cause supply to shift to the left
(B) Cause demand to contract
(C) Cause supply to contract
(D) Have no effect

35. If the government imposes a maximum price below the existing market price it will
(A) Cause supply to expand
(B) Cause demand to contract
(C) Create a shortage
(D) Create a surplus

36. A market can fail in all of the following cases, except
(A) Under-supply of public goods
(B) Under-supply of merit goods
(C) Not labelling foods which contain unhealthy ingredients
(D) Creating incentives through the price mechanism

37. The price mechanism works mainly through
(A) Incentives and signalling
(B) Taxes and subsidies
(C) Minimum and maximum prices
(D) Government spending and welfare benefits

38. Public goods will be under-supplied in a market economy because public goods exhibit
(A) Reject-ability
(B) Diminish-ability
(C) Non-excludability
(D) Zero opportunity cost

39. Road congestion can be reduced by all of the following, except
(A) Subsidising car production
(B) Taxing car ownership
(C) Pricing road-space
(D) Improving public transport

40. The best measure of economic development is
(A) GNP
(B) HDI
(C) PQLI
(D) none of these

ANSWERS: ECONOMICS LECTURER SAMPLE TEST
31(B) 32(B) 33(A) 34(D) 35(C)
36(D) 37(A) 38(C) 39(A) 40(B)

41. All of the following could reduce waste, except
(A) Introducing a landfill tax
(B) Providing less information
(C) Taxing rubbish bags
(D) Reducing packaging on products

42. It is reasonable to expect students or their families to contribute to their tuition fees at university because
(A) It will provide the universities with more revenue
(B) The State should not contribute to their fees
(C) The cost of education continuously rises
(D) The average university student derives private benefit

43. Government intervention to correct a market failure will be inefficient if
(A) The cost of implementation is greater than the benefit
(B) It causes unemployment
(C) Businesses have to close
(D) Anyone loses from their actions

44. Highly unstable agricultural prices are often caused by
(A) Governments buying up stock
(B) The price mechanism working effectively
(C) Supply shocks like diseases
(D) Highly elastic demand and supply

45. Buffer stocks can be criticised for all of the following, except
(A) They need a good harvest to start
(B) Not all goods can be stored
(C) They cost money to manage
(D) They can help stabilise prices

46. To determine the correct level of GNP, it is necessary to
(A) add up the values of goods and services during one year
(B) add up all savings
(C) count all imports
(D) add up the value of semi finished goods

47. Transfer payment means
(A) Bank loans
(B) The payment without work
(C) Text payments
(D) Payments made to all factors of production

48. If we compare GDP and GNP, then
(A) GNP = GDP – net income from abroad
(B) GNP = GDP + net income from abroad
(C) GNP = NNP – net income from abroad
(D) GNP = NNP + net income from abroad

49. A TV set purchased from a retail store is an example of
(A) Intermediate goods
(B) Capital goods
(C) Surplus goods
(D) Final goods

50. Net Investment is
(A) Gross Investment minus household Investment
(B) Gross Investment minus government taxes
(C) Gross investment minus capital consumption allowance
(D) None of the above

ANSWERS: ECONOMICS LECTURER TEST SAMPLE PAPER
41(B) 42(D) 43(A) 44(C) 45(D)
46(A) 47(B) 48(B) 49(D) 50(C)

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