Introduction To Micro Economics

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  • 1/68 Questions

    Scarcity is a situation in which_______________________ .

    • Wants exceed the resources available to satisfy them
    • Something is being wasted
    • People are poor
    • None of the above
Please wait...
Introduction To Micro Economics - Quiz
About This Quiz

This quiz, titled 'Introduction To Micro Economics', assesses key principles such as scarcity, rational decision-making, and economic definitions. It focuses on understanding human behavior in economic contexts, highlighting the challenges of satisfying unlimited wants with limited resources.

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  • 2. 

    Macro Economics is the study of______________ .       

    • All aspects of scarcity

    • The national economy and the global economy as a whole

    • Big businesses

    • The decisions of individual businesses and people

    Correct Answer
    A. The national economy and the global economy as a whole
    Explanation
    Macro Economics is the study of the national economy and the global economy as a whole. It focuses on analyzing and understanding the behavior and performance of the economy on a larger scale, including factors such as national income, employment, inflation, and economic growth. It examines the interrelationships between different sectors, such as government, households, and businesses, and how their decisions and actions impact the overall economy. By studying macroeconomics, economists aim to formulate policies and strategies that can promote stable economic growth and improve the well-being of individuals and societies.

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  • 3. 

    In a free market economy, when consumers increase their purchase of a good and the level of ____________  exceeds_________then prices tend to rise.  

    • Demand, supply

    • Supply, demand

    • Prices, demand

    • Profits, supply.

    Correct Answer
    A. Demand, supply
    Explanation
    When consumers increase their purchase of a good, it leads to an increase in demand for that good. If the level of demand exceeds the level of supply, it creates a shortage in the market. In order to balance the demand and supply, prices tend to rise. Therefore, the correct answer is "Demand, supply".

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  • 4. 

    A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of

    • Macro-economics.

    • Descriptive economics.

    • Micro-economics.

    • Normative economics.

    Correct Answer
    A. Macro-economics.
    Explanation
    The study of how increases in the corporate income tax rate will affect the national unemployment rate falls under the category of macro-economics. Macroeconomics focuses on the overall behavior and performance of an economy as a whole, including factors such as unemployment, inflation, and economic growth. This study specifically examines the relationship between the corporate income tax rate and the national unemployment rate, which is a macroeconomic concern as it looks at the impact on the entire economy rather than individual firms or industries.

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  • 5. 

    In a mixed economy,

    • All economic decisions are taken by the central authority.

    • All economic decisions are taken by private entrepreneurs.

    • Economic decisions are partly taken by the state and partly by the private entrepreneurs

    • None of the above.

    Correct Answer
    A. Economic decisions are partly taken by the state and partly by the private entrepreneurs
    Explanation
    In a mixed economy, economic decisions are not solely taken by the central authority or private entrepreneurs. Instead, they are made through a combination of both. This means that some decisions are made by the state, such as regulations and policies, while others are made by private entrepreneurs, such as business investments and production decisions. This allows for a balance between government intervention and market forces, aiming to promote both economic growth and social welfare.

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  • 6. 

    Which of the following is not a micro-economic subject matter?

    • The price of mangoes.

    • The cost of producing a fire truck for the fire department of Delhi, India.

    • The quantity of mangoes produced for the mangoes market.

    • The national economy's annual rate of growth.

    Correct Answer
    A. The national economy's annual rate of growth.
    Explanation
    The national economy's annual rate of growth is not a micro-economic subject matter because it deals with the overall performance and trends of the entire economy, rather than focusing on individual markets or specific products like mangoes or fire trucks. Microeconomics, on the other hand, studies the behavior of individual consumers, producers, and markets, and analyzes how their decisions impact prices, quantities, and resource allocation.

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  • 7. 

    The law of scarcity :

    • Does not apply to rich, developed countries.

    • Applies only to the less developed countries.

    • Implies that consumers wants will be satisfied in a socialistic system.

    • Implies that consumers wants will never be completely satisfied.

    Correct Answer
    A. Implies that consumers wants will never be completely satisfied.
    Explanation
    The law of scarcity states that there are limited resources available to fulfill unlimited wants and needs. This means that no matter how rich or developed a country is, there will always be scarcity because there will always be more wants and needs than there are resources to fulfill them. Therefore, the correct answer is that the law of scarcity implies that consumers' wants will never be completely satisfied.

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  • 8. 

    Which of the following is the best general definition of the study of Economics?

    • Inflation and unemployment in a growing economy.

    • Business decision making under foreign competition.

    • Individual and social choice in the face of scarcity.

    • The best way to invest in the stock market.

    Correct Answer
    A. Individual and social choice in the face of scarcity.
    Explanation
    The study of Economics is concerned with how individuals and societies make choices when faced with limited resources. It examines how people allocate resources to meet their needs and wants, considering the concept of scarcity. This definition encompasses the fundamental principles of Economics, including the study of production, consumption, and distribution of goods and services. It also encompasses the analysis of individual decision-making and the impact of these decisions on society as a whole.

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  • 9. 

    Find the correct match :

    • An enquiry into the nature and causes of the wealth of the nation : A.C.Pigou.

    • Science which deals with wealth : Alfred Marshall.

    • Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses : Robbins.

    • The range of our enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money : Adam Smith.

    Correct Answer
    A. Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses : Robbins.
    Explanation
    The correct match is "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses : Robbins." This statement accurately defines the field of economics, which focuses on understanding how individuals and societies make choices to allocate scarce resources to fulfill their unlimited wants and needs. It highlights the fundamental concept of scarcity and the trade-offs that individuals and societies face when making economic decisions.

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  • 10. 

    What implication(s) does resource scarcity have for the satisfaction of wants?

    • Not all wants can be satisfied.

    • We will never be faced with the need to make choices.

    • We must develop ways to decrease our individual wants.

    • The discovery of new natural resources is necessary to increase our ability to satisfy wants.

    Correct Answer
    A. Not all wants can be satisfied.
    Explanation
    Resource scarcity refers to a limited availability of resources in relation to the unlimited wants and desires of individuals. This means that there is not enough resources to fulfill all the wants of people. Therefore, not all wants can be satisfied due to the scarcity of resources. This implies that individuals will have to prioritize and make choices about which wants to fulfill and which ones to forgo. The limited availability of resources necessitates the need for individuals to make decisions and allocate resources efficiently in order to maximize satisfaction.

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  • 11. 

    The central problem in economics is that of  

    • Comparing the success of command versus market economies.

    • Guaranteering that production occurs in the most efficient manner.

    • Guaranteering a minimum level of income for ev^ry citizen.

    • Allocating scarce resources in such a manner that society's unlimited needs or wants are satisfied as well as possible.

    Correct Answer
    A. Allocating scarce resources in such a manner that society's unlimited needs or wants are satisfied as well as possible.
    Explanation
    The central problem in economics is the allocation of scarce resources in a way that maximizes the satisfaction of society's unlimited needs or wants. This means finding the most efficient way to distribute resources to meet the demands of individuals and society as a whole. The other options mentioned, such as comparing command versus market economies or guaranteeing a minimum level of income, are not the central problem in economics, but rather specific issues that may be addressed within the broader context of resource allocation.

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  • 12. 
    Unemployment or underemployment of one or more resources is illustrated by production at point - ProProfs

    Unemployment or underemployment of one or more resources is illustrated by production at point

    • A

    • C

    • U

    Correct Answer
    A. U
    Explanation
    The correct answer is U. Point U represents unemployment or underemployment of one or more resources. This means that the economy is not utilizing all of its available resources, leading to a decrease in production.

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  • 13. 

    An economy achieves aproductive efficiencya when :

    • Resources are employed in their most highly valued uses.

    • The best resources are employed.

    • The total number of goods produced is greatest.

    • Goods and services are produced at least cost and no resources are wasted.

    Correct Answer
    A. Goods and services are produced at least cost and no resources are wasted.
    Explanation
    This answer correctly identifies productive efficiency as the production of goods and services at the least cost and without any waste of resources. This means that resources are used efficiently and effectively, resulting in the maximum output of goods and services.

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  • 14. 

    Labour intensive technique would get chosen in a

    • Labour surplus economy.

    • Capital surplus economy.

    • Developed economy.

    • Developing economy.

    Correct Answer
    A. Labour surplus economy.
    Explanation
    Labour intensive techniques refer to methods of production that require a large amount of manual labor relative to capital investment. In a labour surplus economy, there is a high availability of labor compared to the demand for it. This means that there is a large pool of unemployed or underemployed workers who are willing to work for lower wages. Therefore, choosing labour intensive techniques would be beneficial as it would help absorb the surplus labour and reduce unemployment rates. In contrast, in a capital surplus economy, there is an abundance of capital relative to labor, making capital-intensive techniques more viable. In developed and developing economies, the choice of technique would depend on various factors, including the availability of resources, technological advancements, and government policies.

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  • 15. 

    In a free market economy the allocation or resources is determined by

    • Votes taken by consumers

    • A central planning authority.

    • Consumer preference.

    • The level of profits of firms.

    Correct Answer
    A. Consumer preference.
    Explanation
    In a free market economy, the allocation of resources is determined by consumer preference. This means that the goods and services produced are based on what consumers want and are willing to pay for. Consumer preference drives the demand for certain products, which in turn influences the production decisions made by firms. The market responds to consumer preferences by producing more of the goods and services that are in demand, while reducing production of those that are not. This ensures that resources are allocated efficiently and in line with consumer needs and wants.

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  • 16. 

    Macroeconomics is also called _______________ economics.

    • Applied

    • Aggregate

    • Experimental

    • None of the above

    Correct Answer
    A. Aggregate
    Explanation
    Macroeconomics is also called "aggregate" economics because it focuses on studying the overall behavior and performance of an entire economy. It examines the aggregate variables such as national income, unemployment rate, inflation, and economic growth, rather than individual markets or specific industries. By analyzing these aggregate variables, macroeconomics provides insights into the functioning of the economy as a whole and helps in formulating policies to stabilize and improve its performance.

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  • 17. 

    Which of the following does not suggest a macro approach for India?  

    • Determining the GNP of India.

    • Finding the causes of failure of X and co.

    • Identifying the causes of inflation in India.

    • Analyse the causes of failure of industry in providing large scale employment.

    Correct Answer
    A. Finding the causes of failure of X and co.
    Explanation
    The question asks for the option that does not suggest a macro approach for India. A macro approach focuses on the overall economy or society as a whole. Determining the GNP of India, identifying the causes of inflation in India, and analyzing the causes of failure of industry in providing large scale employment all involve examining the broader economic factors and societal issues. However, finding the causes of failure of X and co. suggests a micro approach, as it focuses on a specific company or organization rather than the larger economy.

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  • 18. 

     Which of the following is likely to cause an inward shift in a country's PPC?

    • Earthquake destroying resources of the country.

    • Scientists discovering new machines.

    • Workers getting jobs in the new metro - project.

    • The country finds new reserves of crude oil.

    Correct Answer
    A. Earthquake destroying resources of the country.
    Explanation
    An earthquake destroying resources of a country is likely to cause an inward shift in a country's PPC. This is because the destruction of resources will reduce the country's productive capacity, leading to a decrease in the potential output of goods and services. As a result, the country will be able to produce less than before the earthquake, causing a shift inward in its production possibilities curve.

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  • 19. 

    The various combinations of goods that can be produced in any economy when it uses its available sources and technology efficiently are depicted by

    • Demand curve.

    • Production curve.

    • Supply curve.

    • Production possibilities curve.

    Correct Answer
    A. Production possibilities curve.
    Explanation
    The production possibilities curve represents the different combinations of goods that can be produced in an economy when all available resources and technology are used efficiently. It shows the maximum output that can be achieved for different combinations of goods, illustrating the trade-offs that need to be made when allocating resources. The curve demonstrates the concept of scarcity and the need to make choices in production.

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  • 20. 

    If the marginal (additional) opportunity cost is a constant then the PPC would be

    • Convex.

    • Straight line

    • Backward bending.

    • Concave.

    Correct Answer
    A. Straight line
    Explanation
    If the marginal (additional) opportunity cost is a constant, it means that the resources being used to produce one good can be easily and efficiently shifted to produce another good without any increase in cost. In this case, the production possibilities curve (PPC) would be a straight line. This indicates that the trade-off between producing the two goods remains constant and there is a constant rate of transformation between the two goods.

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  • 21. 

    In an economy people have the freedom to buy or not to buy the goods offered in the market place, and this freedom to choose what they buy dictates what producers will ultimately produce. The key term defining this condition is

    • Economic power of choice.

    • Consumer sovereignty.

    • Positive economy.

    • Producer sovereignty.

    Correct Answer
    A. Consumer sovereignty.
    Explanation
    Consumer sovereignty refers to the power and control that consumers have in determining the goods and services that are produced in the market. In an economy with consumer sovereignty, individuals have the freedom to choose whether or not to purchase the goods offered in the market. This freedom of choice ultimately influences producers to produce goods that consumers demand, as they strive to meet consumer preferences and maximize profits. Therefore, consumer sovereignty accurately describes the condition where consumers dictate what producers will ultimately produce.

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  • 22. 

    The task of economic science is to__________________________ .      

    • Save the earth from the overuse of natural resources

    • Help us to understand how the economic world works

    • Tell us what is good for us

    • Make moral choices about things like drugs

    Correct Answer
    A. Help us to understand how the economic world works
    Explanation
    The task of economic science is to help us understand how the economic world works. Economic science involves the study of production, distribution, and consumption of goods and services. It aims to analyze and explain economic phenomena, such as supply and demand, market behavior, and economic policies. By understanding how the economic world operates, individuals, businesses, and governments can make informed decisions and develop strategies to improve economic outcomes.

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  • 23. 
    Which of the following bundles of goods could not be produced with the resources the economy currently has? - ProProfs

    Which of the following bundles of goods could not be produced with the resources the economy currently has?

    • A

    • B

    • C

    • D

    Correct Answer
    A. D
  • 24. 

    In which economic system all the means of production are owned and controlled by private individuals for profit.

    • Socialism

    • Capitalism

    • Mixed economy

    • Communism

    Correct Answer
    A. Capitalism
    Explanation
    In capitalism, all the means of production are owned and controlled by private individuals for profit. This means that individuals and businesses have the freedom to own and operate their own businesses, make decisions regarding production and distribution, and compete in the market to maximize their profits. Unlike socialism or communism, where the means of production are owned and controlled by the state or the community, capitalism emphasizes private ownership and individual initiative in the pursuit of profit.

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  • 25. 

    Economics may be defined as the science that explains______________ .                                  

    • The choices that we make as we cope with scarcity

    • The decisions made by politicians

    • The decisions made by households

    • All human behavior

    Correct Answer
    A. The choices that we make as we cope with scarcity
    Explanation
    Economics may be defined as the science that explains the choices that we make as we cope with scarcity. This definition highlights the fundamental concept of scarcity, which refers to the limited availability of resources relative to the unlimited wants and needs of individuals and society. Economics studies how individuals, households, businesses, and governments make decisions to allocate these scarce resources in order to satisfy their needs and wants. By understanding the choices made in response to scarcity, economics seeks to explain how resources are used, distributed, and allocated in society.

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  • 26. 

     When productivity increases_____________________ .

    • Prices rise

    • Living standards improve

    • There are fewer good jobs

    • Living standards deteriorate

    Correct Answer
    A. Living standards improve
    Explanation
    When productivity increases, it means that more output is being produced with the same amount of input. This leads to an increase in the overall wealth and resources available in the economy. As a result, living standards improve because there is more wealth to be distributed among the population. This can lead to higher wages, better access to goods and services, and an overall improvement in the quality of life for individuals.

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  • 27. 

    Larger production of ____________ goods would lead to higher production in future.

    • Consumer goods

    • Capital goods

    • Agricultural goods

    • Public goods

    Correct Answer
    A. Capital goods
    Explanation
    Larger production of capital goods would lead to higher production in the future because capital goods are used in the production of other goods and services. They include machinery, equipment, and infrastructure that are necessary for the production process. By increasing the production of capital goods, businesses can improve their efficiency and productivity, which in turn can lead to increased production of consumer goods, agricultural goods, and public goods. Therefore, focusing on the production of capital goods can have a positive impact on overall production levels in the future.

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  • 28. 

    If the PPF is linear, i.e., a straight line, which of the following is true?

    • As the production of a good increases, the opportunity cost of that good rises.

    • As the production of a good increases, the opportunity cost of that good falls.

    • Opportunity costs are constant.

    • The economy is not at full employment when operating on the PPF.

    Correct Answer
    A. Opportunity costs are constant.
    Explanation
    If the PPF is linear, it means that the opportunity cost of producing one good in terms of the other remains constant. This is because the resources used to produce goods are perfectly substitutable, and there is no specialization or trade-off between the two goods. Therefore, as the production of a good increases, the opportunity cost of that good remains the same.

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  • 29. 

    The term 'Economics' owes its origin to the Greek word

    • Aikonomia

    • Wikonomia

    • Oikonomia

    • None of the above

    Correct Answer
    A. Oikonomia
    Explanation
    The correct answer is "Oikonomia." The term "Economics" originates from the Greek word "Oikonomia." This word refers to the management and administration of a household or estate. Over time, it evolved to encompass the study of the production, distribution, and consumption of goods and services in a broader societal context.

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  • 30. 

    Production Possibilities curve is also know as   

    • Demand curve

    • Supply curve

    • Indifference curve

    • Transformation curve

    Correct Answer
    A. Transformation curve
    Explanation
    The correct answer is Transformation curve. The Production Possibilities curve, also known as the Transformation curve, illustrates the different combinations of two goods that can be produced with limited resources. It shows the trade-offs and opportunity costs involved in producing one good over another. The curve demonstrates the concept of efficiency and scarcity in an economy, as it represents the maximum output that can be achieved given the available resources and technology.

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  • 31. 

    Choice is created by the

    • Abundance of resources

    • Urgency of needs

    • Non-availability of resources

    • Scarcity of resource

    Correct Answer
    A. Scarcity of resource
    Explanation
    The correct answer is "Scarcity of resource." This choice suggests that the creation of choice is a result of limited availability of resources. When resources are scarce, individuals and societies are forced to make decisions and prioritize their needs and wants. The scarcity of resources creates competition and the need to allocate resources efficiently, resulting in the creation of choices.

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  • 32. 

    Economic goods are considered scarce resources because they     

    • Cannot be increased in quantity.

    • Do not exist in adequate quantity to satisfy social requirements.

    • Are of primary importance in satisfying social requirements.

    • Are limited to man made goods.

    Correct Answer
    A. Do not exist in adequate quantity to satisfy social requirements.
    Explanation
    Economic goods are considered scarce resources because they do not exist in adequate quantity to satisfy social requirements. This means that there is a limited supply of economic goods in relation to the demand or needs of society. As a result, individuals and societies must make choices about how to allocate these scarce resources to meet their needs and wants. This scarcity gives economic goods value and necessitates the study of economics to understand how to best allocate and utilize these resources.

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  • 33. 

    Capital intensive technique would get chosen in a

    • Labour surplus economy.

    • Capital surplus economy.

    • Developed economy.

    • Developing economy.

    Correct Answer
    A. Capital surplus economy.
    Explanation
    In a capital surplus economy, there is an abundance of capital available for investment. This means that businesses have access to a large amount of financial resources to invest in capital-intensive techniques, which require a significant amount of capital to operate efficiently. In such an economy, businesses can afford to invest in expensive machinery, equipment, and technology to increase productivity and efficiency. Therefore, a capital surplus economy would be more likely to choose capital-intensive techniques over labor-intensive ones.

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  • 34. 

    Identify the correct statement :

    • In deductive method logic proceeds from the particular to the general.

    • Micro and Macro-Economics are interdependent.

    • In a capitalist economy, the economic problems are solved by Planning Commission.

    • Higher the prices lower is the quantity demanded of a product is a normative statement.

    Correct Answer
    A. Micro and Macro-Economics are interdependent.
    Explanation
    Micro and Macro-Economics are interdependent because they both study different aspects of the economy and are interconnected. Microeconomics focuses on individual economic units such as households and firms, while macroeconomics studies the overall performance and behavior of the entire economy. Changes in macroeconomic factors, such as inflation or unemployment, can have an impact on microeconomic decisions, and vice versa. Therefore, understanding both micro and macroeconomics is crucial for a comprehensive understanding of the economy.

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  • 35. 

    Ram       :    My corn harvest this year is poor. Krishan : Don't worry. Price increases will compensate for the fall in quantity supplied. Vinod     : Climate affects crop yields. Some years are bad, others are good. Madhur  : The Government ought to guarantee that our income will not fall. In this conversation, the normative statement is made by

    • Ram

    • Krishan

    • Vinod

    • Madhur

    Correct Answer
    A. Madhur
    Explanation
    Madhur's statement is a normative statement because it expresses an opinion about what the government ought to do. Normative statements are subjective and based on personal values or beliefs, rather than objective facts. In contrast, the other statements in the conversation are either providing explanations or making predictions based on cause and effect relationships.

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  • 36. 

    Periods of less than full employment correspond to  

    • Points outside the PPF.

    • Points inside the PPF.

    • Points on the PPF.

    • Either points inside or outside the PPF.

    Correct Answer
    A. Points inside the PPF.
    Explanation
    Periods of less than full employment correspond to points inside the PPF. The PPF represents the maximum potential output that an economy can produce with its given resources and technology. When the economy is operating below full employment, it means that there is unused or underutilized resources, such as unemployed labor or idle factories. As a result, the economy is producing less than its maximum potential, which is represented by points inside the PPF.

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  • 37. 

    Rational decision making requires that :

    • One's choices be arrived at logically and without error.

    • One's choices be consistent with one's goals.

    • One's choices never vary.

    • One makes choices that do not involve trade-offs.

    Correct Answer
    A. One's choices be consistent with one's goals.
    Explanation
    Rational decision making requires that one's choices be consistent with one's goals. This means that when making decisions, individuals should consider their long-term objectives and ensure that their choices align with these goals. By doing so, individuals can make logical and informed decisions that are in line with their desired outcomes. This approach to decision making helps individuals prioritize their actions and make choices that are most likely to lead to the achievement of their goals.

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  • 38. 

    Economic choices can be summarized in five big questions. They are____________.   

    • What, how, who, where, and would you please

    • Why not, what, how, when, and where

    • What, how, when, where, and why

    • What, how, when, where, and who

    Correct Answer
    A. What, how, when, where, and who
    Explanation
    The correct answer is "What, how, when, where, and who." These five questions are commonly used to summarize the key aspects of economic choices. "What" refers to what goods and services are produced, "how" refers to the methods and resources used in production, "when" refers to the timing of production and consumption, "where" refers to the location of production and consumption, and "who" refers to the individuals or groups involved in production and consumption.

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  • 39. 

    An example of 'positive' economic analysis would be :

    • An analysis of the relationship between the price of food and the quantity purchased.

    • Determining how much income each person should be guaranteed.

    • Determining the 'fair' price for food.

    • Deciding how to distribute the output of the economy.

    Correct Answer
    A. An analysis of the relationship between the price of food and the quantity purchased.
    Explanation
    Positive economic analysis refers to the objective examination of economic phenomena without any value judgments or opinions. It focuses on describing and explaining how economic variables are related to each other. In the given options, analyzing the relationship between the price of food and the quantity purchased is an example of positive economic analysis. This analysis would involve studying how changes in food prices affect the amount of food people buy, without making any judgments about whether the prices are fair or whether income guarantees should be implemented.

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  • 40. 

    From the national point of view which of the following indicates micro approach?    

    • Per capita income of India.

    • Underemployment in agricultural sector.

    • Lock out in TELCO.

    • Total savings in India.

    Correct Answer
    A. Lock out in TELCO.
    Explanation
    The lockout in TELCO indicates a micro approach from a national point of view because it focuses on a specific company or industry. The lockout is a labor issue within TELCO, which is a specific entity, rather than a broader economic indicator like per capita income or total savings in the country. Underemployment in the agricultural sector could be seen as a mix of micro and macro approaches, as it pertains to a specific sector but also has implications for the overall economy.

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  • 41. 

    The branch of economic theory that deals with the problem of allocation of resources is

    • Micro-economic theory.

    • Macro-economic theory.

    • Econometrics.

    • None of the above.

    Correct Answer
    A. Micro-economic theory.
    Explanation
    Micro-economic theory is the correct answer because it specifically focuses on the allocation of resources. It studies the behavior of individual agents, such as consumers and firms, and how they make decisions regarding the allocation of scarce resources. Micro-economic theory analyzes supply and demand, market equilibrium, production, and consumption patterns to understand how resources are allocated efficiently or inefficiently in a market economy. On the other hand, macro-economic theory deals with the overall performance and behavior of the economy as a whole, including factors like inflation, unemployment, and economic growth. Econometrics is a branch of economics that applies statistical methods to analyze economic data.

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  • 42. 

    Which of the following is a normative statement?

    • Planned economies allocate resources via government departments.

    • Most transitional economies have experienced problems of falling output and rising prices over the past decade.

    • There is a greater degree of consumer sovereignty in market economies than planned economies.

    • Reducing inequality should be a major priority for mixed economies.

    Correct Answer
    A. Reducing inequality should be a major priority for mixed economies.
    Explanation
    The statement "Reducing inequality should be a major priority for mixed economies" is a normative statement because it expresses a value judgment and presents an opinion about what should be done. It is not a statement of fact but rather a statement of what the speaker believes should be the case.

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  • 43. 
    Moving from point A to point D, what happens to the opportunity cost of producing each additional unit of consumer goods? - ProProfs

    Moving from point A to point D, what happens to the opportunity cost of producing each additional unit of consumer goods?

    • It increases.

    • It decreases.

    • It remains constant.

    • It increase up to point B, then falls thereafter.

    Correct Answer
    A. It increases.
    Explanation
    As we move from point A to point D, the opportunity cost of producing each additional unit of consumer goods increases. This means that in order to produce more consumer goods, we have to give up more and more units of capital goods. This is because as we specialize more in the production of consumer goods, we have to divert resources away from the production of capital goods, leading to a higher opportunity cost. Therefore, the opportunity cost of producing each additional unit of consumer goods increases as we move from point A to point D.

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  • 44. 

    Which of the following would be considered a disadvantage of allocating resources using a market system?

    • Income will tend to be unevenly distributed.

    • Significant unemployment may occur.

    • It cannot prevent the wastage of scarce economic resources.

    • Profits will tend to be low.

    Correct Answer
    A. Income will tend to be unevenly distributed.
    Explanation
    Allocating resources using a market system can lead to uneven distribution of income. In a market system, resources are allocated based on supply and demand, and individuals are rewarded based on their ability to generate income. This can result in some individuals accumulating significant wealth, while others struggle to meet their basic needs. The market system does not guarantee equal distribution of resources or income, which can lead to income inequality and social disparities.

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  • 45. 

    Oikonomia means   

    • Industry

    • Household

    • Services

    • None of these

    Correct Answer
    A. Household
    Explanation
    Oikonomia is a Greek word that translates to "household" in English. In ancient Greece, oikonomia referred to the management and organization of a household, including the management of resources, finances, and domestic affairs. It did not refer to industry, services, or any other options listed.

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  • 46. 
    Which point on the PPF shows a "productively efficient" level of output? - ProProfs

    Which point on the PPF shows a "productively efficient" level of output?

    • A

    • B

    • C

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The correct answer is "All of the above." This means that all points on the PPF show a "productively efficient" level of output. Productive efficiency occurs when an economy is producing goods and services at the maximum possible level given its resources and technology. Therefore, any point on the PPF represents the most efficient allocation of resources and production possibilities.

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  • 47. 
    What is the opportunity cost of moving from point A to point B? - ProProfs

    What is the opportunity cost of moving from point A to point B?

    • 100 units of capital goods.

    • 8 units of consumer goods.

    • 90 units of capital goods.

    • 10 units of capital goods.

    Correct Answer
    A. 10 units of capital goods.
    Explanation
    The opportunity cost of moving from point A to point B is the value of the next best alternative that is given up. In this case, the next best alternative to moving from point A to point B is producing 10 units of capital goods. Therefore, the opportunity cost of moving from point A to point B is 10 units of capital goods.

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  • 48. 

    Which is one of the future consequences of an increase in the current level of consumption in the India?

    • Slower economic growth in the future.

    • Greater economic growth in the future.

    • No change in our economic growth rate.

    • Greater capital accumulation in the future. Use the figure at right to answer

    Correct Answer
    A. Slower economic growth in the future.
    Explanation
    An increase in the current level of consumption in India can lead to slower economic growth in the future. This is because when consumption increases, it puts pressure on the available resources and can lead to inflation. Inflation can then result in higher interest rates and reduced investment, which can hinder economic growth. Additionally, increased consumption may lead to a higher trade deficit, as more goods are imported to meet the demand. This can also have a negative impact on economic growth. Therefore, it is likely that an increase in consumption will result in slower economic growth in the future.

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  • 49. 
    Which of the following clearly represents a movement toward greater productive efficiency? - ProProfs

    Which of the following clearly represents a movement toward greater productive efficiency?

    • A movement from point A to point B.

    • A movement from point C to point D.

    • A movement from point F to point C.

    • A movement from point E to point B.

    Correct Answer
    A. A movement from point F to point C.
    Explanation
    A movement from point F to point C represents a movement toward greater productive efficiency because it indicates that resources are being allocated more efficiently, resulting in an increase in output without an increase in input. This movement suggests that the production process has become more streamlined and productive, leading to improved efficiency and effectiveness in utilizing resources.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 27, 2012
    Quiz Created by
    Sweetsalman123
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