Introduction To Micro Economics
Questions and Answers
- 1.
Find the correct match :
- A.
An enquiry into the nature and causes of the wealth of the nation : A.C.Pigou.
- B.
Science which deals with wealth : Alfred Marshall.
- C.
Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses : Robbins.
- D.
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
C. 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.Rate this question:
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- 2.
The law of scarcity :
- A.
Does not apply to rich, developed countries.
- B.
Applies only to the less developed countries.
- C.
Implies that consumers wants will be satisfied in a socialistic system.
- D.
Implies that consumers wants will never be completely satisfied.
Correct Answer
D. 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.Rate this question:
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- 3.
Who expressed the view that aEconomics is neutral between enda?
- A.
Robbins
- B.
Marshall
- C.
Pigou
- D.
Adam Smith
Correct Answer
A. RobbinsExplanation
Robbins expressed the view that economics is neutral between ends. This means that economics as a discipline does not make value judgments about what ends or goals individuals should pursue. Instead, it focuses on analyzing the means or methods individuals use to achieve their ends. Robbins argued that economics should be value-free and objective, studying how individuals allocate scarce resources to satisfy their unlimited wants. This perspective is often associated with the neoclassical school of economics.Rate this question:
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- 4.
Which of the following is the best general definition of the study of Economics?
- A.
Inflation and unemployment in a growing economy.
- B.
Business decision making under foreign competition.
- C.
Individual and social choice in the face of scarcity.
- D.
The best way to invest in the stock market.
Correct Answer
C. 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.Rate this question:
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- 5.
What implication(s) does resource scarcity have for the satisfaction of wants?
- A.
Not all wants can be satisfied.
- B.
We will never be faced with the need to make choices.
- C.
We must develop ways to decrease our individual wants.
- D.
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.Rate this question:
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- 6.
Rational decision making requires that :
- A.
One's choices be arrived at logically and without error.
- B.
One's choices be consistent with one's goals.
- C.
One's choices never vary.
- D.
One makes choices that do not involve trade-offs.
Correct Answer
B. 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.Rate this question:
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- 7.
Economics according to Lionel Robbins is a
- A.
Normative science
- B.
Applied science
- C.
Positive science
- D.
Experimental science
Correct Answer
C. Positive scienceExplanation
According to Lionel Robbins, economics is considered a positive science. Positive science refers to the study of facts and objective phenomena, focusing on what "is" rather than what "ought to be." In the context of economics, it means analyzing and understanding economic behavior and phenomena as they exist in reality, without making subjective value judgments. This approach involves using empirical evidence, data, and mathematical models to explain and predict economic outcomes. By categorizing economics as a positive science, Robbins emphasizes the importance of studying and understanding economic phenomena based on observable facts and evidence.Rate this question:
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- 8.
Which of the following is a normative statement?
- A.
Planned economies allocate resources via government departments.
- B.
Most transitional economies have experienced problems of falling output and rising prices over the past decade.
- C.
There is a greater degree of consumer sovereignty in market economies than planned economies.
- D.
Reducing inequality should be a major priority for mixed economies.
Correct Answer
D. 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.Rate this question:
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- 9.
Macroeconomics is also called _______________ economics.
- A.
Applied
- B.
Aggregate
- C.
Experimental
- D.
None of the above
Correct Answer
B. AggregateExplanation
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.Rate this question:
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- 10.
An example of 'positive' economic analysis would be :
- A.
An analysis of the relationship between the price of food and the quantity purchased.
- B.
Determining how much income each person should be guaranteed.
- C.
Determining the 'fair' price for food.
- D.
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.Rate this question:
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- 11.
Identify the correct statement :
- A.
In deductive method logic proceeds from the particular to the general.
- B.
Micro and Macro-Economics are interdependent.
- C.
In a capitalist economy, the economic problems are solved by Planning Commission.
- D.
Higher the prices lower is the quantity demanded of a product is a normative statement.
Correct Answer
B. 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.Rate this question:
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- 12.
A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of
- A.
Macro-economics.
- B.
Descriptive economics.
- C.
Micro-economics.
- D.
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.Rate this question:
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- 13.
Which of the following does not suggest a macro approach for India?
- A.
Determining the GNP of India.
- B.
Finding the causes of failure of X and co.
- C.
Identifying the causes of inflation in India.
- D.
Analyse the causes of failure of industry in providing large scale employment.
Correct Answer
B. 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.Rate this question:
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- 14.
Economic goods are considered scarce resources because they
- A.
Cannot be increased in quantity.
- B.
Do not exist in adequate quantity to satisfy social requirements.
- C.
Are of primary importance in satisfying social requirements.
- D.
Are limited to man made goods.
Correct Answer
B. 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.Rate this question:
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- 15.
From the national point of view which of the following indicates micro approach?
- A.
Per capita income of India.
- B.
Underemployment in agricultural sector.
- C.
Lock out in TELCO.
- D.
Total savings in India.
Correct Answer
C. 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.Rate this question:
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- 16.
In a free market economy the allocation or resources is determined by
- A.
Votes taken by consumers
- B.
A central planning authority.
- C.
Consumer preference.
- D.
The level of profits of firms.
Correct Answer
C. 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.Rate this question:
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- 17.
A capitalist economy uses _________ as the principal means of allocating resources.
- A.
Demand
- B.
Supply
- C.
Efficiency
- D.
Prices
Correct Answer
D. PricesExplanation
In a capitalist economy, prices serve as the principal means of allocating resources. Prices are determined by the interaction of supply and demand in the market. When demand for a particular good or service is high, the price tends to increase, signaling to producers that there is a greater opportunity for profit. This incentivizes producers to allocate more resources towards the production of that good or service. On the other hand, when demand is low, the price decreases, signaling to producers that there is less opportunity for profit, leading to a reallocation of resources towards more profitable ventures. Therefore, prices play a crucial role in determining how resources are allocated in a capitalist economy.Rate this question:
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- 18.
In a free market economy, when consumers increase their purchase of a good and the level of ____________ exceeds_________then prices tend to rise.
- A.
Demand, supply
- B.
Supply, demand
- C.
Prices, demand
- D.
Profits, supply.
Correct Answer
A. Demand, supplyExplanation
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".Rate this question:
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- 19.
Which of the following would be considered a disadvantage of allocating resources using a market system?
- A.
Income will tend to be unevenly distributed.
- B.
Significant unemployment may occur.
- C.
It cannot prevent the wastage of scarce economic resources.
- D.
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.Rate this question:
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- 20.
In a mixed economy,
- A.
All economic decisions are taken by the central authority.
- B.
All economic decisions are taken by private entrepreneurs.
- C.
Economic decisions are partly taken by the state and partly by the private entrepreneurs
- D.
None of the above.
Correct Answer
C. Economic decisions are partly taken by the state and partly by the private entrepreneursExplanation
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.Rate this question:
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- 21.
The central problem in economics is that of
- A.
Comparing the success of command versus market economies.
- B.
Guaranteering that production occurs in the most efficient manner.
- C.
Guaranteering a minimum level of income for ev^ry citizen.
- D.
Allocating scarce resources in such a manner that society's unlimited needs or wants are satisfied as well as possible.
Correct Answer
D. 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.Rate this question:
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- 22.
An economy achieves aproductive efficiencya when :
- A.
Resources are employed in their most highly valued uses.
- B.
The best resources are employed.
- C.
The total number of goods produced is greatest.
- D.
Goods and services are produced at least cost and no resources are wasted.
Correct Answer
D. 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.Rate this question:
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- 23.
If the PPF is linear, i.e., a straight line, which of the following is true?
- A.
As the production of a good increases, the opportunity cost of that good rises.
- B.
As the production of a good increases, the opportunity cost of that good falls.
- C.
Opportunity costs are constant.
- D.
The economy is not at full employment when operating on the PPF.
Correct Answer
C. 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.Rate this question:
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- 24.
Periods of less than full employment correspond to
- A.
Points outside the PPF.
- B.
Points inside the PPF.
- C.
Points on the PPF.
- D.
Either points inside or outside the PPF.
Correct Answer
B. 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.Rate this question:
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- 25.
Which of the following would not result in an rightward shift of the PPF?
- A.
An increase in investment in capital stock.
- B.
A reduction in the labour unemployment rate.
- C.
The discovery of new oil deposits in India.
- D.
An increase in the number of people taking management training courses.
Correct Answer
B. A reduction in the labour unemployment rate.Explanation
A reduction in the labor unemployment rate would not result in a rightward shift of the PPF. The PPF represents the maximum combination of goods and services that can be produced given the available resources and technology. A reduction in the labor unemployment rate means that more people are employed, which increases the available labor force. This would result in an increase in the production capacity and potential output, leading to a rightward shift of the PPF. Therefore, the reduction in the labor unemployment rate would not cause a leftward shift of the PPF.Rate this question:
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- 26.
Choice is created by the
- A.
Abundance of resources
- B.
Urgency of needs
- C.
Non-availability of resources
- D.
Scarcity of resource
Correct Answer
D. Scarcity of resourceExplanation
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.Rate this question:
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- 27.
Which is one of the future consequences of an increase in the current level of consumption in the India?
- A.
Slower economic growth in the future.
- B.
Greater economic growth in the future.
- C.
No change in our economic growth rate.
- D.
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.Rate this question:
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- 28.
Capital intensive technique would get chosen in a
- A.
Labour surplus economy.
- B.
Capital surplus economy.
- C.
Developed economy.
- D.
Developing economy.
Correct Answer
B. 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.Rate this question:
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- 29.
Labour intensive technique would get chosen in a
- A.
Labour surplus economy.
- B.
Capital surplus economy.
- C.
Developed economy.
- D.
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.Rate this question:
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- 30.
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
- A.
Ram
- B.
Krishan
- C.
Vinod
- D.
Madhur
Correct Answer
D. MadhurExplanation
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.Rate this question:
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- 31.
Consider the following and decide which, if any, economy is without scarcity :
- A.
The pre-independent Indian economy, where most people were farmers.
- B.
A mythical economy where everybody is a billionaire.
- C.
Any economy where income is distributed equally among its people.
- D.
None of the above.
Correct Answer
D. None of the above.Explanation
The correct answer is "None of the above" because scarcity is a fundamental economic concept that exists in all economies. In the pre-independent Indian economy, although most people were farmers, there was still a limited availability of resources such as land, water, and labor. In a mythical economy where everybody is a billionaire, scarcity would still exist as resources would be limited and not infinitely available. Similarly, in an economy where income is distributed equally, scarcity would still be present as resources would need to be allocated and choices would have to be made due to their limited availability. Therefore, no economy is without scarcity.Rate this question:
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- 32.
Which of the following is not a micro-economic subject matter?
- A.
The price of mangoes.
- B.
The cost of producing a fire truck for the fire department of Delhi, India.
- C.
The quantity of mangoes produced for the mangoes market.
- D.
The national economy's annual rate of growth.
Correct Answer
D. 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.Rate this question:
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- 33.
Which of the following is not one of the four central questions that the study of economics is supposed to answer?
- A.
Who produces what?
- B.
When are goods produced?
- C.
Who consumes what?
- D.
How are goods produced?
Correct Answer
B. When are goods produced?Explanation
The study of economics aims to answer four central questions: who produces what, who consumes what, how are goods produced, and how are goods allocated. The question "When are goods produced?" is not included in the list of central questions because it does not directly address the allocation or production of goods. The timing of production is not a central concern in economics as it focuses more on the allocation, distribution, and production processes.Rate this question:
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- 34.
If the marginal (additional) opportunity cost is a constant then the PPC would be
- A.
Convex.
- B.
Straight line
- C.
Backward bending.
- D.
Concave.
Correct Answer
B. Straight lineExplanation
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.Rate this question:
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- 35.
Larger production of ____________ goods would lead to higher production in future.
- A.
Consumer goods
- B.
Capital goods
- C.
Agricultural goods
- D.
Public goods
Correct Answer
B. Capital goodsExplanation
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.Rate this question:
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- 36.
The branch of economic theory that deals with the problem of allocation of resources is
- A.
Micro-economic theory.
- B.
Macro-economic theory.
- C.
Econometrics.
- D.
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.Rate this question:
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- 37.
Which of the following is likely to cause an inward shift in a country's PPC?
- A.
Earthquake destroying resources of the country.
- B.
Scientists discovering new machines.
- C.
Workers getting jobs in the new metro - project.
- D.
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.Rate this question:
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- 38.
The various combinations of goods that can be produced in any economy when it uses its available sources and technology efficiently are depicted by
- A.
Demand curve.
- B.
Production curve.
- C.
Supply curve.
- D.
Production possibilities curve.
Correct Answer
D. 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.Rate this question:
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- 39.
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
- A.
Economic power of choice.
- B.
Consumer sovereignty.
- C.
Positive economy.
- D.
Producer sovereignty.
Correct Answer
B. 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.Rate this question:
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- 40.
The term 'Economics' owes its origin to the Greek word
- A.
Aikonomia
- B.
Wikonomia
- C.
Oikonomia
- D.
None of the above
Correct Answer
C. OikonomiaExplanation
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.Rate this question:
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- 41.
Oikonomia means
- A.
Industry
- B.
Household
- C.
Services
- D.
None of these
Correct Answer
B. HouseholdExplanation
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.Rate this question:
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- 42.
Adam smith published his masterpiece aAn enquiry into the nature and causes of wealth of nationa in the year
- A.
1776
- B.
1786
- C.
1756
- D.
1766
Correct Answer
A. 1776Explanation
Adam Smith published his masterpiece "An Inquiry into the Nature and Causes of the Wealth of Nations" in the year 1776. This book is considered one of the most influential works in the field of economics and laid the foundation for modern economics. In this book, Smith discusses various economic concepts such as division of labor, free markets, and the invisible hand. The year 1776 is significant as it marks the beginning of the American Revolution and the publication of Smith's book had a profound impact on economic and political thought during that time.Rate this question:
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- 43.
The classical economists defined Economics as
- A.
The science of welfare
- B.
The science of scarcity
- C.
The science of wealth
- D.
The science of wealth and welfare
Correct Answer
C. The science of wealthExplanation
The classical economists defined Economics as the science of wealth because their primary focus was on the production, distribution, and consumption of goods and services. They believed that the accumulation of wealth was essential for the progress and well-being of society. While welfare is certainly a component of economics, it was not the sole focus of the classical economists. Scarcity, on the other hand, is a fundamental concept in economics but does not encompass the entire field. Therefore, the science of wealth is the most accurate description of how the classical economists defined economics.Rate this question:
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- 44.
Lionel Robbins Published his famous book aNature of significance of Economicsa in the year
- A.
1935
- B.
1933
- C.
1931
- D.
1937
Correct Answer
C. 1931Explanation
Lionel Robbins published his famous book "The Nature and Significance of Economic Science" in 1931. This book is considered a landmark in the field of economics as it introduced the concept of scarcity and the allocation of resources as the central focus of economic analysis. Robbins' book provided a new perspective on the study of economics and had a significant influence on the development of economic theory.Rate this question:
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- 45.
According to_____________Economics is the athe study of how in a civilized society one obtains the share of what other people have produced and of how the total product of society changes and is determineda
- A.
Jacob Viner
- B.
Henry Smith
- C.
Pigou
- D.
Paul A. Samuelson
Correct Answer
B. Henry Smith -
- 46.
'Economics is what Economists do' is given by
- A.
Jacob Viner
- B.
Henry Smith
- C.
Pigou
- D.
Paul A. Samuelson
Correct Answer
A. Jacob VinerExplanation
Jacob Viner is the one who said, "Economics is what economists do." This statement implies that the definition of economics is not fixed, but rather it is determined by the actions and practices of economists. In other words, the field of economics is shaped by the research, theories, and methodologies employed by economists in their work. This perspective highlights the dynamic and evolving nature of economics as a social science.Rate this question:
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- 47.
In which economic system all the means of production are owned and controlled by private individuals for profit.
- A.
Socialism
- B.
Capitalism
- C.
Mixed economy
- D.
Communism
Correct Answer
B. CapitalismExplanation
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.Rate this question:
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- 48.
Economics may be defined as the science that explains______________ .
- A.
The choices that we make as we cope with scarcity
- B.
The decisions made by politicians
- C.
The decisions made by households
- D.
All human behavior
Correct Answer
A. The choices that we make as we cope with scarcityExplanation
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.Rate this question:
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- 49.
Scarcity is a situation in which_______________________ .
- A.
Wants exceed the resources available to satisfy them
- B.
Something is being wasted
- C.
People are poor
- D.
None of the above
Correct Answer
A. Wants exceed the resources available to satisfy themExplanation
Scarcity refers to a situation where there is an insufficient amount of resources to meet the unlimited wants and needs of individuals or society. In this scenario, the demand or wants of people surpass the available resources or supply, leading to scarcity. This means that there is a shortage or lack of resources to fully satisfy the desires and demands of individuals.Rate this question:
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- 50.
Economic choices can be summarized in five big questions. They are____________.
- A.
What, how, who, where, and would you please
- B.
Why not, what, how, when, and where
- C.
What, how, when, where, and why
- D.
What, how, when, where, and who
Correct Answer
D. What, how, when, where, and whoExplanation
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.Rate this question:
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Mar 21, 2023Quiz Edited by
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Feb 27, 2012Quiz Created by
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