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All questions of Introduction to Microeconomics for Commerce Exam

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What is the other name for opportunity cost in economics
  • a)
    Total Cost
  • b)
    Marginal cost
  • c)
    Economic cost
  • d)
    Economic problem
Correct answer is option 'C'. Can you explain this answer?

Aryan Khanna answered
Economic cost is the combination of losses of any goods that have a value attached to them by any one individual. Economic cost is used mainly by economists as means to compare the prudence of one course of action with that of another.

An economy always produces on, but not inside a PPC.
  • a)
    True
  • b)
    False
  • c)
    Occasionally
  • d)
    Can’t say
Correct answer is option 'B'. Can you explain this answer?

Alok Mehta answered
An economy does not always on a ppc . when an economy produces on ppc it mean there is no unemployment and all the resources are fully and being used efficiently but practically these 2 conditions may not apply . if there is unemployment or inefficent use of resources an ecnmy will opreate inside the ppc therefor the above given statement is refuted .

The basic factors of production are land, labour, capital and______
  • a)
    Investment
  • b)
    Entrepreneurship
  • c)
    Resources
  • d)
    Machinery
Correct answer is option 'B'. Can you explain this answer?

Alok Mehta answered
The four factors of production are land, labor, capital goods, and entrepreneurship. They are the inputs needed for supply. They produce all the goods and services in an economy. That's measured by gross domestic product. 

The subject of a Microeconomic study is
  • a)
      Individual economy
  • b)
      Mixed economies
  • c)
      Individual economic unit
  • d)
      Planned economies
Correct answer is option 'C'. Can you explain this answer?

Arjun Saini answered
Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms

Microeconomics studies the behaviour of 
  • a)
    Individual economic unit
  • b)
      Mixed economies
  • c)
      Individual economy 
  • d)
    Planned economies
Correct answer is 'A'. Can you explain this answer?

Arjun Singhania answered
I. The term Micro Economics is derived from the Greek work “Mikros” which means “Small”. Micro economics gives a detailed analysis of one part of the economy or society. It studies the behaviour of individual units of the economy, such as households, firms, industries and markets.ii. Micro economics is concerned with the study of behaviour of individual element(s) of an economy, whereas, macro economies concerned with the study of behaviours of an economy as whole.iii. Micro-economics gives a microscopic picture of the economy. The activities of numerous economic units and their inter-relationship are studied and analysed minutely through this method.

All unattainable combinations will lie
  • a)
    Under the PPC only 
  • b)
    On and under the PPC 
  • c)
    On the PPC only
  • d)
      Above the PPC only
Correct answer is option 'D'. Can you explain this answer?

Muskaan Mishra answered
Points outside the PPF are unattainable production points given current resources and technologies. It is impossible for an economy to produce outside its PPF. The PPF can change, however, with changes in resources or technology.

Who gets how much in an economy is best described by which of the following central problems? 
  • a)
    What to produce
  • b)
      For whom to produce
  • c)
      How to produce
  • d)
    None of these
Correct answer is option 'B'. Can you explain this answer?

Anuj Choudhury answered
For whom to produce refers to selection of the category of people who will ultimately consume the goods, i.e. whether to produce goods for more poor and less rich or more rich and less poor. Since resources are scarce in every economy, no society can satisfy all the wants of its people.

Which central problem explains ‘who gets more and who gets less’? 
  • a)
    Scarcity of resources
  • b)
      What to produce 
  • c)
    For whom to produce 
  • d)
    How to produce
Correct answer is option 'C'. Can you explain this answer?

Rahul Chaudhary answered
This problem refers to selection of the category of people who will ultimately consume the goods, i.e. whether to produce goods for more poor and less rich or more rich and less poor. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises.

The basic factors of production are land, labour, capital and______ 
  • a)
    Resources 
  • b)
    Machinery
  • c)
    Investment
  • d)
    Entrepreneurship
Correct answer is option 'D'. Can you explain this answer?

Aditya Kumar The Best answered
Factors of production is an economic term that describes the inputs that are used in the production of goods or services in order to make an economic profit. This include land, labour, capital and entrepreneurship.

The positive economic analysis deals with the variables
  • a)
       As they should be
  • b)
      As they are
  • c)
      As they are expected
  • d)
      As they seem to be
Correct answer is option 'B'. Can you explain this answer?

Kiran Mehta answered
Positive economics is the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories.

In a market economy, the central problems are solved by
  • a)
       Supply of goods 
  • b)
      Planning authority
  • c)
       Demand for goods
  • d)
       Market mechanism
Correct answer is option 'D'. Can you explain this answer?

Puja Nambiar answered
To solve the problems through market or price mechanism ie., what goods are to be produced and what quantities, which methods for production are to be employed for the production of goods and how the output is to be distributed, should be decided by the free play of the forces of demand and supply.

If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to:
  • a)
    Increase
  • b)
    Decrease
  • c)
    Remain the same
  • d)
    Become zero
Correct answer is option 'A'. Can you explain this answer?

Naina Sharma answered
Since,the demand of the good is inelastic. So,even if the price will increase the consumer will not decrease the consumption of that good.They will continue to purchase that goods. Due to this the production will go on.And so,the expenditure will increase.

Positive economics states
  • a)
    Central problems of an economy be
  • b)
    What will  
  • c)
    What is
  • d)
    What is supposed to be
Correct answer is option 'B'. Can you explain this answer?

Alok Mehta answered
Positive economics is objective and fact based, while normative economics is subjective and value based. Positive economic statements must be able to be tested and proved or disproved. Normative economic statements are opinion based, so they cannot be proved or disproved.

One or more persons living together and having a common budget is called:
  • a)
    A family
  • b)
    Organisation
  • c)
    Household
  • d)
    All commodities in a house
Correct answer is option 'C'. Can you explain this answer?

Manisha Patel answered
Allocation of resource means distribution of resource. Distribution of resource means factory of production i.e land, labour , capital and entreprenureship . so allocation of resource result in production of goods and services

In Economics, a good is something which
  • a)
    Satisfies wants and needs
  • b)
    Can be a service
  • c)
    Appears appealing
  • d)
    Is a service
Correct answer is option 'A'. Can you explain this answer?

Om Desai answered
In Economics, goods are materials that satisfy human wants and provide utility. A good may be a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it.

Normative economics states
  • a)
    What ought to be
  • b)
    Central problems of an economy
  • c)
    What was
  • d)
    What is
Correct answer is option 'A'. Can you explain this answer?

Priya Patel answered
Normative economics. Normative economics (as opposed to positive economics) is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be.

The basic economic problem arises in
  • a)
      All Economies 
  • b)
      Mixed Economies
  • c)
       Socialist economies
  • d)
       Market Economies
Correct answer is option 'A'. Can you explain this answer?

Aniket Basu answered
Economic problem arises mainly due to two reasons- (i) human wants are unlimited (ii) means to satisfy human wants are scarce. The problem of scarcity is faced by an individual and the society. With wants unlimited and resources scarce, our wants cannot be fulfilled. 

All attainable combinations will lie
  • a)
    Under the PPC only 
  • b)
    On the PPC only 
  • c)
    On and under the PPC 
  • d)
    Above the PPC only
Correct answer is option 'C'. Can you explain this answer?

Aryan Khanna answered
A production possibilities frontier (PPF) is a diagram that illustrates the possible production points for an economy based on its resources and technology.Production points on a PPF are possible and efficient. Production points on a PPF represent efficient use of all of the economy’s resources.

Larger production of ___________ goods would lead to higher production in the future.
  • a)
    Nuclear Power
  • b)
    Electricity
  • c)
    Capital
  • d)
    Coal
Correct answer is option 'C'. Can you explain this answer?

Bibek Desai answered
A capital good is a durable good that is used in the production of goods or services. Capital goods are one of the three types of producer goods, the other two being land and labour which are also known collectively as primary factors of production.

One or more persons living together and having a common budget is called:
  • a)
    A family
  • b)
    Organisation
  • c)
    Household
  • d)
    All commodities in a house
  • e)
     
Correct answer is option 'C'. Can you explain this answer?

Vikas Kapoor answered
A household consists of one or more people who live in the same dwelling and share meals. It may also consist of a single family or another group of people.

As they see Opportunity cost means 
  • a)
    The money value of an opportunity in producing a good 
  • b)
    Cost of a resource used in production
  • c)
      The best alternative use of a resource
  • d)
      Next best alternative foregone
Correct answer is option 'D'. Can you explain this answer?

Jatin Sharma answered
**Explanation:**

Opportunity cost is the value of the next best alternative that is forgone when a choice is made. It is the cost of not choosing the next best alternative. In other words, it is the value of the best option that is sacrificed in order to choose a different option.

Here is a detailed explanation of why option 'D' is the correct answer:

**Next best alternative foregone:**
Opportunity cost refers to the value of the next best alternative that is foregone when a decision is made. When resources are limited, choosing to allocate them towards one option means sacrificing the benefits that could have been gained from the next best alternative. This is the essence of opportunity cost.

**Example:**
For example, suppose a person has the option to either start a business or go to college. If they choose to start a business, the opportunity cost would be the benefits that could have been gained from going to college. Conversely, if they choose to go to college, the opportunity cost would be the potential benefits of starting a business.

**Comparison with other options:**
Options A, B, and C are not the correct answers because they do not fully capture the concept of opportunity cost. While option A suggests that opportunity cost refers to the money value of an opportunity in producing a good, opportunity cost is not limited to just the money value. It also encompasses the value of the alternative uses of resources.

Option B refers to the cost of a resource used in production which is not necessarily the same as opportunity cost. While the cost of a resource is certainly a factor to consider when calculating opportunity cost, it is not the only factor. Opportunity cost takes into account the value of the next best alternative.

Option C suggests that opportunity cost is the best alternative use of a resource. While this is partly true, it does not fully capture the idea that opportunity cost is the value of the best option that is forgone when a different option is chosen.

Therefore, option 'D' is the correct answer as it best captures the concept of opportunity cost by stating that it is the next best alternative foregone.

Calculate Purchase on Investment. The information is Opening balance of Investment – Rs. 2,50,000, closing balance Investment – Rs. 5,00,000, Sale – Rs.1,37,500, Profit on sale – Rs.12,500.
  • a)
    Rs. 3,50,000
  • b)
    Rs. 2,75,000
  • c)
    Rs. 3,75,000
  • d)
    Rs. 2,50,000
Correct answer is option 'C'. Can you explain this answer?

Kritika Bajaj answered
In order to calculate the purchase on investment, we would need more information such as the closing balance of investment and any additional investments or withdrawals made during the period. Additionally, we would need to know if there were any dividends or interest earned on the investment.

Price determination of a commodity is a subject matter of microeconomics.
  • a)
    False
  • b)
    True
  • c)
    Can’t say
  • d)
    Conditional
Correct answer is option 'B'. Can you explain this answer?

Prem Yadav answered
Price of a commodity is decided by demand and supply for it in the economy and aggregate demand supply are macro variables

Any allocation of resources result in
  • a)
    Consumption of goods
  • b)
    Inefficient utilization
  • c)
    Wastage of resources
  • d)
    Production of goods and services
Correct answer is option 'D'. Can you explain this answer?

Ahtaniya Khan answered
D.
coz allocation of resources means making optimum utilisation of resources... i.e. resources are fully utilized only when they are used production purpose.. without d wastes of resources.

Under the Industrial policy of 1991:
  • a)
    The mandatory convertible clause is applicable to all term loans.
  • b)
    The mandatory convertible clause is applicable to term loans of more than 10 years.
  • c)
    The mandatory convertible clause is applicable to term loans of less than 10 years.
  • d)
    The mandatory convertible clause is no longer applicable.
Correct answer is option 'D'. Can you explain this answer?

Poonam Reddy answered
A mandatory convertible is a security that automatically converts to common equity on or before a predetermined date. This hybrid security guarantees a certain return up to the conversion date, after which there is no guaranteed return but the possibility of a much higher return.

An individual in economics is
  • a)
    An individual decision making unit
  • b)
    A human being only
  • c)
    A good
  • d)
    A dependent unit
Correct answer is option 'A'. Can you explain this answer?

Nandini Iyer answered
A decision-making unit (DMU) is an individual - a group of individuals who are participants in a decision-making process, who share a common goal or goals which the decision will hopefully help them to achieve and who share the risk arising from the decision.

A resource is a
  • a)
    Not a good or a service
  • b)
    Service only
  • c)
    Good or a service
  • d)
    Good only
Correct answer is option 'C'. Can you explain this answer?

Pranavi Das answered
A resource is a source or supply from which benefit is produced. An item becomes a resource with time and developing technology.Typically resources are materials, energy, services, staff, knowledge, or other assets that are transformed to produce benefit and in the process may be consumed or made unavailable.

Loose tools and Stores and spares are the part of --------------
  • a)
    Inventory
  • b)
    Current Assets
  • c)
    Cash and Cash Equivalents
  • d)
    Investment
Correct answer is option 'A'. Can you explain this answer?

Kaavya Mukherjee answered
Spares and tools which is not part of any particular Fixed assets, you can value as Inventory as per AS-2 and charge off in P&L a/c based on consumption.

Cash paid against trade payable belongs to ------------
  • a)
    Operating Activities
  • b)
    No Effect
  • c)
    Financing Activities
  • d)
    Investing Activities
Correct answer is option 'A'. Can you explain this answer?

Amrita Sen answered
These are the company's core business activities, such as manufacturing, distributing, marketing and selling a product or service. Operating activities should generally provide the majority of a company's cash flow and largely determine whether a company is profitable.

The study of general price level is a macroeconomic study. This statement is
  • a)
      False
  • b)
      True
  • c)
      Can’t say
  • d)
      Conditional
Correct answer is option 'B'. Can you explain this answer?

Kaavya Mukherjee answered
Macro economics is concerned with variables as the aggregate volume of output of an economy, with extent to which resources are employed, with the size of national income and with general price level.

Normative economics analyses
  • a)
    The problem of What to produce 
  • b)
    Ethical aspects of economic decisions
  • c)
    Distribution of national product 
  • d)
    Central problems of an economy
Correct answer is option 'B'. Can you explain this answer?

Sharmila Sharma answered
Normative economics  is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be.

The normative economic analysis deals with the variables
  • a)
      As they are
  • b)
      As they should be
  • c)
      As they were
  • d)
    ne of these
Correct answer is option 'B'. Can you explain this answer?

Sounak Chaudhary answered
Normative economic analysis refers to the analysis in which we study whether a particular mechanism is desirable or not. In this analysis, we study what ought to be the desired situation or in what ways the economic problems should be solved. In other words, it is concerned with what should be and what should not be, and what is desirable and what is not? 

Labour intensive technique would get chosen in
  • a)
       Labour surplus economy
  • b)
       Developing economies 
  • c)
      Developed economies 
  • d)
      Capital surplus economy
Correct answer is option 'A'. Can you explain this answer?

Shubham Nambiar answered
Labour intensive techniques are those production techniques that require a significant amount of labor input compared to other factors of production such as capital or technology. These techniques are typically characterized by a high ratio of labor to capital.

In a labor surplus economy, there is an excess supply of labor relative to the demand for labor. This means that there are more workers available than there are jobs available. In such an economy, labor is usually abundant and cheap. As a result, firms tend to favor labor-intensive techniques of production to take advantage of the low labor costs. This is because using labor-intensive techniques allows firms to employ a larger number of workers at a lower cost, thus maximizing their output and profits.

In a labor surplus economy, the following factors contribute to the preference for labor-intensive techniques:

1. Cheap labor: With a surplus of labor, the wages of workers are typically low. This makes labor a relatively cheap factor of production compared to capital. By employing more workers, firms can take advantage of the low labor costs and increase their production levels.

2. Limited access to capital: In economies with a labor surplus, there is often limited access to capital due to the low level of investment and financial resources. As a result, firms may not have the necessary capital to invest in advanced technology or machinery. Labor-intensive techniques, which require less capital investment, are therefore more feasible in such economies.

3. Low productivity levels: In labor surplus economies, the level of education and skill development among the workforce may be relatively low. This can result in lower productivity levels compared to developed economies. Using labor-intensive techniques allows firms to make the most of the available labor resources, even with lower productivity levels.

It is important to note that the preference for labor-intensive techniques in a labor surplus economy is a result of the specific economic conditions prevailing in such an economy. In economies with a labor shortage or higher levels of capital, firms may choose to adopt capital-intensive techniques that rely more on advanced technology and machinery.

A movement along a PPC implies
  • a)
      Redistribution of technology 
  • b)
    Redistribution of wealth
  • c)
      Reallocation of income
  • d)
      Reallocation of resources
Correct answer is option 'D'. Can you explain this answer?

Aniket Basu answered
The movement along the PPC from left to right shows that in order to produce more units of capital goods, the economy must sacrifice some amount of consumer goods.

What to produce also deal with what quantities to produce.
  • a)
      May be 
  • b)
    Can’t say 
  • c)
    No 
  • d)
    Yes
Correct answer is option 'D'. Can you explain this answer?

Sankar Bose answered
The quantity in which a commodity is to be produced is set at that level where demand equals supply. If quality produced is more or less, then there will be dis equilibrium in the market and price will fluctuate. Hence, to maintain stable equilibrium price it becomes necessary to make demand and supply equal. 

One of the characteristics of economic resource is scarcity. Which is the other? 
  • a)
    They are in abundance
  • b)
      They are not marketable 
  • c)
    They are available in limited quantity
  • d)
      They have alternate uses
Correct answer is option 'D'. Can you explain this answer?

Anushka Desai answered
Economic resources are the assets which an economy may have available to supply and produce goods and services to meet the ever changing needs and wants of individuals and society as a whole.

Chapter doubts & questions for Introduction to Microeconomics - Economics Class 11 2024 is part of Commerce exam preparation. The chapters have been prepared according to the Commerce exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.

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