Test: Introduction To Economics - 3


25 Questions MCQ Test Economics Class 11 | Test: Introduction To Economics - 3


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QUESTION: 1

In Economics, a good is something which

Solution:

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.

QUESTION: 2

A resource is a

Solution:

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.

QUESTION: 3

The central problems of an economy are due to

Solution:

Central economic problem asserts that an economy's finite resources are insufficient to satisfy all human wants and needs. It assumes that human wants are unlimited, but the means to satisfy human wants are scarce.

QUESTION: 4

Vinod Limited sold patents costing Rs.20,000 in Rs.22,000. Treatment will be ---

Solution:

Sale of patent is not an operating activity. Profit on sale of patents will be deducted in operating activities and sale price Rs.22,000 will be added in investing activities.

QUESTION: 5

Cash paid against trade payable belongs to ------------

Solution:

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.

QUESTION: 6

Interest received on investment will be___________

Solution:

Interest received on investment is a revenue receipt and added in investing activities while preparing cash flow statement.

QUESTION: 7

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.

Solution:

Purchses= (Closing stock+Sales)-(Opening stock + Profit). Purchase of investment during the year Rs.3,75,000 i.e. (5,00,000 + 1,37,500) – (2,50,000 + 12,500) = 3,75,000

QUESTION: 8

Under which type of activity will you classify the sale of shares of another company while preparing cash flow statement?

Solution:

Sale of shares of other company are part of investment which is now sold by the company. It is sale of investment, so it will take place in investing activity.

QUESTION: 9

Loose tools and Stores and spares are the part of --------------

Solution:

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.

QUESTION: 10

Increase of decrease in the Bank balance is ---------

Solution:

Cash from operating activities usually refers to the net cash inflow reported in the first section of the statement of cash flows. Cash from operating activities focuses on the cash inflows and outflows from a company's main business activities of buying and selling merchandise, providing services, etc.

QUESTION: 11

The basic factors of production are land, labour, capital and______ 

Solution:

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.

QUESTION: 12

One of the characteristics of economic resource is scarcity. Which is the other? 

Solution:

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.

QUESTION: 13

Positive economics states

Solution:

Positive economics is the branch of economics that concerns the description and explanation of economic phenomena.

QUESTION: 14

Normative economics states

Solution:

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

QUESTION: 15

An individual in economics is

Solution:

The decision Making Unit  is a collection or team of individuals who participate in a buyer decision process.

QUESTION: 16

The basic assumption regarding resources while drawing a PPC is

Solution:

Since human wants are unlimited and the means to satisfy them are limited, every society is faced with the fundamental problem of choosing and allocating its scarce resources among alternative uses. The production possibility curve or frontier is an analytical tool which is used to illustrate and explain this problem of choice.

QUESTION: 17

A PPC is downward sloping and____________ to the origin. Choose the correct option.

Solution:

PPFs are normally drawn as bulging upwards or outwards from the origin ("concave" when viewed from the origin), but they can be represented as bulging downward (inwards) or linear (straight), depending on a number of assumptions. A PPF illustrates several economic concepts, such as  scarcity of resources, opportunity cost, productive efficiency, allocative efficiency, and economies of scale.

QUESTION: 18

What is the other name for opportunity cost in economics

Solution:

Opportunity Cost is also known as Economic Opportunity Loss and it is the highest value alternative forgone. Moreover, Real cost is the fixed cost, which you have paid and therefore, opportunity cost is not a real cost.

QUESTION: 19

In a centrally planned economy, the central problems are solved by

Solution:

Method which can be employed to solve the central problems is the adoption of economic planning. In this method, the solution of the various basic problems is not achieved through the free working of demand for and supply of goods and factors. But to solve these problems, Government sets up a central planning authority which has been called by several names, such as planning commission, planning ministry or planning board.

QUESTION: 20

In a market economy, the central problems are solved by

Solution:

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.

QUESTION: 21

The opportunity cost of a good is

Solution:
QUESTION: 22

The study of jute industry is a macroeconomic study. This statement is

Solution:

Micro economics deals with determination of prices and quantities in individual markerts and with the relationship among these markets.

QUESTION: 23

Price determination of a commodity is a subject matter of microeconomics.

Solution:

Micro economics deals with the behaviour of individual economic units such as consumers and business firm and is concerned with the determination of relative prices of commodities and factors of production.

QUESTION: 24

The study of general price level is a macroeconomic study. This statement is

Solution:

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.

QUESTION: 25

Which central problem explains ‘who gets more and who gets less’? 

Solution:

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.

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