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Q.1 One thing common among the USA, the UK, UAE and Japan is that

(a) Only rich people live in these countries, there is no poverty.

(b) Only while people inhabit these countries.

(d) They are growing at very fast rates, about 8 to 10% per annum.
Ans: C

Q.2 The shape of transformation curve is changed due to

(a) Opportunity cost
(b) Total cost
(c) Marginal opportunity cost
(d) None
Ans: C

Q.3 The concept of scarcity of resources
(a) Implies that consumers want will be satisfied
(b) Applies only to the less developed countries.

(c) Does not apply to developed countries.
(d) consumer’s wants will never be completely satisfied.
Ans: D

Q.4 Scarcity and choice are inseparable:

(a) Only at consumer’s level to maximize his satisfaction
(b) Only at producer’s level to maximize his profits

(c) Only at national level to maximize social welfare
(d) At all levels of decision making.
Ans: D

Q.5 Opportunity cost of an activity is:
(a) Cost of foregone opportunity
(b) Cost of units sacrificed

(c) Value of next best alternative sacrificed
(d) None of these
Ans: C

Q.6 The opportunity cost of a new public stadium is the:

(a) Money cost of hiring guards and staff for the new stadium.

(b) Cost of constructing the new stadium in a future year.

(d) Other goods and services that must be sacrificed to construct the new stadium.
Ans: D

Q.7 PP cure:

(a) Slopes upward
(b) Slopes downward and is concave

Ans: B

Q.8 The opportunity cost of 500 kg of wheat produced on a land which can produce 400 kg of rice is:

(a) 100 kg of rice
(b) 400 kg of rice
(c) 600 kg rice
(d) None of these
Ans: B

Q.9 Which of the following is a statement of normative nature in economics?(a) Economics is study of choice alternatives

(b) Govt. should be concerned with how to reduce unemployment.

(d) Accommodation of refugees is posing a big problem for the Europe
Ans: B

Q.10 Two production possibilities curve can intersect each other when

(a) Production conditions turn favourable for production of both goods.

(b) Production conditions turn unfavourable for production of both goods.

(d) None of these.
Ans: C

Q.11 Which of the following statements is correct?

(a) An economy always operates on PPC.

(b) Only scarce goods command price.

(d) PP curve is concave shaped because of decreasing marginal opportunity cost.
Ans: B

Q.12 The PP curve is based on the assumption that –

(a) The given resources are fully and efficiently utilized

(b) The state of technology does not change

(d) All the above.

Ans: D

Q.13 Study of macroeconomics is concerned with:

(a) Theory of demand
(b) Determination of aggregate output

Q.14 Which of the following is related to the problem ‘for whom to produce’?

(a) Factor distribution of income
(b) Inter-personal distribution of income

(a) The behaviour of firms
(b) The behaviour of electronics industry

(c) The activities of individual units
(d) Economic aggregates
Ans: D

Q.16 Total output of an economy is the sum of total output of individual producers. This statement proves that:

(a) Macroeconomics depends on micro economics

(b) There is no correlation between micro and macro economics

(d) Microeconomics is dependent on macroeconomics

Q.17 The opportunity cost of watching a movie will be equal to:

(a) The time lost while watching the show

(b) The pleasure that could have been enjoyed watching TV instead

(d) The amount paid to buy the tickets.
Ans: B

Q.18 Assume that a PPF for butter and guns is drawn so that it is a straight line. It means:

(a) Less and less units of butter are sacrificed to gain an additional unit of gun.

(b) More and more units of butter are sacrificed to gain an additional unit of gun.

(d) None of these.
Ans: C

Q.19 The word ‘Economics’ is most closely connected with the world:

(a) Free
(b) Scarcity
(c) Unlimited
(d) Restricted
Ans: B

Q.20 Which of the following will not lead to shift in PPF?

(a) Upgradation of Technology
(b) Exploration of new oil reserves

(c) Massive unemployment
(d) Destruction of Resources
Ans: C

Q.21 Which of the following is related to Microeconomics?

(a) Inflation in the economy
(b) Unemployment Problem

(a) When there is only course of action
(b) When there are two or more alternative courses of action

(a) a straight line
(b) convex to the point of origin

(c) concave to the point of origin
(d) none of these
Ans: C

Q.24 The reason behind an outward shift of a PPC could be : (Choose the correct alternative)
(a) growth of resources
(b) technological advancement

(c) either (a) or (b) or both
(d) obsolete technology
Ans: C

Q.25 A country has 2 alternative of production of production as 50X+ 100Y or 54X+98Y from the given resource available. If the country chooses the second alternative. What is the marginal opportunity cost of producing X :

(a) 3Y
(b) 4X
(c) 2Y
(d) 6Y
Ans: C

Q.26 Which of the following is a normative statement ?

(a) Planned economies allocate resources via government departments.

(b) Most transititonal economies have experienced problems of falling output and rising prices
(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.
Ans: D

Q.27 Normative economics is based on (Choose the correct alternative).

(a) ethical consideration
(b) fact and generalisation
(c) what is or what should be
(d) All of these
Ans: D

Q.28 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 granted.

(d) Deciding how to distribute the output of the company.
Ans: A

Q.29 Efficient use of resources in production is known as ............ ?

(a) Growth of Resources
(b) Allocation of Resources

(a) Growth of resources
(b) Allocation of resources

(c) Scarcity of resources
(d) Any of these
Ans: B

Q.31 A statement which does not offer any suggestion is known as :

(a) positive statement
(b) normative statement
(c) both (a) and (b)
(d) none of these.
Ans: A

Q.32 The government does not interfere in the process of decision-making under :

(a) market economy
(b) centrally planned economy
(c) mixed economy
(d) all of these
Ans: A

Q.33 Consumer is sovereign under :

(a) controlled economy
(b) free economy
(c) mixed economy
(d) both (b) and (c)
Ans: D

Q.34 Ques.like what should be the level of National income, what should the wage rate; fall within the scope of
(a) Positive science
(b) Normative science
(c) Both a and b
(d) None of the above
Ans: B

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FAQs on MCQs - Introduction and Central Problem of an Economy - Commerce

1. What is the central problem of an economy?

Ans. The central problem of an economy is the scarcity of resources and the unlimited wants of people. It means that there are not enough resources to satisfy all the wants of people. Therefore, the economy must decide how to allocate its scarce resources among different uses to maximize the satisfaction of people's wants.

2. How does the central problem of an economy affect production?

Ans. The central problem of an economy affects production in the sense that it determines what to produce, how much to produce, and for whom to produce. The economy has to make choices regarding the production of goods and services, and it has to weigh the costs and benefits of each choice.

3. What are the main factors of production?

Ans. The main factors of production are land, labor, capital, and entrepreneurship. Land refers to the natural resources used in production, such as forests, minerals, and water. Labor refers to the human effort used in production. Capital refers to the physical and human-made resources used in production, such as machinery, tools, and buildings. Entrepreneurship refers to the ability to combine the other factors of production to create new products and services.

4. How does an economy solve the central problem of scarcity?

Ans. An economy solves the central problem of scarcity by making choices based on the principles of opportunity cost and trade-offs. Opportunity cost refers to the cost of the next best alternative forgone when a choice is made. Trade-offs refer to the choices that have to be made between different options. By weighing the costs and benefits of each choice, an economy can allocate its scarce resources in the most efficient way to satisfy the wants of people.

5. What is the role of government in solving the central problem of an economy?

Ans. The role of government in solving the central problem of an economy is to provide the necessary regulations, public goods, and services to ensure that the economy functions efficiently. The government also has the responsibility to redistribute income and wealth to promote social welfare and reduce inequality. Moreover, the government can use fiscal and monetary policies to stabilize the economy and promote growth and development.

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