Additional MCQS-Introduction to Micro

Economics

b) One’s choices be consistent with one’s

1. Find the correct match: goals.
a) An enquiry into the nature and causes of c) One’s choices never vary.
the wealth of the nation: A. C. pigou. d) One makes choices that do not involve
b) Science which deals with wealth: Alfred trade-offs.
Marshall.
c) Economics is the science, which studies 7. Economics, according to Lionel Robbins , is a
human behaviour as a relationship _____
between ends and scarce means which a) Normative science.
have alternative uses: Robbins. b) Applied science.
d) The range of our enquiry becomes c) Positive science.
restricted to that part of social welfare that d) Experimental science.
can be brought directly or indirectly into
relation with the measuring rod of money: 8. Which of the following is a normative
Adam Smith. statement?
a) Planned economies allocate resources via
2. The law of scarcity : government departments.
a) Does not –apply to rich, developed b) Most transitional economies have
countries experienced problems of falling output and
b) Applies only to the less developed rising prices over the past decade.
countries. c) There is a greater degree of consumer
c) Implies that consumers want will be Sovereignty in market economies than
satisfied in a socialistic system. planned economies.
d) Implies that consumer’s wants will never d) Reducing inequality should be a major
be completely satisfied. priority for mixed economies.

3. Who expressed the view that “Economics is 9. Macro economics is also called economics.
neutral between ends”? a) Applied
a) Robbins b) Aggregate
b) Marshall c) Experimental
c) Pigou d) None of the above
d) Adam Smith
10. An example of positive ‘economic analysis
4. Which of the following is the best general would be:
definition of the study of Economics? a) An analysis of the relationship between the
a) Inflation and unemployment in a growing price of food and the quantity purchased.
economy. b) Determining how much income each
b) Business decision making under foreign person should be guaranteed.
completion. c) Determining the ‘fair’ price for food
c) Individual and social choice in the face of d) Deciding how to distribute the output of the
scarcity. economy.
d) The best way to invest in the stock market.
11. Identity the correct statement:
5. What implication(s) dose resource scarcity has a) In deductive method logic proceeds from
for the satisfaction of wants? the particular to the general
a) Not all wants can be satisfied. b) Micro & Macro Economics are
b) We will never be faced with the need to interdependent.
make choices. c) In a capitalist economy, the economic
c) We must develop ways too decrease our problems are solved by planning
individual wants. commission.
d) The discovery of new natural resources is d) Higher the prices lower is the quantity
necessary to increase our ability to satisfy demanded of a product is a normative
wants. statement.

12. A study of how increases in the corporate

6. Rational decision making requires that: income tax rate will affect the national
a) One’s choices be arrived at logically and unemployment rate is an example of
without error. a) Macro economics.

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 Additional MCQS-Introduction to Micro
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b) Descriptive economics. d) Profits will tend to be low.

c) Micro economics.
d) Normative economics.
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) Analyses the causes of failure of industry
in providing large-scale employment.
14. Economics 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 important in satisfying social
requirement.
d) Are limited to man made goods
15. From the national point of view which of the
following indicates micro approach?
a) Per capital income of India.
b) Under employment in agricultural sector.
c) Lock out in TELCO.
d) Total savings in India.
16. In a free market economy the allocation of
resources is determined by
a) Votes taken by consumers.
b) A central planning authority.
c) By consumer preference.
d) The level of profits of firms.
20. In a mixed economy,
a) All economic decisions are taken by the central
authority.
b) All economics 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.
21. The central problem in economics is that of
a) Comparing the success of command versus
market economies.
b) Guaranteeing that production occurs in the
most efficient manner.
c) Guaranteeing a minimum level of income for
every citizen.
d) Allocating scarce resources in such a manner
that society’s unlimited needs or wants are
satisfied as well as possible.
22. Which of the following bundles of goods could
not be produced with the resources the
economy currently has?
a) a
b) b
c) c
d) D

17. A capitalist economy uses…………as the

principal means of allocating resources.
a) Demand
b) Supply
c) Efficiency
23. An economy achieves “productive efficiency”
d) Prices
when:
a) Resources are employed in their most
18. In a free market economy, when consumers
highly
increase their purchase of a good and the level
valued uses.
of ……. Exceeds……… ……………. Then
b) The best resources are employed,
prices tend to rise.
c) The total number of goods produced is
a) Demand, supply
greatest.
b) Supply, demand
d) Goods and services are produced at least
c) Prices, demand
cost
d) Profits, supply
and no resources are wasted.
Use the Figure below to answer questions24-26.
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.

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 Additional MCQS-Introduction to Micro
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b) That there will be an improvement in the

24. Which point on the PPF shows a “productive technology of both ‘gun’ and ‘butter’
efficient “level of output? production
a) A c) That there will be an increase in the labour
b) B force.
c) C d) All of the above.
d) All of the above.
31. What is one of the future consequences of an
25. Which of the following clearly represents a increase in the current level of consumption in
movement toward greater productive efficiency ? India?
a) A movement from point A to point B. a) Slower economic growth in the future
b) A Movement from point C to point D. b) Greater economic growth in the future.
c) A movement from point F to point C. c) No change in our economic growth rate.
d) A movement from point E to point B. d) Greater capital accumulation in the future.
Use the Figure below to answer questions 32-38
26.Which of the following illustrates a decrease in
unemployment using the PPF?
a) A movement from down along the PPF.
b) A rightward shift of the PPF.
c) A movement from a point on the PPF to a
point inside the PPF.
d) A movement from appoint inside the PPF to
a point in the PPF.

27. If the PPF is linear, i.e., a straight line, which of

the following is true?
a) As the production of good increases, the 32. Which of the following represents the concept
opportunity cost of that good rises. of trade-offs?
b) As the production of good increased, the a) A movement from point A to point B.
opportunity cost of that good falls. b) A movement from point U to point C.
c) Opportunity costs are constant. c) Point W.
d) The economy is not at full employment d) Point U.
when operating on the PPF. 33. Which of the following would not move the
PPF for this economy closer to point W?
28. Periods of less than full employment a) A decrease in the amount of unemployed
correspond to labour resources.
a) Points outside the PPC. b) A shift in preferences toward greater
b) Points inside the PPC. capital formation.
c) Points on the PPC. c) An improvement in the overall level of
d) Either points inside or outside the PPC. technology.
d) An increase in the population growth rate.
29. Which of the following would not result in an
rightward shift of the PPF? 34. Moving from point A to point D, what happens
a) An increase in investment in capital stock. to the opportunity cost of producing each additional
b) A reduction in the labour unemployment rate. unit of consumer goods?
c) The discovery of new oil deposits in India. a) It increases.
d) An increase in the number of people taking b) It decreases.
management-training course. c) It remains constant.
d) It increases up to point B, and then falls
30. During presidential election campaigns, thereafter.
candidates often promise both more ‘gun’ and more
‘butter’ if they are elected. Assuming unemployment 35. What is the opportunity cost of moving from
is not a problem, what possible assumption are they point A to point B?
making but not revealing to their audience? a) 100 units of capital goods.
a) There will be a sufficient increase in the b) 8 units of consumer goods.
supply of natural resources used to c) 90 units of capital goods.
produce “gun” and ‘butter’ d) 10 units of capital goods.

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 Additional MCQS-Introduction to Micro
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36. Unemployment or underemployment of one or

more resources is illustrated by production at point 43. Which of the following is not a microeconomic
a) A. b) C. subject matter?
c) U. d) W. a) The price of mangoes.
b) A mythical economy where everybody is a
37. Which of the following is a reason for the billionaire.
curvature or bowed-out shape of the PPF? c) Any economy where income is distributed
a) Falling unemployment as we move along equally among its people.
the curve, d) Nome of the above.
b) The economy having to produce less of one
good in order to produce more of another good. 44. Which of the following is not one of the four
c) Opportunity costs increase as more of a central questions that the study of economics is
good is produced. supposed to answer?
d) None of the above. a) Who produces what?
b) When are goods produced?
38. Which of the following is a reason for the c) Who consumes what?
negative slope of the PPF? d) How are goods produced?
a) The inverse relationship between the use of
technology and the use of natural resources. 45. If the marginal (additional opportunity cost is a
b) Scarcity; at any point in time we have limited constant then the PPC would be
amounts of productive resources. a) Convex b) Straight line
c) Resource specialization. c) Backward bending d) concave
d) Increasing opportunity costs.
46. Larger production of ---------- goods would
39. capital intensive technique would get chosen in lead to higher production in future.
ar a) Consumer goods
a) Labour surplus economy. b) Capital goods
b) Capital surplus economy. c) Agricultural goods
c) Developed economy. d) Public goods
d) Developing economy.
47. The branch of economic theory that deals with
40. Labour intensive technique would get chosen problem of allocation of resources is
in a a) Micro-economic theory.
a) Labour surplus economy, b) Macro-economic theory.
b) Capital surplus economy. c) Econometrics.
c) Developed economy. d) None of the above
d) Developing economy.
48. Which of the following is likely to cause an
41. Ram; my corn harvest this year is poor. inward a country’s PPC?
Krishna: Don’t worry. Price increases will compensate a) Earthquake destroying resources of the
for the fall in quantity supplied. country.
Vinod: climate affects crop yields. Some years are b) Scientists discovering new machines.
bad, others are god. c) Workers getting jobs in the new metro
Madhur: The Government ought to guarantee that project.
our income will not fall. In the conversation the d) The country finds new reserves of crude oil.
normative statement is made by
a) Ram b) Krishna 49. The various combinations of goods that can
c)Vinod d) Madhur be produced in any economy when it uses its
available sources and technology efficiently are
42. Consider the following and decide which, if depicted by.
any, economy is without scarcity: a) Demand curve.
a) The pre-independent Indian economy, b) Production curve.
where most people were farmers. c) Supply curve.
b) a mythical economy where everybody is a d) Production possibilities curve.
billionaire.
c) any economy where income is distributed 50. In an economy people have the freedom to
equally among its people. buy or not to buy the goods offered in the market
d) None of the above. place, and this freedom to choose what they buy

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 Additional MCQS-Introduction to Micro
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dictated what producers will ultimately produce. The b) Capitalism

key term defining this condition is c) Mixed economy
a) Economic power of choice. d) Communism
b) Consumer sovereignty.
c) Positive economy. 59. Economics may be defined as the science that
d) Producer sovereignty. explains …………………….
a) The choices that we make as we cope with
51. The term ‘Economics’ owes its origin to the scarcity
Greek word b) The decisions made by politicians
a) Aikonomia c) The decisions made by households
b) Wikonomia d) All human behavior
c) Oikonomia
d) None of the above 60. Scarcity is a situation in which………………..
a) Wants exceed the resources available to
52. Oilinomia means satisfy them
a) Industry b) Something is being wasted
b) Household c) People are poor
c) Services d) None of the above
d) None of these
61. Under inductive method , the logic proceeds
53. Adam Smith published his masterpiece “ An from
enquiry into the nature and cause s of wealth a) General to particular
of nation ‘ in the year b) Positive to normative
a) 1776 b) 1786 c) Normative to positive
c) 1756 d) 1766 d) Particular to general

54. The classical economists defined Economics 62. When productivity increases………..
as (a) Prices rise
a) The science of welfare (b) Living standards improve
b) The science o scarcity (c) There are fewer good jobs
c) The science of wealth (d) Living standards deteriorate
d) The science of wealth and welfare
63. Macro Economics is the study of…………
55.Lionel Robins published his famous book (a) All aspects of scarcity
”Nature of significance of Economics” in the year (b) The national economy and the global
a) 1935 b) 1933 economy as whole
c) 1931 d) 1937 (c) Big businesses
(d) The decisions of individual businesses and
56.According to ……………….. Economics is the people
“the study of how in a civilized society one obtains
the share of what other people have produced and 64. The task of economic science is to……….
of how the total product of society changes and is (a) Save the earth from the overuse of natural
determined.” resources
a) Jacob Comer (b) Help us to understand how the economics
b) Henry Smith world works
c) Pigou (c) Tell us what is good for us
d) Paul A. Samuelson (d) Make moral choices about things like drugs

57. ‘Economics is what Economists do’ is given by 65. Who among the following gave the definition of
a) Jacob Viner Economics as “Science which deals with
b) Henry Smith wealth”?
c) Pigou (a) J.K. Keynes
d) Paul A. samuelson (b) H.C. Dickinoson
(c) Henry Smith
58.In which economics system all the means of (d) J. B. say
production are owned and controlled by private
individuals for profits. 66. Production Possibilities curve is also known as
a) Socialism (a) Demand curve

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 Additional MCQS-Introduction to Micro
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(b) Supply curve 72.According to Table, the opportunity cost of

(c) Indifference curve increasing one unit of Good B from 10 units to
(d) Transformation curve 18units is:
a) 3 units of A.
67. Socialist economy is a b) 1 units of A.
(a) Planned economy c) 0.125 units of A.
(b) Mixed economy d) 0.5units of A.
(c) Profit oriented economy
(d) None of these 73.Given the data in Table , as one moves from
successively from point a to point B, C, D, E and F,
68. Freedom of choice is the advantage of the opportunity cost of Good A:
(a) Socialism (b) capitalism a) Increases as more of good A is produced,
(c) mixed economy (d) communism b) Decreases as more of good A is produced.
c) Remains constant.
69.In 1940, Hitler’s air force bombed Rotterdam, a d) Is always equal to one unit of B.
beautiful city in Holland. Twenty five thousand
homes, 1200 factories, 69 schools and 13 74. The economic analysis expects the consumer
hospitals were destroyed. Nearly 75,000 people to behave in a manner which is:
died. 35% of the port was gutted by the German a) Rational
army. The above destruction would mean: b) Irrational
(a) A complete wipe off of the production c) Emotional
possibilities Curve (PPC) of Rotterdam. d) Indifferent
(b) An outward shift of the PPC of Rotterdam. Use table for questions 75 to 79 production
(c) An inward shift of the PPC of Rotterdam. possibilities (alternative)
(d) A downward movement on the same PPC A B C D E F
of Rotterdam.
Hot pockets Eggs 15 12 9 6 2 0
70.If immediately after the war, Rotterdam rebuilt
its port with the help of most up to date craned, 0 0 11 15 18 20
docks and cargo handling technology. By the end
of the reconstruction, ships were loading and
unloading faster and at lower cost than anywhere 75. According to the production possibilities curve
in the world. It became more efficient than it was in Table, a combination of 12 Hot pockets and 11
before the destruction. This means: Eggos:
a) Rotterdam has come back to its original PPC. a) Is attainable but involves the efficient use of
b) Rotterdam has shifted to a higher PPC. society’s resources.
c) Rotterdam has shifted to a lower PPC. b) Is attainable but involves the unemployment
d) Nothing can said. or inefficient use of some of society’s
Use Table to answer question 71-73 production resources.
possibilities c) Is not attainable given society’s current
Production A B C D E F resources and technology.
d) May be produced only if the production
Possibilities possibilities curve shifts inward.

Good A 0 1 2 3 4 5 76. According to the production possibilities curve

in Table , a combination of 3Hot pockets and 15
Good B 30 28 24 18 10 0 Eggos:
a) Is attainable and it involves an efficient use
of society’s resources.
71.According to Table the opportunity cost of b) Is attainable but involves the unemployment
increasing Good A’s production from 2 of4 units is or inefficient use of some of society’s
equal to: resources.
a) 10 units of B c) Is not attainable given society’s current
b) 1 units of B resources and technology.
c) 24 units of B d) May be produced only if the production
d) 2 units of B. possibilities curve shifts inward

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Economics
77. Referring to table , in moving from point D to
point C, the opportunity cost of 1 more Hot Pocket
is:
a) 4 eggos. b)1/6 eggos
c)1 eggo. d)4/3 eggos
78. Given the data in Table, as one moves
successively from point A to point B, C, D, E, and F
the opportunity cost of egos:
a) Increases as more /egos are produced
b) Decreases as more Eggos are produced.
c)Remains constant as more Eggos are
produced.
d) Cannot be measured.
79. Given the data in Table , as one moves
successively from point F to points E, D, C,B, and
A opportunity cost of Hot Pockets:
Introduction to Micro Economics
a) Increases as more hot potatoes are
produced.
b) Decreases as more hot potatoes are
produced.
c) Remains constant as, more Hot potatoes
ate produced.
d) Cannot be means.
80.Which of the following would not cause an
economy’s production possibilities an curve to shift
to the right?
a) The discovery of new super-conductivity
materials, which makes manufacturing more
efficient.
b) A decrease in unemployment.
c) Improvements in technology.
d) Widespread application of irrigation to
agricultural land.
81.In drawing a production possibilities curve,
which of the following is (are) held constant?
a) The supply of natural resources and supply
of labor.
b) Technology and the educational attainment
of the work force.
c) Both (a) and (b).
d) None of the above.
82. Which of the following is incorrect?
a) The central problem in economics is that of
allocating scarce resources in such a manner
that society’s unlimited needs are satisfied as
will as possible.
b) In mixed economy, the government and the
private sector interact in solving the basic
economic questions.
c) Microeconomics best describes the study of
the behavior of individual agents.
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Additional MCQS-Introduction to Micro
d)An important theme in economics is that
market system are better than command
(socialistic) economies.
83. Which of the following is correct?
a) Normative economics is not concerned with
value judgements .
b) A market is a process that reconciles
consumer decision, production decisions and
labour decisions.
c) A mixed economy has a certain level of
government intervention in the economy along
with private sector ownership of the economy.
d) (b) and (c).
84. Indian economy is mixed economy because:
a) Agriculture and industry have both
simultaneously developed in India.
b) Agriculture and industry have both
developed in the public sector.
c) Private ownership and public ownership
over means of production co-exit.
d) Any of the above.
Questions 85 to 87 are based on igure 1 which
shows production possibilities curve (PPC) for
grape juice and wine
85. The opportunity cost of increasing wine
production from D to E is :
a) 0 litres of grape juice.
b) 5 litres of grape juice.
c) 1 litres of wine.
d) 0.2 litres of wine.
86. Assuming that the PPC does not shift, which
of the following is true?
a) Point A is desirable but is inefficient.
b) Point D represents more efficient allocation
of resources than points A and f.
c) Point H is desirable but is not attainable.
d) If wine production equals 7 litres, the
maximum amount of grape juice that can be
produced simultaneously is 28 litres.
87. The PPC in the diagram reflects:
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 Additional MCQS-Introduction to Micro
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a) Increasing opportunity cost of more wine 92. Which of the following involve trade-offs.?
production and constant opportunity cost of a) Talking a nap
more grape juice production. b) All of these answers involve trade-offs.
b) Increasing opportunity cost of more wine c) Watching a football game on Saturday
production and decreasing opportunity cost of afternoon.
more grape juice production d) Going to university
c) Decreasing opportunity cost of more wine
production and decreasing cost 01 more grape 93. Choice is created by the
juice production. a) abundance of resources
d) Increasing opportunity cost of more wine b) urgency of needs
production and increasing cost of more grape c) non- availability of resources
juice production. d) scarcity of resources

88. Which of the following statements is correct? 94. Under a free economy, price are:
a) In a two- good economy, the production a) Regulated
possibilities frontier reflects the maximum b) Determined through free interplay of
amount of on good that can be produced when demand and supply
a given is produced. c) Party regulated
b) Microeconomics is the study of the behavior d) None of these
of the economy as a whole.
c) Positive economics focuses on welfare of 95. Which of the following falls under micro
the people of a society. economics?
d) None of the above. a) National income
b) General Price level
c) Factor Pricing
d) National saving and investment
89. Which of the following is correct?
a) The production possibilities frontier shows 96. Under Inductive method, the logic proceeds
the maximum combination of output that the from:
economy can available. a) General to particulars
b) Increasing opportunity cost implies a b) Particulars to general
production possibility frontier concave to the c) Both (a) and (b)
origin. d) None.
c) Free markets are the markets in which the
governments do not intervene. 97. according to Robbins, ‘means’ are :
d) All of the above are correct. a) Scarce b) Unlimited
c) Undefined d) All of these
90. Price theory is an important of _____
Economics. 98. Which of these would cause a rightward shift
a) Micro b) Macro of the PPC curve?
c) Development d) Welfare a) Improvement in technology.
b) Greater capital formation
91. With the same amount of resources, a farmer c) Increase in pollution.
can feed the following combination of goats d) All of these.
and horses:
99. If the opportunity cost is constant , than PPC
Goats Horses
would be:
a) Convex b) straight line
Option I 168 44
c) Backward bending d) concave
Option II 150 50
100. economics is the study of :
a) How society manages its unlimited
Given that option available with him, what is the resources
opportunity cost to the farmer of feeding one b) How to reduce over wants until we are
horse? satisfied
a) 1 goat. b) 3 horses. c) How society manages its scarce resources
c) 3 goats. d) 18 goats. d) How to fully satisfy our unlimited wants

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Economics
ANSWER WITH DETAILED RESOLVING
Note: - In CPT exam, there is no need to give
reasons, this reasons are given only for the
understanding of the students:
Ans.1(c) The correct definitions are
 Science of material well- being -
“Alfred Marshall.”
 “The range of our inquiry becomes restricted
to that part of social welfare that can be
brought directly or indirectly in to relation with
the measuring rode of money ”
-A.C. Pigou
 Science of wealth –“Adam Smith ”
 Economics is the science, which studies
human behavior as a relationship between
ends and scarce means which have
alternative uses:
Robbins.
Ans 2(d) The law of scarcity implies that
consumer’s wants will never be completely
satisfied because human wants are unlimited
wants and resource have scarcity
Ans 3 (a) Robbins the view that economics is
nature between wants and it means It is not for
economists to pass value judgments.
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Additional MCQS-Introduction to Micro
Ans 4(c) General definition of the study of
economics is the individual and social choice in the
face of scarcity, because an individual or society
have to choose their unlimited wants with their
scarce resources.
Ans 5 (a) The scarcity of resources is with
reference to the unlimited want and all wants
cannot be satisfied within the scarce recourses.
Ans 6(b) Rational decision-making requires that
one’s choices be consistent with one’s goals,
otherwise maximum satisfaction cannot be
achieved.
Ans 7(c) Positive science.
Ans 8(d) Normative statement refers to “What
ought to be” or it offers advice, and it is advisable
that to reduced inequality, priority is to be given for
mixed economies.
Ans. 9(b) Macro economics is also called
aggregated economics.
Ans. 10 (a) An example of ‘Positive’ economics
analysis would be the low of demands and it
explains an analysis of the relationship between
the price of food and the quantity purchase
Ans 11(b) The correct statement is that Micro and
Macro – economic are inter-dependent
Ans 12(a) Macro economics is the study of overall
phenomena as a whole rather than its individual
parts. Hence A study of how increases in the
corporate in unemployment rate are an example
Macro statement.
Ans 13(b) finding the causes of failure of X and
co.’ is not a macro statement approach; it is micro
approach because micro deals part of the society.
Ans 14(b) Economic goods are considered scarce
resources because they do not exist in adequate
quantity to satisfy social requirements, If they exist
in adequate quantity then economic goods are
considered unlimited resources.
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Economics
Ans 15(c) ‘Lookout in TELCO’ IS MICRO
approach, because micro deals with individual part
of the society rather than all the units combined.
Ans 16(c) In a free market economy the allocation
or resources is determined by the principle of
consumer sovereignty and
What should be produced be decided by produced
it will be decided by the consumer’s preference.
Ans17(d) A capitalist economy uses ‘prices’ as the
principal means of allocating resources, because
price mechanism have important role in capitalist
economy to determine price
Ans18(a) In a free market economy , with the help
of the demand and supply price will be decided,
and when consumers increases their purchase the
level of demands exceeds supply then price tend
to rice.
Ans 19(a) In market system there is wide gap of
income between the rich and the poor, which
mainly arises due to unequal
Distribution of income. So it is a disadvantage if the
capitalist economy there is coexistence of public
private sector.
Ans 20(c) In a mixed economy economics
decisions are partly taken by the state and partly
by the private entrepreneurs because in a mixed
economy there is coexistence of public and private
sector.
Ans 21(d) The central problem in the economics
is that what, how and for whom to produced and it
is allocating scarce resource in such a manner that
society’s unlimited needs and wants are satisfied
as well as possible .
Ans22 (d) An economy cannot produced outside
the PPC curve because current resource of the
economy are constant ,in the finger ’d’ Point is
outside the PPC which is not possible to produce.
Ans 23 (d) “Productive efficiency “means goods
produced at any point on the PPC and when an
economy produced on the PPC curve then we can
say that goods and service that produced at list at
cost and no resource are wasted
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Additional MCQS-Introduction to Micro
Ans 24(d) “Productive efficiency “means goods
produced at any point on the PPC
And in the finger all the points on the A,B, and C
lines on PPC so all points PPC shows a productive
efficient level of output
Ans 25(c) Any point move from inside the PPC to
a point on the PPC to a point on the PPC,
represents A movement towards greater
productivity efficiency because productivity
efficiency line on PPC so movement from ‘F’ to ‘C’
is correct answer.
Ans 26(d) Unemployment can be decreased by
the utilization of full resources and any movement
from a point inside the PPF to a point on the PPF
represents full utilization of resources.
Ans 27(c ) Principle of increasing opportunity cost
that makes the PPC concave to the origin and PPC
will be straight line of opportunity cost is constant.
Ans28(b) period of less then full employment
means’ unemployment’ and in this case an
economy operate inside the PPC, because if an
economy produce on the PPC curve, it represents
full employment of resources.
Ans 29(b) A reduction in the labour unemployment
rate, created ’employment’ and increase in
employment shift PPC curve , but not the rightward
shift of PPC.PPC can shift to the right or economic
growth are possible in the following circumstances-
1. Improvement in overall technology
2. Greater capital formation
3. Increase in population growth/labour
force
Ans 30 (d) Both ‘gun’ or butter can be produced by
increase in supply of natural resource improvement
of technology and increase in labour force.
Ans 31(a) Economic growth depends upon capital
formation , increase in current level of consumption
growth in the future.
Ans 32(a) A movement from point A to point B.
represents the concept of trade-offs.
Ans 33(a) A decrease in the amount of
unemployed labour resources would not mean
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Economics
growth of resources so it would not move the PPF
for this economy closer to point W.
Ans 34(a) Moving from point A to point D, the
opportunity cost of producing each additional unit
of consumer goods increases.
Ans 35(d) the opportunity cost of moving from
point A to point B is 10 units of capital goods(100-
90)
Ans 36(c) Any point inside PPC shows
unemployment or underemployment of one or
more resources it is illustrated by production at
point ‘U’.
Ans37 (c) PPC looks concave to the origin
because of increasing marginal opportunity cost.
Ans 38(b) the negative slope of the PPF is due to
scarcity; at any point in time we have limited
amounts of productive resources
Ans 39 (b) Economy as to decided about
technique of production on the basic of cost labor
and capital. A labor surplus economics choose
labor intensive technique and a capital surplus
economy chooses capital intensive technique.
Ans40 (a) reason same as ans 39.
Ans 41(d) normative statement refers to “what
ought to be” or it makes and assignment of an
activity and offers advice. Hence the statement
made by madhur is the normative statement.
Ans 42(d) The want of human being are unlimited.
If one want is satisfied, anther want good crop up.
Since wants are unlimited recourses with these
want can be satisfied are limited, a choice has to
be made .
Ans 43(d) Micro-economics is the study of
particular firm, particular household. Individual
price, wages, income, Industry and a particular
commodity. Hence, the national economy’s annual
rate of growth is not a micro-economic subject
matter.
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Additional MCQS-Introduction to Micro
Ans 44(b) The central problems are 1. What to
produce 2. How to produce 3.For whom to produce
4. What provision should be made for Economic
Growth: Hence, when are goods produced? Is not
one of the four central questions that the study of
economics is supposed to answer?
Ans 45(b) if marginal opportunity cost is constant
then the PPC would be straight line.
Ans46 (b) Capital goods helps in further
production so their large production would lead to
higher production in future.
Ans 47(a) The branch of economic theory that
deals with the problem of resources is micro-
economic theory.
Ans 48(a) Earthquake destroying resources will
shift PPC inward, as resources of production will
reduce.
Ans 49(d) Production possibility curve may be
defined as a curve which shows the various
combinations of two goods that can be produced in
any economy with given amount of resources and
technology.
Ans 50 (b) “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 producer will ultimately
produce. ” This is known as principle of consumer
sovereignty. In a free market economic the
allocation of resources is determined by the
consumer preference.
Ans 51(c) the term ‘ Economics’ owes its origin to
the Greek word ‘Oiknonomiia’ means ‘ household ‘.
Ans 52(b) ‘Oiknonomia’ means ‘household ‘.
Ans 53(a) Adam Smith published his masterpiece
in the year 1776
Ans 54(c) Classical economics (Adam Smith )
defined economics as ‘The science of weath’.
Ans 55(c) Lionel Robbins published his book in the
year 1931.
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 Additional MCQS-Introduction to Micro
Economics

Ans 56(b) Henry Smith defined economics as

science of dynamic growth and development. Production Good A Good B Increasing
Opportunity
Ans 57(a) Jacob viner defined Economics in what Possibilities cost
Economists do’.
A 0 23 -
Ans 58(b) Under capitalism economics system , all B 1 28 2
the means of production are privately owned for
private profits . C 2 24 4

Ans 59(a) Economics may be defined as ‘choice in D 3 18 6

the face of scracity’. E 4 10 8

Ans60 (a) Scarcity is a situation in which F 5 0 10

wants exceed the resources available to satisfy
them
Ans 61(d) Inductive method, the logic proceeds
from particular to general
Ans 62(b) When productivity increase living
standards improve
Ans 63(b) Macro Economics is the study of the
national economy and the global economy as
whole
Ans 64(b) The task of economic science is to help
us to understand how the economics world works
Ans 65(d) J. B. says that gave the definition of
Economics as “Science which deals with wealth”
Ans 66(d) Production Possibilities curve is also
known as transformation curve
Ans 72(a) As one moves from successively from
point A to point B, C, D, E and F, the opportunity
cost of Good A Increases as more of good A is
produced.
Ans 74(a) The economic analysis expects the
consumer to behave in a manner which is Rational
Ans 75 (c) A combination of 3 Hot pockets and 11
Eggs is not attainable given society’s current
resources and technology
Ans 77 (d) D to point C, the opportunity cost of 1
more Hot pocket is 4/3 Egos i.e.(15-11/9-6).
Ans 78 (a) As one moves successively from point
A to points B, C, D, E, and A, the opportunity cost
of Hot pockets increases as more hot pockets
increases as more hot potatoes are produced.

Ans 67(a) Socialist economy is a planned
economy
Ans 68(b) Freedom of choice is the advantage of
capitalist economy.
Ans 69(c) War destroying resources will shift PPC
inward as resources of production will reduce.
Ans 70 (b) Improvement in overall technology will
results in shift of PPC to the right.
Ans 71 (b) Opportunity cost of increasing Good A’s
production from 2 to 4 units is equal to 14 units of
B (24-10)
Ans 79 (a) As one moves successively from point
F to points E, D, C, B, and A, the opportunity cost
Hot pockets increases as more hot potatoes are
produced.
Ans 80 (b) A decrease in unemployment will not
result in growth of resources which would not
cause an economy’s production possibilities
curve to shift to the right
Ans 81 (c) In drawing a production possibilities
curve, both are held constant
(i) The supply of natural resources and the
supply of labour

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 Additional MCQS-Introduction to Micro
Economics

(ii) Technology and the educational attainment Ans 96(b) Under inductive methods logic
of the work force. Proceeds from particular to general or from
individual to universal.
Ans 82(b) In mixed economy, the government and
the private sector interact in solving the basic Ans 97(b) According to Robbins means resources
economic questions. are scarce and wants ate unlimited.

Ans 83(b) statement (b) and (c) are correct.
Ans 84 (c) Indian economy is mixed economy
because private ownership and public ownership
over means of production co-exist.
Ans 98(d) PPC right words shifts, cause economic
growth
Ans 99(b) PPC Would be straight line downward
sloping, if opportunity cost in constant.

Ans 85 (b) The opportunity cost of increasing wine Ans 100(d) economics is the study of how to fulfill
production from D to E is liters of grape juice. our unlimited wants.

Ans 86 (c) Point H is desirable but is not attainable

, as PPC does not shift.

Ans 87 (d) The PPC in the diagram reflects

increasing opportunity cost of more wine
production and increasing cost of more grape juice
production.

Ans 88(a) “In a two –good economy, the

production possibilities frontier reflects the
maximum amount of the other good is produced ”
is the only correct statement .

Ans 89(a) Price theory is an important constituent

of Micro Economics

Ans 90 (d) all of the statements are correct.

Ans 91(c ) The opportunity cost to the farmer of

feeding one horse 3 goats I.e. 168-150/50-44

Ans 92(b) All the answers involve trade-offs.

Ans 93(d) According to Robbins, choice is created

scarcity of resources.

Ans 94(b) Under a free economy prices

determined the through price mechanism (free
interplay of demand and supply)

Ans 95(c) Product pricing and factor (LLCE)

Pricing (RWIP) fall under micro economics

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