1. The curve showing the possibilities of production of desired good is known as:
Correct : B. production possibility curve
2. Which one of the following definition of Economics is associated with the name
of Lionel Robbins?
Correct : B. scarcity definition
3. A hypothesis is tested by:
Correct : C. its ability to predict accurately an outcome that follows logically from the assumptions
4. In a free enterprise economy, the problems of what, how and for whom to
produce are solved by :
Correct : B. the price mechanism
5. Who considered Political Economy as “an enquiry into the nature and causes of
the wealth of nations”?
Correct : A. adam smith
6. Which of the following definitions of Economics include the economic concept
of ‘scales of Preferences’?
Correct : C. scarcity definition
7. Which of the following embodies a more widely accepted definition of
economics?
Correct : D. science of making choice.
8. The fundamental problem faced by an economy is one of :
Correct : D. scarcity of resources and multiplicity of wants.
9. Production possibilities curve does not show:
Correct : D. productive potential under conditions of underemployment
10. State whether Economics is :
Correct : D. a science or an art depending on who uses economics and for what purpose.
11. Who of the following emphasized the normative aspect of Economics as a
science?
Correct : C. the german historical school
12. Of the following economists who is considered as master of partial analysis?
Correct : A. alfred marshall
13. Which of the following statements has been drawn by inductive method?
Correct : B. all businessmen wish to buy at low price and sell at high price
14. What is true for deductive method?
Correct : A. abstract
15. What is true for inductive method?
Correct : B. empirical
16. Find out the correct statement:
Correct : B. models transform verbal expressions in to more scientific expressions
17. Micro economic theory studies how a free enterprise economy determines:
Correct : A. the price of goods
18. Which aspect of taxation involves normative economics?
Correct : B. the fairness of the tax
19. Microeconomics deals primarily with:
Correct : D. comparative statics, partial equilibrium and positive economics.
20. Which of the following is incorrect?
Correct : C. microeconomics is concerned primarily with the time path and processes by which one equilibrium position evolves into another
21. Which of the following statements is most closely associated with general
equilibrium analysis?
Correct : A. everything depends on everything else
22. The meaning of the word ‘economic’ is most closely associated with the word:
Correct : B. scarce
23. The market equilibrium for a commodity is determined by
Correct : C. the balancing of the forces of demand and supply for the commodity
24. Microeconomics studies the decision making behavior of:
Correct : B. an individual or household
25. The word micro was first used in Economics by:
Correct : B. ragnar frisch
26. A function refers to :
Correct : D. the relationship between one dependent variable and one or more independent variables.
27. The validity of an economic theory is judged by its power to:
Correct : A. explain an economic phenomenon
28. The subject matter of economics is the study of:
Correct : D. scarcity and choice
29. To whom do you attribute the ‘growth’ definition of economics?
Correct : A. paul samuelson
30. The first economist who coined the terms micro economics and
macroeconomics
Correct : A. ragnar frisch
31. Microeconomics deals with:
Correct : D. all the above
32. Prof. Robbin’s definition of Economics is:
Correct : A. scarcity definition
33. A theory is:
Correct : B. a validated hypothesis
34. The book ‘Principles of Economics’ was written by:
Correct : B. marshall
35. Average revenue is :
Correct : B. tr / no. of units sold
36. A hypothesis is a :
Correct : D. a proposition the validity of which is to be tested
37. In the classical system, the basic economic problems are solved by:
Correct : B. price mechanism
38. Growth definition of economics was concerned with:
Correct : D. economic growth
39. A market:
Correct : B. does not necessarily refer to a meeting place between buyers and sellers
40. The average fixed cost is obtained by :
Correct : A. tfc / q
41. Average Revenue curve under monopoly is :
Correct : B. downward slopping
42. _______ investigations examine an individual’s relationship with and
interaction in society
Correct : D. social science
43. In the 19th century _________ argued that ideas pass through three rising stages namely, Theological, Philosophical and Scientific.
Correct : A. auguste comte
44. _________ is distinctive for much greater use of mathematics than the other
social sciences, a development made possible by the development of a concept of utility
Correct : C. economics
45. The most important founder of German sociology, __________ , was keenly interested in maintaining the relationship between economics and sociology.
Correct : B. max weber
46. International Social Science Associations were founded under the auspices
of___________
Correct : A. unesco
47. ________ social science discipline deals with the integration of different
aspects of the Social Sciences, Humanities, and Human Biology
Correct : D. anthropology
48. Social science can help to appreciate the values enshrined in the Indian
Constitution such as justice, liberty, equality and fraternity and the unity and integrity of the nation and the building of a socialist, secular and democratic society.
Correct : A. true
49. ______is primarily done by observing or testing on real-life data or analysing
the pattern of some specific events in order to identify the nature or the class of trend that specific phenomenon maintains.
Correct : A. empirical research
50. _____ has distinguished between different types of societies on basis of economic system.
Correct : C. karl marx
51. Mannheim defines ________as the sum of those methods by which a society
tries to influence human behavior to maintain a given order.
Correct : A. social control
52. Implicit costs are:
Correct : C. "payments" for self-employed resources.
53. Which would be an implicit cost for a firm? The cost:
Correct : D. of wages foregone by the owner of the firm.
54. If a firm's revenues just cover all its opportunity costs, then:
Correct : B. economic profit is zero.
55. Suppose a firm sells its product at a price lower than the opportunity cost of the
inputs used to produce it. Which is true?
Correct : D. the firm may earn accounting profits, but will face economic losses.
56. Suppose that a firm produces 200,000 units a year and sells them all for Rs.10
each. The explicit costs of production are Rs.1,500,000 and the implicit costs of production are Rs. 300,000. The firm has an accounting profit of:
Correct : A. rs. 500,000 and an economic profit of rs. 200,000.
57. The short run is a time period in which:
Correct : D. some resources are fixed and others are variable.
58. The law of diminishing returns only applies in cases where:
Correct : C. there is at least one fixed factor of production.
59. The marginal product of labor curve shows the change in total product
resulting from:
Correct : B. one-unit increase in the quantity of a particular resource used, holding constant other resources.
60. When the total product curve is falling, the:
Correct : B. marginal product of labor is negative.
61. When marginal product reaches its maximum, what can be said of total
product?
Correct : C. total product is increasing if marginal product is still positive
62. Variable costs are:
Correct : C. costs that change with the level of production.
63. Which is not a fixed cost?
Correct : D. a worker\s wage of rs. 15 per hour
64. If you know that with 8 units of output, average fixed cost is Rs. 12.50 and
average variable cost is Rs. 81.25, then total cost at this output level is:
Correct : C. rs. 750.
65. With fixed costs of Rs. 400, a firm has average total costs of Rs. 3 and average
variable costs of Rs. 2.50. Its output is:
Correct : C. 800 units.
66. The reason the marginal cost curve eventually increases as output increases for
the typical firm is because:
Correct : C. of the law of diminishing returns.
67. If the short-run average variable costs of production for a firm are rising, then
this indicates that:
Correct : C. marginal costs are above average variable costs.
68. If a more efficient technology was discovered by a firm, there would be:
Correct : D. a downward shift in the mc curve.
69. A firm encountering economies of scale over some range of output will have a:
Correct : B. falling long-run average cost curve.
70. If all resources used in the production of a product are increased by 20 percent and
output increases by 20 percent, then there must be:
Correct : C. constant returns to scale.
71. Which of the following statements best describes the general form of a production function:
(i) It is a purely technological relationship between quantities of input and quantities of output.
(ii) It represents the technology of an organisation, sector of an economy.
(iii) Prices of inputs or of the output do not enter into the production function.
(iv) It is a flow concept describing the transformation of inputs into output per unitof time.
Correct : D. all of the above
72. Which of the following statements describes the presence of diminishing
returns. Holding at least one factor constant …....
Correct : B. the marginal product of a factor is positive but falling.
73. Which of the following statements describes increasing returns to scale:
Correct : C. increasing inputs by 1/4 leads to an increase in output of 1/3.
74. Economies of scale exist if:
Correct : B. as the amount of capital increases, the cost of producing per unit falls
75. Whenever marginal product is declining with increasing use of an input,
Correct : D. total product is increasing at a decreasing rate as input use increases.
76. Whenever marginal product is increasing with increasing use of an input,
Correct : B. total product is increasing at an increasing rate
77. When average product is at a maximum, marginal product is
Correct : C. equal to average product
78. Whenever average product is declining, with increases in input usage,
Correct : B. total product is declining with increases in input
79. The total product curve may initially show output increasing at an increasing
rate as more labour is hired because of the:
Correct : D. increase in marginal physical product.
80. If labour is the only variable resource and its marginal physical product falls as
more workers are hired:
Correct : A. the law of diminishing marginal returns is at work.
81. When both average and total product are greater than zero, and marginal
product equals average product, then total product:
Correct : B. is positive and rising.
82. Costs incurred only when production occurs are known as:
Correct : C. variable costs.
83. The law of diminishing marginal returns is encountered as increasing amounts
of labour are hired because:
Correct : C. each extra worker hired decreases the amounts of land and capital per worker, so the work place becomes more congested and managerial control becomes more difficult.
84. Which of the following is irrelevant for rational decision making?
Correct : A. total variable cost (tvc)
85. A curve that can never be “U” shaped is the:
Correct : C. average fixed cost curve.
86. Diminishing marginal returns are most compatible with:
Correct : B. advantages from specialization.
87. If average variable costs fall as output grows:
Correct : C. total cost must also be declining.
88. In economic theory the costs of a firm
Correct : B. includes implicit as well as explicit outlays
89. The average total costs of the firm as defined in standard economic theory
Correct : D. are the sum of the fixed and variable costs divided by the number of units of output
90. The short run as the term is used in connection with the theory of the firm is a
period of time:
Correct : A. too short for the firm to vary all its inputs
91. According to the principle of diminishing marginal physical productivity, in
the short run
Correct : C. as output is increased, the quantity of inputs needed to produce additional units of output will increase, causing costs per unit of output to increase
92. Economies of scale
Correct : B. are usually considered to be a phenomenon of the long run
93. Marginal costs and average variable costs are equal when
Correct : D. average variable cost is a minimum
94. Theory of demand examines the behaviour of the--------
Correct : A. Consumer
95. The want satisfying power of a commodity:
Correct : B. Utility
96. Utility is the concept which is:
Correct : B. Subjective
97. Change in utility resulting from one unit change in consumption is called:
Correct : C. Marginal Utility
98. When Total Utility is maximum, Marginal Utility is :
Correct : A. Zero
99. When Marginal Utility is negative, Total Utility: