The law of scarcity

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(a)

Does not apply to rich, developed countries

(b)

Applies only to the less developed countries.

(c)

Implies that consumers' wants will be satisfied in a socialistic system.

(d)

Implies that consumers' wants will never be completely satisfied

The central problem in economics is that of

1

(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 in the best possible manner.

If the PPF is linear, i.e., a straight line, which one of the following statements is true?

1

(a)

As the production of a good increases , the opportunity cost of that good rises.

(b)

(b) As the production of a good increases , the opportunity cost of that good falls

(c)

Opportunity costs are constant

(d)

The economy is not at full employment when operating on the PPF.

Capital intensive technique is chosen in a  

1

(a)

Labour surplus economy.

(b)

Capital surplus economy.

(c)

Developed economy.

(d)

Developing economy

Labour intensive technique is chosen in a

1

(a)

Labour surplus economy

(b)

Capital surplus economy

(c)

Developed economy.

(d)

Developing economy.

Production Possibilities Curve is also known as

1

(a)

Demand curve

(b)

Supply curve

(c)

Indifference curve

(d)

Transformation curve

Which of the following is not a subject matter of microeconomics?

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(a)

Consumer's behavior

(b)

Market structure

(c)

Monetary Policy

(d)

Pricing of factor services

Which of the following is an assumption of Production Possibility Frontier? 

1

(a)

Resources are not fully employed.

(b)

Resources are not equally efficient for production of the two goods.

(c)

Resources are not efficiently employed

(d)

Resources available are not fixed.

An economy always manages to meet all the needs of the people living in the country.

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(a) True

(b) False

In the context of an economy when we talk about 'scarcity', we refer to short supply of land.

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(a) True

(b) False

Economic problem arises due to plenty of resources.

1

(a) True

(b) False

Because of destruction caused by war, a country's PPF will shift to the left.

1

(a) False

(b) True

A job guarantee scheme will lead to a rightward shift of PPF.

1

(a) True

(b) False

If a PPF shifts to the right, the new PPF will be parallel to the original

1

(a) True

(b) False

A 'Production Possibility Frontier' (PPF) is always represented as a upward sloping curve.

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(a) True

(b) False

What is a production possibility frontier?

1

(a)

Production possibility frontier is a curve which depicts all the possible combinations of two goods which can be produced with given resources and technology in an economy.

What is meant by economy?

1

(a)

Economy is a system which provides people with the means to work and earn living.

What is economics?

1

(a)

Economics is about studying economic problems arising due to limited means (having alternative uses) in relation to unlimited wants.

Why does an economic problem arise?

1

(a)

If we are not able to satisfy unlimited wants out of limited resources then the economic problem arises.

State two features of resources that give rise to an economic problem?

1

(a)

The two features of resources that giverise to an economic problem are:
(i) Resources are limited.
(ii) They have alternative uses.

Which type of science is economics?

1

(a)

Economics is a social science.

What is the basic reason for economic problem in all economies?

1

(a)

It is scarcity of resources.

What is meant by economising of resources?

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(a)

Economising of resources means that resources are to be used in such a manner that maximum output is realised per unit of input. It also means optimum utilisation of resources.

What is meant by central problem of an economy?

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(a)

The problem of making a choice among alternative uses of resources is known as basic or central problem of an economy

What does a rightward shift of pro-duction possibility curve indicate?

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(a)

It indicates growth of resources.