The concept of scarcity in economics implies that
A All wants can be fulfilled
B Resources exceed wants
C Wants exceed available resources
D Production is unlimited
Scarcity exists because human wants are unlimited while resources available to satisfy them are limited.
Economics is regarded as a positive science mainly because it
A Prescribes policies
B Makes value judgments
C Studies cause-and-effect relationships
D Focuses on welfare
As a positive science, economics explains economic phenomena through cause-and-effect analysis without moral judgments.
Which statement reflects the welfare definition of economics?
A Economics studies scarcity
B Economics studies wealth accumulation
C Economics studies human welfare
D Economics studies price mechanism
The welfare definition emphasizes economics as a study of human welfare derived from material goods.
A key criticism of the wealth definition of economics was that it
A Ignored production
B Ignored human welfare
C Ignored scarcity
D Was unscientific
The wealth definition focused narrowly on wealth and ignored welfare aspects of human life.
Economics studies only economic activities because they
A Are legal
B Involve money
C Satisfy wants using scarce resources
D Are socially useful
Economic activities involve the use of scarce resources to satisfy human wants.
Which of the following best represents a positive economic statement?
A Poverty should be reduced
B Government must control inflation
C Unemployment is 7%
D Taxes are unfair
This statement is factual, measurable, and free from value judgment.
Normative economics is important because it
A Explains economic laws
B Provides statistical tools
C Helps in policy decisions
D Predicts future prices
Normative economics guides policymakers by offering value-based recommendations.
Microeconomics is mainly concerned with
A National income
B Aggregate demand
C Individual decision-making
D Economic growth
Microeconomics studies individual consumers, firms, and markets.
Which of the following is a macroeconomic issue?
A Price of rice
B Output of a firm
C Inflation
D Consumer equilibrium
Inflation reflects changes in the general price level and is a macroeconomic issue.
Human wants are competitive because
A They are limited
B Resources are unlimited
C Satisfaction of one want reduces others
D Resources have alternative uses
Wants compete for limited resources that have alternative uses.
Wants which arise due to habits are known as
A Immediate wants
B Future wants
C Habitual wants
D Social wants
Habitual wants arise from repeated consumption patterns and habits.
Which of the following is a consumer good?
A Machine
B Raw material
C Bread
D Factory building
Bread directly satisfies human wants and is a consumer good.
Capital goods are important because they
A Directly satisfy wants
B Are free goods
C Help in further production
D Are non-durable
Capital goods help in producing other goods and services.
Services are classified as economic activities because they
A Are tangible
B Can be stored
C Create utility
D Are free
Services generate utility and satisfy human wants despite being intangible.
Scarcity is a universal problem because it
A Exists only in developing nations
B Exists only in developed nations
C Exists in all economies
D Exists only in socialist economies
Scarcity affects all societies regardless of their level of development.
Opportunity cost arises due to
A Unlimited resources
B No alternative uses
C Scarcity of resources
D Free goods
Opportunity cost exists because scarce resources have alternative uses.
Which situation shows zero opportunity cost?
A Choosing between two jobs
B Using land for farming instead of housing
C Using a resource with single use
D Choosing between leisure and work
If a resource has only one use, no alternative is sacrificed.
The PPC illustrates the problem of
A Demand
B Supply
C Choice
D Price
PPC shows trade-offs and choices between alternative combinations of goods.
A concave PPC indicates
A Constant opportunity cost
B Increasing opportunity cost
C Decreasing opportunity cost
D Zero opportunity cost
As production shifts, less suitable resources are used, increasing opportunity cost.
Which point on PPC reflects unemployment of resources?
A On the curve
B Outside the curve
C Inside the curve
D At maximum output
Points inside the PPC show underutilization of resources.
The central problem of “how to produce” focuses on
A Distribution of output
B Choice of technique
C Consumer preferences
D Quantity demanded
It concerns selecting labor-intensive or capital-intensive methods.
The problem of “for whom to produce” is solved through
A Resource availability
B Income distribution
C Technology
D Production cost
Income distribution determines purchasing power and access to goods.
Which economy relies completely on government planning?
A Capitalist
B Mixed
C Socialist
D Traditional
Socialist economies depend on central planning for economic decisions.
Consumer sovereignty is weakest in a
A Capitalist economy
B Mixed economy
C Socialist economy
D Market economy
In socialist systems, production decisions are made by the state, not consumers.
Mixed economy attempts to
A Remove private sector
B Remove public sector
C Balance efficiency and equity
D Eliminate planning
Mixed economies combine market efficiency with social welfare objectives.
Economics helps society by
A Eliminating poverty
B Ensuring rational allocation
C Ending inequality
D Increasing population
Economics guides efficient allocation of scarce resources for social benefit.
Which of the following involves a value judgment?
A Inflation rate is 6%
B GDP increased by 5%
C Unemployment should be reduced
D Population is rising
Statements suggesting what should be done are normative.
The study of aggregates like total output is part of
A Microeconomics
B Normative economics
C Macroeconomics
D Welfare economics
Macroeconomics focuses on aggregates and overall economic performance.
Which want requires immediate satisfaction?
A Education
B Housing
C Hunger
D Retirement planning
Hunger is an immediate want that cannot be postponed.
Goods that can be used repeatedly over time are
A Perishable goods
B Non-durable goods
C Durable goods
D Free goods
Durable goods provide utility over a long period.
Opportunity cost helps economists understand
A Market demand
B Rational choice
C Inflation
D National income
Opportunity cost explains trade-offs involved in rational decision-making.
A rightward shift of PPC shows
A Unemployment
B Scarcity increase
C Economic growth
D Inefficiency
Growth occurs due to improved technology or increased resources.
Economics assumes human behavior to be
A Irrational
B Random
C Rational
D Emotional
Economic analysis assumes individuals act rationally to maximize satisfaction.
Which factor does NOT affect scarcity?
A Wants
B Resources
C Technology
D Climate
Scarcity arises from wants, resources, and technology, not directly from climate.
The core of economic problem is
A Inflation
B Poverty
C Choice
D Inequality
Choice is central because scarce resources must be allocated among competing wants.
Economics is important for firms because it helps them
A Eliminate risk
B Maximize profits
C Avoid competition
D Fix prices arbitrarily
Economic principles guide firms in cost control and profit maximization.
A command economy is also known as
A Market economy
B Free economy
C Planned economy
D Traditional economy
Government planning dominates economic decisions in a command economy.
Which is NOT a feature of capitalism?
A Private ownership
B Profit motive
C Central planning
D Consumer sovereignty
Central planning is a feature of socialism, not capitalism.
Economics avoids ranking wants because
A Wants are unlimited
B Wants are subjective
C Economics is neutral
D Resources are scarce
Economics does not judge the desirability of wants; it remains neutral.
The PPC helps policymakers in
A Measuring inflation
B Understanding trade-offs
C Calculating GDP
D Estimating population
PPC illustrates opportunity cost and trade-offs in resource allocation.
The price mechanism works efficiently when markets are
A Controlled
B Free and competitive
C Regulated heavily
D Monopolized
Free and competitive markets allow prices to reflect demand and supply accurately.
Which of the following is an example of collective want?
A Clothing
B Education
C National defense
D Food
National defense benefits all citizens collectively and is provided by the state.
Economics as a subject helps students develop
A Moral values
B Emotional intelligence
C Analytical skills
D Physical strength
Economics enhances logical thinking and analytical ability.
A situation where resources are not fully utilized is called
A Growth
B Efficiency
C Inefficiency
D Expansion
Underutilization of resources leads to inefficiency.
Economics mainly addresses the problem of
A Unlimited resources
B Unlimited wants
C Limited resources
D Political power
Limited resources create the need for economic analysis and choice.
Which economic system emphasizes social welfare over profits?
A Capitalist
B Mixed
C Socialist
D Market
Socialism prioritizes welfare and equitable distribution.
The study of how goods are shared among people is called
A Production
B Consumption
C Distribution
D Exchange
Distribution deals with allocation of output among individuals.
Economics improves living standards primarily through
A Increasing wants
B Efficient resource use
C Eliminating scarcity
D Increasing population
Efficient use of scarce resources raises output and welfare.
The fundamental economic problem is permanent because
A Technology stagnates
B Resources decrease
C Wants continuously increase
D Population declines
Human wants keep expanding, making scarcity a permanent issue.
Economics ultimately aims at
A Wealth accumulation only
B Welfare maximization under scarcity
C Political stability
D Elimination of choices
Modern economics seeks maximum welfare through efficient allocation of scarce resources.