Economics is best defined as a social science because it primarily studies
A Individual psychological behavior
B Human behavior in relation to unlimited resources
C Human behavior in relation to scarce resources
D Natural laws governing production
Economics is called a social science because it examines how human beings make choices under conditions of scarcity. It focuses on allocation of limited resources to satisfy unlimited human wants.
According to Lionel Robbins, the central focus of economics is
A Wealth creation
B Material welfare
C Scarcity and choice
D Economic growth
Robbins defined economics as the science which studies human behavior as a relationship between ends and scarce means which have alternative uses, emphasizing scarcity and choice as its core.
Which economist defined economics as a study of wealth and its distribution?
A Lionel Robbins
B Alfred Marshall
C Adam Smith
D Paul Samuelson
Adam Smith, in his book The Wealth of Nations, viewed economics as a science of wealth, focusing on its production, accumulation, and distribution.
Alfred Marshall considered economics primarily as a study of
A Wealth maximization
B Human welfare
C Scarcity of resources
D Economic planning
Alfred Marshall defined economics as a study of mankind in the ordinary business of life, emphasizing material welfare rather than wealth alone.
Which definition of economics successfully integrates both wealth and welfare aspects?
A Robbins’ definition
B Adam Smith’s definition
C Marshall’s definition
D Modern definition
The modern definition of economics integrates wealth, welfare, and scarcity, making it more comprehensive and suitable for analyzing real-world economic problems.
The scope of economics broadly includes
A Only production activities
B Only consumption behavior
C Production, consumption, and distribution
D Monetary transactions only
Economics studies how goods and services are produced, consumed, and distributed among individuals and groups within an economy.
Which of the following best explains the importance of economics in daily life?
A It eliminates scarcity
B It helps in rational decision-making
C It guarantees economic equality
D It prevents economic cycles
Economics helps individuals and governments make rational choices by evaluating costs, benefits, and trade-offs in situations involving limited resources.
Positive economics is mainly concerned with
A Value judgments
B What ought to be
C Ethical considerations
D What is
Positive economics deals with facts and objective analysis, focusing on explaining economic phenomena as they actually occur without moral judgments.
Normative economics differs from positive economics because it involves
A Statistical tools
B Cause-and-effect relationships
C Value judgments
D Scientific testing
Normative economics is subjective and based on opinions or value judgments, addressing what should be rather than what is.
An example of a positive economic statement is
A Government should reduce taxes
B Poverty is morally unacceptable
C Inflation rate increased to 6% last year
D Income inequality must be reduced
This statement is factual, measurable, and testable, making it a positive economic statement rather than a value-based opinion.
Which statement reflects normative economics?
A Demand falls when price rises
B Budget deficit increased in 2023
C Unemployment rate is 7%
D Government should increase welfare spending
Normative economics expresses opinions and prescribes policies based on value judgments, as seen in recommendations about welfare spending.
Microeconomics primarily studies
A National income aggregates
B Individual economic units
C International trade flows
D Overall price level
Microeconomics focuses on individual units such as consumers, firms, and markets, analyzing their behavior and decision-making.
Macroeconomics deals with
A Price determination of a product
B Firm-level production
C Aggregate economic variables
D Consumer preferences
Macroeconomics studies the economy as a whole, including aggregates like national income, employment, inflation, and economic growth.
Who popularized the term “macroeconomics”?
A Alfred Marshall
B Lionel Robbins
C J.M. Keynes
D Adam Smith
J.M. Keynes popularized macroeconomic analysis through his work on national income, employment, and economic fluctuations.
Which problem is primarily microeconomic in nature?
A Inflation
B Unemployment
C Balance of payments
D Price determination of a commodity
Price determination of a commodity involves individual markets and consumer-producer interaction, making it a microeconomic issue.
Human wants are said to be unlimited because
A Resources are abundant
B Wants change with income and time
C Wants can be fully satisfied
D Wants are fixed
Human wants keep increasing due to changes in income, tastes, technology, and social environment, making them practically unlimited.
Which characteristic distinguishes wants from needs?
A Wants are limited
B Wants are essential for survival
C Wants vary across individuals
D Wants are always collective
Wants differ from person to person depending on preferences, income levels, culture, and environment.
Classification of human wants based on urgency includes
A Individual and collective wants
B Economic and non-economic wants
C Necessaries, comforts, and luxuries
D Present and future wants
Based on urgency, wants are classified into necessaries (essential), comforts, and luxuries, reflecting priority levels.
Goods that directly satisfy human wants are known as
A Capital goods
B Producer goods
C Intermediate goods
D Consumer goods
Consumer goods are directly used by consumers to satisfy their wants, such as food, clothing, and household items.
Services differ from goods because services are
A Transferable
B Tangible
C Storable
D Intangible
Services are intangible in nature, meaning they cannot be touched or stored, such as education, healthcare, and banking.
Free goods are those which
A Have no utility
B Are scarce
C Command a price
D Are available abundantly
Free goods like air and sunlight are available in abundance and do not have scarcity, so they do not command a price.
Economic goods are distinguished by the presence of
A Abundance
B Scarcity
C Free availability
D Zero opportunity cost
Economic goods are scarce in relation to demand and therefore involve opportunity cost and price.
The basic economic problem arises due to
A Unlimited resources and wants
B Limited wants and resources
C Unlimited wants and limited resources
D Unlimited production capacity
The core economic problem exists because human wants are unlimited while resources to satisfy them are limited.
Which of the following best explains the problem of choice?
A Resources can be used only once
B Wants are limited
C Resources have alternative uses
D Goods are homogeneous
Choice arises because scarce resources can be put to alternative uses, requiring selection among competing wants.
Opportunity cost refers to
A Cost in monetary terms only
B Cost of production
C Value of next best alternative foregone
D Accounting cost
Opportunity cost is the value of the next best alternative sacrificed when a particular choice is made.
Production Possibility Curve (PPC) shows
A Demand and supply
B Cost and revenue
C Maximum attainable output combinations
D Price fluctuations
PPC represents different combinations of two goods that can be produced with given resources and technology.
A point inside the PPC indicates
A Full employment
B Economic growth
C Inefficient use of resources
D Technological progress
A point inside the PPC reflects underutilization or inefficient use of available resources.
The downward slope of PPC is due to
A Increasing returns
B Law of diminishing returns
C Opportunity cost
D Unlimited resources
The PPC slopes downward because producing more of one good requires sacrificing some amount of another good.
The central problem of “what to produce” relates to
A Choice of techniques
B Distribution of output
C Allocation of resources
D Selection of goods and services
This problem concerns deciding which goods and services should be produced in an economy given limited resources.
“How to produce” refers to
A Type of goods
B Quantity of output
C Choice of production technique
D Distribution of income
This central problem involves choosing between labor-intensive or capital-intensive techniques for production.
The problem of “for whom to produce” deals with
A Consumer preferences
B Income distribution
C Resource availability
D Technology choice
This problem concerns how national income is distributed among different sections of society.
A capitalist economy is characterized by
A Government ownership of resources
B Central planning
C Private ownership and profit motive
D Absence of markets
Capitalist economies rely on private ownership of means of production and decisions driven by profit motive.
In a socialist economy, the main economic decisions are taken by
A Consumers
B Private firms
C Market forces
D Central authority
In socialism, the government or central authority controls production, distribution, and pricing decisions.
Mixed economy combines features of
A Capitalism only
B Socialism only
C Capitalism and socialism
D Traditional economy
A mixed economy includes both private and public sector participation, combining market mechanisms with government intervention.
India is considered a
A Capitalist economy
B Socialist economy
C Traditional economy
D Mixed economy
India follows a mixed economic system where both private enterprises and government-controlled sectors coexist.
The importance of economics to government lies in
A Eliminating political problems
B Policy formulation and planning
C Ensuring perfect equality
D Removing scarcity
Economics helps governments frame policies related to taxation, budgeting, growth, employment, and welfare.
Which branch of economics studies allocation of resources at firm level?
A Macroeconomics
B Development economics
C Microeconomics
D Public economics
Microeconomics analyzes decision-making and resource allocation at the level of individual firms and consumers.
Scarcity implies that
A Wants can be fully satisfied
B Goods are freely available
C Resources are unlimited
D Resources are limited relative to wants
Scarcity exists when available resources are insufficient to satisfy all human wants fully.
The concept of opportunity cost is applicable when resources have
A Single use
B No alternative use
C Alternative uses
D Unlimited supply
Opportunity cost arises only when resources can be used for more than one purpose.
Which of the following does NOT fall under the scope of economics?
A Production
B Consumption
C Distribution
D Political ideology
Economics deals with production, consumption, and distribution, not political ideology.
Economics helps in efficient utilization of resources by
A Eliminating scarcity
B Increasing wants
C Guiding rational choice
D Creating inequality
Economics provides tools to allocate scarce resources efficiently through rational decision-making.
A rightward shift of PPC indicates
A Inefficiency
B Unemployment
C Economic growth
D Scarcity increase
A rightward shift of PPC reflects growth due to technological progress or increase in resources.
The problem of scarcity exists because
A Resources are destroyed
B Wants decrease
C Production is unlimited
D Resources are limited
Scarcity arises fundamentally because resources are limited in relation to human wants.
Which economic system relies most on price mechanism?
A Socialist
B Traditional
C Capitalist
D Command economy
In capitalism, prices determined by market forces guide production, consumption, and distribution decisions.
The study of how individuals allocate income among different goods is part of
A Macroeconomics
B Microeconomics
C Welfare economics
D Public finance
Microeconomics examines consumer behavior, including income allocation and demand patterns.
Economic laws differ from natural laws because they
A Are universally constant
B Have no exceptions
C Depend on human behavior
D Are mathematically exact
Economic laws are not exact because they depend on human behavior, which is variable and influenced by many factors.
Which is a central feature of modern economics?
A Wealth accumulation only
B Welfare focus only
C Scarcity and choice
D Ethical judgments
Modern economics emphasizes scarcity, choice, and allocation of resources to satisfy human wants efficiently.
The PPC assumes
A Changing technology
B Full employment of resources
C Increasing resources
D Variable efficiency
PPC is based on the assumption that resources are fully and efficiently utilized.
Which statement is true regarding human wants?
A They are limited
B They remain constant
C They are satiable
D They are unlimited
Human wants are unlimited as new wants arise once existing wants are satisfied.
Economics is important for students because it
A Guarantees employment
B Promotes political awareness
C Develops analytical thinking
D Eliminates economic problems
Studying economics helps students develop logical reasoning, analytical skills, and understanding of real-world economic issues.