Economics is concerned with efficiency because it seeks to
A Eliminate all inequalities
B Maximize output from given resources
C Control population growth
D Increase government revenue
Economics emphasizes efficiency to ensure scarce resources are used in a way that produces the maximum possible output and satisfaction.
The statement “Resources are scarce in relation to wants” implies that
A Wants can be satisfied fully
B Choices are unavoidable
C Resources have no value
D Goods are freely available
Scarcity forces individuals and societies to make choices about allocation of limited resources among competing wants.
Which economist emphasized economics as a science of choice?
A Adam Smith
B Alfred Marshall
C Lionel Robbins
D J.M. Keynes
Lionel Robbins highlighted choice as central to economics by focusing on scarcity and alternative uses of resources.
Economics is distinct from other social sciences mainly because it studies
A Human emotions
B Political institutions
C Allocation of scarce resources
D Social customs
Economics uniquely focuses on how scarce resources are allocated to satisfy unlimited wants.
Which of the following is a limitation of positive economics?
A It lacks factual basis
B It cannot predict outcomes
C It does not suggest policies
D It is value-based
Positive economics explains what is, but does not prescribe what should be done, limiting its role in policy formulation.
Normative economics becomes essential mainly for
A Measuring GDP
B Testing hypotheses
C Policy recommendations
D Studying market structure
Normative economics provides value-based judgments necessary for suggesting economic policies.
Microeconomic analysis assumes that firms aim to
A Maximize sales
B Maximize profit
C Maximize welfare
D Minimize cost only
Standard microeconomic theory assumes firms behave rationally to maximize profits given constraints.
Which of the following issues is purely macroeconomic?
A Demand for a commodity
B Pricing of mobile phones
C General price level
D Consumer equilibrium
The general price level reflects inflation and is an aggregate phenomenon studied in macroeconomics.
Macroeconomics differs from microeconomics because it
A Studies individual choices
B Focuses on aggregates
C Ignores human behavior
D Is less scientific
Macroeconomics analyzes aggregate variables like total output, employment, and inflation.
Which of the following is an example of a future want?
A Hunger
B Shelter
C Education after ten years
D Clothing
Education planned for a future period represents a want that can be postponed and satisfied later.
Wants that arise due to social pressure are called
A Individual wants
B Collective wants
C Social wants
D Immediate wants
Social wants emerge due to interaction with society, such as status-related consumption.
Goods that lose utility over time if not used are
A Durable goods
B Non-durable goods
C Capital goods
D Free goods
Non-durable goods like food and fuel are consumed quickly and cannot be stored for long periods.
Which of the following is a durable consumer good?
A Milk
B Vegetables
C Television
D Bread
Durable goods like televisions provide utility over a long period.
Services are considered productive because they
A Are tangible
B Create utility
C Can be stored
D Are free goods
Services create utility by directly satisfying human wants despite being intangible.
Scarcity is a relative concept because it
A Exists only in poor countries
B Depends on time and place
C Is temporary
D Depends on money
Scarcity varies with time, place, technology, and social conditions.
Choice in economics leads to
A Elimination of wants
B Opportunity cost
C Unlimited production
D Free goods
Every choice involves giving up the next best alternative, creating opportunity cost.
Opportunity cost is zero when
A Resources are scarce
B Resources have alternative uses
C Resources have no alternative use
D Demand is low
If a resource has only one use, choosing it does not involve sacrificing any alternative.
Which assumption of PPC ensures maximum output?
A Variable resources
B Underemployment
C Full employment
D Technological change
PPC assumes full employment of resources to show maximum possible production.
Movement along PPC indicates
A Economic growth
B Change in technology
C Change in resource allocation
D Resource depletion
Movement along the PPC shows reallocation of existing resources between goods.
A point outside the PPC represents
A Inefficiency
B Attainable output
C Unattainable combination
D Full employment
Points outside PPC are unattainable with existing resources and technology.
Which central problem is addressed by deciding capital–labour ratio?
A What to produce
B How to produce
C For whom to produce
D When to produce
Capital–labour ratio reflects choice of technique, which is part of the “how to produce” problem.
The problem of for whom to produce is closely related to
A Factor mobility
B Consumer sovereignty
C Income distribution
D Price rigidity
Distribution of income determines purchasing power and access to goods and services.
In a capitalist economy, resource allocation is guided mainly by
A Central plans
B Government orders
C Price signals
D Social customs
Prices guide producers and consumers in deciding what and how much to produce and consume.
The role of government in a mixed economy is to
A Eliminate markets
B Control all production
C Correct market failures
D Prevent private ownership
Governments intervene in mixed economies to regulate markets and ensure social welfare.
Traditional economies are mainly governed by
A Market forces
B Central planning
C Customs and traditions
D Profit motive
Economic decisions in traditional economies are guided by customs, habits, and traditions.
Economics helps producers by enabling them to
A Increase wages
B Predict consumer behavior
C Eliminate competition
D Control demand
Economic analysis helps producers anticipate demand patterns and make production decisions.
Which of the following best reflects scarcity?
A Free education
B Free sunlight
C Limited hospital beds
D Unlimited air
Hospital beds are limited relative to demand, reflecting scarcity.
Opportunity cost is forward-looking because it
A Depends on past expenditure
B Is irrelevant for decisions
C Considers future alternatives
D Is always monetary
Opportunity cost evaluates the value of alternatives that could have been chosen instead.
The PPC becomes a straight line when
A Opportunity cost increases
B Opportunity cost decreases
C Opportunity cost is constant
D Resources are scarce
Perfect substitutability of resources leads to constant opportunity cost, resulting in a straight-line PPC.
Which factor does NOT cause outward shift of PPC?
A Technological progress
B Increase in resources
C Natural disaster
D Improvement in efficiency
Natural disasters reduce productive capacity, causing inward shift, not outward shift.
The central problem of what to produce reflects
A Income inequality
B Resource allocation priorities
C Production technique
D Market competition
This problem involves prioritizing goods and services due to limited resources.
A command economy is another name for
A Capitalist economy
B Mixed economy
C Socialist economy
D Traditional economy
In a socialist or command economy, the government directs production and distribution decisions.
Consumer sovereignty exists mainly in
A Socialist economy
B Traditional economy
C Capitalist economy
D Command economy
In capitalism, consumers influence production through their preferences expressed in the market.
Economics is important for policymakers because it helps in
A Eliminating political conflict
B Evaluating trade-offs
C Increasing population
D Avoiding choices
Economics assists policymakers in understanding trade-offs involved in different policy options.
Which is a macroeconomic objective?
A Profit maximization
B Utility maximization
C Price stability
D Cost minimization
Price stability is a macroeconomic goal related to controlling inflation.
Scarcity necessitates
A Unlimited production
B Government ownership
C Economic planning
D Choice and prioritization
Scarcity forces societies to choose and prioritize among competing needs.
Economics does not study non-economic activities because they
A Involve money
B Lack utility
C Do not involve scarcity
D Are illegal
Non-economic activities generally do not involve scarcity or resource allocation decisions.
Which of the following is an economic activity?
A Playing games for fun
B Studying as a hobby
C Teaching for salary
D Sleeping
Teaching for salary involves earning income and allocation of resources, making it an economic activity.
The problem of scarcity would persist even if
A Population decreases
B Technology improves
C Wants increase
D Resources increase slightly
As long as wants continue to expand, scarcity remains a persistent economic problem.
Economics helps in national development by
A Eliminating poverty overnight
B Guiding resource allocation
C Increasing natural resources
D Removing inequalities completely
Economic planning and analysis guide efficient allocation of resources for development.
Which of the following reflects a value judgment?
A Inflation rate is 5%
B GDP grew by 6%
C Poverty should be eradicated
D Population is increasing
Statements expressing what should be done are normative and value-based.
Microeconomics is sometimes called
A Price theory
B Income theory
C Growth theory
D Welfare theory
Microeconomics focuses heavily on price determination and is often referred to as price theory.
Macroeconomics is concerned with
A Individual market demand
B Single firm output
C Aggregate employment
D Consumer equilibrium
Employment levels at the national scale are a key concern of macroeconomics.
Which type of want arises suddenly?
A Future want
B Habitual want
C Immediate want
D Collective want
Immediate wants like hunger arise suddenly and require urgent satisfaction.
Which goods help in producing consumer goods?
A Free goods
B Capital goods
C Inferior goods
D Luxury goods
Capital goods such as machinery aid in producing consumer goods.
Opportunity cost helps in
A Eliminating scarcity
B Avoiding choice
C Rational decision-making
D Increasing resources
Understanding opportunity cost allows individuals and governments to make rational choices.
The PPC is a graphical representation of
A Demand conditions
B Supply conditions
C Resource constraints
D Price determination
PPC visually shows resource constraints and trade-offs faced by an economy.
Which central problem arises due to limited resources?
A Inflation
B Distribution
C Allocation
D Growth
Allocation of scarce resources among alternative uses is the core central problem.
In which system does government play a dominant economic role?
A Capitalist
B Mixed
C Socialist
D Market
Socialist systems involve dominant government control over production and distribution.
Economics improves standard of living by
A Increasing wants
B Reducing choices
C Ensuring efficient resource use
D Eliminating scarcity
Efficient allocation and utilization of resources raise output and living standards.