Introduction to Economics - Online Test
Q1. Labour intensive technique would get chosen in
Answer : Option A
Explaination / Solution:
The labor surplus economy model has as its basic premise the inability of unskilled agricultural labor markets to clear in countries with high man/land ratios. In such situations, the marginal product of laboris likely to fall below a bargaining wage, related to the average rather than the marginal product.
Q2. Capital intensive technique would get chosen in
Answer : Option B
Explaination / Solution:
Capital surplus is a term used by economists to denote capital inflows in excess of capital outflows on a country's balance of payment's.
Q3. The basic economic problem arises in
Answer : Option B
Explaination / Solution:
Economic problem arises mainly due to two reasons- (i) human wants are unlimited (ii) means to satisfy human wants are scarce. The problem of scarcity is faced by an individual and the society. With wants unlimited and resources scarce, our wants cannot be fulfilled.
Q4. What causes an economy to produce more of Good X and no less of Good Y?
Answer : Option D
Explaination / Solution:
Technology is the advancement of the society as a whole. Better technology means that you can figure out more efficient production techniques thereby leading the economy to create a scope to move the PPC further to the right
Q5. Does production takes place only on PPC?
Answer : Option B
Explaination / Solution:
When all resources are employed on ideal situation, production can take place on PPC
Q6. Positive economic analyses
Answer : Option C
Explaination / Solution:
Positive economics is objective and fact based, statements do not have to be correct, but they must be able to be tested and proved or disproved.
Q7. Normative economics analyses
Answer : Option B
Explaination / Solution:
Normative economics is a part of economics that expresses value or normative judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be.
Q8. What does a point below a PPC show
Answer : Option C
Explaination / Solution:
A PPF graph shows the maximum production level for one commodity for any production level of the other commodity. A point below the curve signifies inefficiency.
Q9. All attainable combinations will lie
Answer : Option C
Explaination / Solution:
A production possibilities frontier (PPF) is a diagram that illustrates the possible production points for an economy based on its resources and technology.Production points on a PPF are possible and efficient. Production points on a PPF represent efficient use of all of the economy’s resources.
Q10. All unattainable combinations will lie
Answer : Option D
Explaination / Solution:
Points outside the PPF are unattainable production points given current resources and technologies. It is impossible for an economy to produce outside its PPF. The PPF can change, however, with changes in resources or technology.
