Introduction to Microeconomics Test 1

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Introduction to Microeconomics Test 1

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Weekly Quiz Competition

Question 1
1 / -0

Normative economic theory deals with ___________.

A
what are or how the economic problems facing the society are solved

B
how the problem should be solved

C
what to produce

D
when to produce

Solution

Normative economics deals with 'what ought to be' . It mainly possess value judgements and does not deal with facts and data..
Question 2
1 / -0

Which point of PPF are attainable ?

A
Outside

B
Inside

C
Both

D
None

Solution

The point of PPF that are attainable are called the attainable combinations. The points inside and on the PPF are attainable for the firm. The points that lie inside the PPC means that the actual production is falling short of its capabilities and there is a wastage or inefficient utilization of resources.
Question 3
1 / -0

____________ describe actual state of affairs.

A
Positive statement

B
Normative

C
Subjective statement

D
Interrogative statement

Solution

Positive statements study the facts of life i.e. it deals with 'things as they are'. It deals with what are the economic problems and how are they actually solved. It explains the cause and effect relationship and avoids giving suggestions.
Question 4
1 / -0

Direct transfer of cash subsidy has increased allocative efficiency. This is a ____________ statement.

A
subjective

B
negative

C
positive

D
normative

Solution

Direct transfer of cash subsidy has increased allocative efficiency is a Positive statement. This is because Positive statements study the facts of life i.e. it deals with 'things as they are'. It deals with what are the economic problems and how are they actually solved. It explains the cause and effect relationship and avoids giving suggestions. Since, the given statement is not suggesting anything, it is positive in nature.
Question 5
1 / -0

When we say rate of product transformation we refers to ______.

A
how production of one good can be substituted for another while still using a fixed supply of inputs efficiently

B
rate of input substitution for maintaining the same production level

C
ratio of price of final products

D
input/output ratio of each product

Solution

The rate of production at which one product is substituted for another product while still keeping using a fixed supply of inputs efficiently is called the rate of Product Transformation. It is the ratio of units of a commodity sacrificed to gain an additional unit of another commodity. This is equal to the units sacrificed divided by units gained.
Question 6
1 / -0

Positive statement involves ___________.

A
value judgement

B
public opinion

C
statement of facts

D
none of the above

Solution

Positive statements study the facts of life i.e it deals with 'things as they are'. It deals with what are the economic problems and how are they actually solved. It explains the cause and effect relationship and avoids giving suggestions.
Question 7
1 / -0

The branch of economics that deals with the sum total of economic activities dealing with the issues of growth, unemployment and inflation is _________.

A
microeconomics

B
normative economics

C
both A & B

D
macroeconomics
Question 8
1 / -0

Which of these is a normative statement?

A
Forward trading in commodity market has led to inflationary conditions in food grains.

B
Forward trading in commodities ought to be banned to curb rising prices.

C
Export of onion has created shortage of domestic supply of onions.

D
None of the above.

Solution

Normative economics deals with what ought to be or how the economic problems should be solved. It discusses what the desirable things are and how they should be realised. Thus it is suggestive in nature.
Forwarding trading in commodities ought to be banned to curb rising prices is the statement that is suggesting us a measure to make the situation desirable, thus the statement is normative in nature.
Question 9
1 / -0

Which of the following definition of financial management is given by "Massie"?

A
Financial management is the activity concerned with planning, raising, controlling and administering of funds used in the business.

B
Financial management is that area of business management devoted to a judicious use of capital and a careful selection of source of capital in order to enable a spending unit to move in the direction of reaching its goals.

C
Financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.

D
None of the above
Question 10
1 / -0

When the rate of money inflation increases then the prices of commodities _____.

A
Increase

B
Decrease

C
Remain constant

D
Do not change

Solution

Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing the real burden of public and private debt, keeping nominal interest rates above zero so that central banks can adjust interest rates to stabilize the economy, and reducing unemployment due to nominal wage rigidity.

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Re-Attempt Weekly Quiz Competition

Introduction to Microeconomics Test 1

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Introduction to Microeconomics Test 1

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SHARING IS CARING

Question 1

what are or how the economic problems facing the society are solved

how the problem should be solved

what to produce

when to produce

Solution

Question 2

Outside

Inside

Both

None

Solution

Question 3

Positive statement

Normative

Subjective statement

Interrogative statement

Solution

Question 4

subjective

negative

positive

normative

Solution

Question 5

how production of one good can be substituted for another while still using a fixed supply of inputs efficiently

rate of input substitution for maintaining the same production level

ratio of price of final products

input/output ratio of each product

Solution

Question 6

value judgement

public opinion

statement of facts

none of the above

Solution

Question 7

microeconomics

normative economics

both A & B

macroeconomics

Question 8

Forward trading in commodity market has led to inflationary conditions in food grains.

Forward trading in commodities ought to be banned to curb rising prices.

Export of onion has created shortage of domestic supply of onions.

None of the above.

Solution

Question 9

Financial management is the activity concerned with planning, raising, controlling and administering of funds used in the business.

Financial management is that area of business management devoted to a judicious use of capital and a careful selection of source of capital in order to enable a spending unit to move in the direction of reaching its goals.

Financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.

None of the above

Question 10

Increase

Decrease

Remain constant

Do not change

Solution

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