Introduction to Microeconomics Test 11

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Introduction to Microeconomics Test 11

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Question 1
1 / -0

Identify what is normative statements concern?

A
What was?

B
What is the normal situation?

C
What will be?

D
What ought to be?

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 realized. Thus it is suggestive in nature.
Question 2
1 / -0

Which of the following is not correct?

A
Micro and Macro economics are complementary to each other.

B
Every macro economic problem requires micro economic analysis for its proper understanding.

C
Micro-economic behaviour can be added-up to drive macro economic behaviour.

D
What is macro from the national angle is micro from world angle.

Solution

Microeconomic behaviour cannot be added-up to drive macroeconomic behaviour.

The phenomenon in Microeconomics cannot be generalized for all the units in the economy on an aggregate level.

For example the theory of an individual firm cannot be universally applied to the whole industrial sector in an economy. The theory of individual consumer behaviour is different from the behaviour of the whole economy’s behaviour at the aggregate level. The demand of a single person may not always match with the economy’s aggregate demand.
Question 3
1 / -0

Which of the following would not move the PPF for this economy close to point W?

A
A decrease in the amount of unemployed labour resources.

B
A shit in preferences toward greater capital formation.

C
An improvement in the overall level of technology.

D
An increase in the population growth rate.

Solution

A decrease in the amount of un-employed labour resources would not mean growth of resources so it would not move the PPF for this economy closer to point W.
Question 4
1 / -0

Which of the following statements are positive statements?
(i) India is overpopulated.
(ii) Agricultural income should be taxed.
(iii) Service-class people should be exempted from income tax.
(iv) There is tremendous tax evasion in India.

A
i and ii

B
i and iii

C
i and iv

D
iii and iv

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.
Both the statements (ii) and (iii) are giving suggestions but (i) and (iv) are stating a fact and it not suggesting anything. Thus option (i) and (iv) are positive statements.
Question 5
1 / -0

Which of the following is likely to cause an inward shift in country's PPC?

A
Earthquake destroying resources of the country.

B
Scientists discovering new machines.

C
Workers getting jobs in the new metro project.

D
The country finds new reserves of crude oil.

Solution

An inward shift of the production possibility frontier (PPF) represents a fall in a nation's supply-side or productive capacity. One cause could be the effects of natural disasters such as drought, earthquakes or severe floods which destroy built-up capital and potentially causes significant loss of life
Question 6
1 / -0

The various combinations of goods that can be produced in any economy when it uses its available sources and technology efficiently are depicted by ________________.

A
Demand curve

B
Production curve

C
Supply curve

D
Production possibilities curve

Solution

Production Possibility Curve may be defined as a curve which shows the various combinations of two goods that can be produced in any economy with a given amount of resources and technology.
Question 7
1 / -0

An outward shift in the producation possibiity curve implies that ______.

A
for more of one commodity, the other has been sacrified

B
the cost of production rises

C
the unempolyement has increased

D
increase in the productive resources

Solution

Production possibility curve shows the different combinations of the production of two commodities that can be achieved in an economy given the resources and technology which are to be fully utilized. Therefore to achieve any point beyond PPC, there is need for increase in the present supply of resources and technology which leads to an outward shift in Production possibility curve.
Question 8
1 / -0

Positive economics deals with _______.

A
what is

B
what ought to be

C
both 'a' and 'b'

D
none of the above

Solution

Positive economics: It studies the fact 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 9
1 / -0

Positive economics remains strictly neutral towards ends. This means that ____________.

A
positive economics study the facts as they are

B
positive economics is prescriptive in nature

C
positive economics is based on ethical, philosophical and religious beliefs

D
only (a) and (b)

Solution

Positive economics: It studies the fact 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. Thus it remains neutral towards ends.
Question 10
1 / -0

A higher indifference curve denotes a _____________.

A
higher level of satisfaction

B
lower level of satisfaction

C
same level of satisfaction

D
none of the above

Solution

Higher indifference curve denotes a higher level of satisfaction. Higher indifference curve represents large bundle of goods, which means more utility because of monotonic preference. In the image we see, that IC₂ gives more satisfaction than IC₁ and IC₃ gives more satisfaction than both IC₁ and IC₂.

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Introduction to Microeconomics Test 11

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Introduction to Microeconomics Test 11

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SHARING IS CARING

Question 1

What was?

What is the normal situation?

What will be?

What ought to be?

Solution

Question 2

Micro and Macro economics are complementary to each other.

Every macro economic problem requires micro economic analysis for its proper understanding.

Micro-economic behaviour can be added-up to drive macro economic behaviour.

What is macro from the national angle is micro from world angle.

Solution

Question 3

A decrease in the amount of unemployed labour resources.

A shit in preferences toward greater capital formation.

An improvement in the overall level of technology.

An increase in the population growth rate.

Solution

Question 4

i and ii

i and iii

i and iv

iii and iv

Solution

Question 5

Earthquake destroying resources of the country.

Scientists discovering new machines.

Workers getting jobs in the new metro project.

The country finds new reserves of crude oil.

Solution

Question 6

Demand curve

Production curve

Supply curve

Production possibilities curve

Solution

Question 7

for more of one commodity, the other has been sacrified

the cost of production rises

the unempolyement has increased

increase in the productive resources

Solution

Question 8

what is

what ought to be

both 'a' and 'b'

none of the above

Solution

Question 9

positive economics study the facts as they are

positive economics is prescriptive in nature

positive economics is based on ethical, philosophical and religious beliefs

only (a) and (b)

Solution

Question 10

higher level of satisfaction

lower level of satisfaction

same level of satisfaction

none of the above

Solution

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