Introduction to Microeconomics Test 14

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Introduction to Microeconomics Test 14

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Question 1
1 / -0

Production possibility curve is used for:

A
Determining the production of the products in accordance with its resources

B
Determining the production. if technology is improved

C
Both a & b

D
None of the above

Solution

Production possibility curve is an indicator that shows the different attainable combinations of the production of two commodities that can be produced in an economy given the resources and technology which are to be fully utilized.
Question 2
1 / -0

Which of the following is not one of the central questions that the study of economics is supposed to answer?

A
Who produces what?

B
When are goods produced?

C
Who consumes what?

D
How are goods produced?

Solution

The central problem of an economy does not deal with the time of production as it is assumed that human wants are unlimited and goods are required throughout the year. Therefore, the the problem of 'When to produce?' is not regarded as a central problem of the economy.
Question 3
1 / -0

The basic difference between macroeconomics and microeconomics is that ________________.

A
macroeconomics looks at the aggregate markets, while microeconomics is concerned with the subcomponents.

B
macroeconomics is concern with policy decisions, while microeconomics applies only to theory.

C
microeconomics is concerned with the aggregate markets, while macroeconomics is concerned with the components.

D
opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics.

Solution

Macroeconomics studies the economy as a whole and therefore looks at the aggregate markets.
Microeconomics studies individual factors in the economy therefore it is concerned with its subcomponents.
Question 4
1 / -0

An example of positive' economic analysis would be:

A
An analysis of the relationship between the price of food and the quantity purchased.

B
Determining how much income each person should be guaranteed.

C
Determining the 'fair' price for food.

D
Deciding how to distribute the output of the economy

Solution

Law of demand, which studies the relationship between the price of a good and the quantity purchased, is an apt example of positive economic analysis. This is because it is based on proven facts, that can be empirically tested and it now forms the basis for important microeconomic theories.
Question 5
1 / -0

Who of the following treated economics as normative science?

A
Marshall

B
Robbins

C
Pigou

D
(A) and (C)

Solution

Normative science explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Both Alfred Marshall and Pigou described economics as a study where human and social welfare could be achieved by the means of various economic activities which were economically fair for the society and was based on economic judgement.
Question 6
1 / -0

Normative economic analysis _________.

A
are observations that quantify what normally occurs when workers, consumers, firms and investors interact in the market

B
quantifies possible outcomes so that policymakers can rank the desirability of policy recommendations and their impact on the economy

C
analyzes what policies and economic outcomes are best for society, and is often accompanied by value judgments

D
is based on cause and effect relationships observed in the economy

Solution

Normative economics analyses what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Question 7
1 / -0

Which of the following is normative statement?

A
Wage rate in Satara should be Rs. 200 per day.

B
Tax should be reduced.

C
National income should be equally distributed.

D
All of the above

Solution

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.Therefore, adequate wage rate, reduction in tax, and equal distribution of income are valued judgement which are based on the belief that it will bring stability in the economy.
Question 8
1 / -0

Positive economic analysis ________.

A
compares the desirability of alternative government policy outcomes

B
provides a framework within which we can study how some groups are better off than others.

C
analyzes the sources of improvements in the standard of living that result from favourable government policies.

D
is based on observed cause and effect relationships in the economy.

Solution

Positive economic analysis is based on observed and experimented facts which yields cause and effect relationship, that is verifiable.
Question 9
1 / -0

Which of the following is an example of a normative statement?

A
If you consume this good, you will be better off.

B
To make the good available to more people, a lower price should be set.

C
A lower price for a good causes people to want to buy more of that good.

D
A higher price for a good causes people to want to buy less of that good.

Solution

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Therefore, availability of the goods at a reasonable rate in the economy is a valued judgement based on the belief that it will bring economic welfare.
Question 10
1 / -0

Which of the following is a normative statement?

A
Planned economies allocate resources via government departments.

B
Most transitional economies have experienced problems of falling output and rising prices over the past decade.

C
There is a greater degree of consumer sovereignty in market economies than planned economies.

D
Reducing inequality should be a major priority for mixed economies.

Solution

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy. Therefore, reduction of inequality in the economy in a valued judgement on the belief that it will establish peace and equality in the economy.

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Introduction to Microeconomics Test 14

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Introduction to Microeconomics Test 14

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Question 1

Determining the production of the products in accordance with its resources

Determining the production. if technology is improved

Both a & b

None of the above

Solution

Question 2

Who produces what?

When are goods produced?

Who consumes what?

How are goods produced?

Solution

Question 3

macroeconomics looks at the aggregate markets, while microeconomics is concerned with the subcomponents.

macroeconomics is concern with policy decisions, while microeconomics applies only to theory.

microeconomics is concerned with the aggregate markets, while macroeconomics is concerned with the components.

opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics.

Solution

Question 4

An analysis of the relationship between the price of food and the quantity purchased.

Determining how much income each person should be guaranteed.

Determining the 'fair' price for food.

Deciding how to distribute the output of the economy

Solution

Question 5

Marshall

Robbins

Pigou

(A) and (C)

Solution

Question 6

are observations that quantify what normally occurs when workers, consumers, firms and investors interact in the market

quantifies possible outcomes so that policymakers can rank the desirability of policy recommendations and their impact on the economy

analyzes what policies and economic outcomes are best for society, and is often accompanied by value judgments

is based on cause and effect relationships observed in the economy

Solution

Question 7

Wage rate in Satara should be Rs. 200 per day.

Tax should be reduced.

National income should be equally distributed.

All of the above

Solution

Question 8

compares the desirability of alternative government policy outcomes

provides a framework within which we can study how some groups are better off than others.

analyzes the sources of improvements in the standard of living that result from favourable government policies.

is based on observed cause and effect relationships in the economy.

Solution

Question 9

If you consume this good, you will be better off.

To make the good available to more people, a lower price should be set.

A lower price for a good causes people to want to buy more of that good.

A higher price for a good causes people to want to buy less of that good.

Solution

Question 10

Planned economies allocate resources via government departments.

Most transitional economies have experienced problems of falling output and rising prices over the past decade.

There is a greater degree of consumer sovereignty in market economies than planned economies.

Reducing inequality should be a major priority for mixed economies.

Solution

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