Introduction to Microeconomics Test 17

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Introduction to Microeconomics Test 17

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Question 1
1 / -0

Generally, the production possibility curve(PPC) is __________ to the origin.

A
convex

B
parallel

C
concave

D
perpendicular

Solution

The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity is sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of PPC.
Question 2
1 / -0

Economics has ___________.

A
positive aspects

B
normative aspects

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Positive economics describes and explains various economic phenomena, while normative economics focuses on the value of economic fairness or what the economy should be.
Question 3
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While laying down theories (like law of demand, law of supply), the __________ aspect of economics is projected and brought out.

A
positive

B
normative

C
both (a) and (b)

D
neither (a) nor (b)

Solution

Positive statements describes the matter of the presence of the subject with proven facts and figures that needs to be taken into account before developing a subject. Therefore, theories of any law are backed by various proven facts that are based on repeated experiments which makes it positive statements.
Question 4
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Which of these economists were of the view that economics is a normative science?

A
Lionel Robbins

B
Alfred Marshall

C
Both (a) and (b)

D
Neither (a) nor (b)

Solution

Alfred Marshall was a British economist who proposed the definition of welfare according to which economics is a science of creation of welfare for both human as well as society in which he emphasized on the betterment of the society by the humans and betterment of humans by the society.
Therefore, these definition was derived on the basis of valued judgement that aimed at economic welfare due to which it is also known as normative economics.
Question 5
1 / -0

Economics which is concerned with welfare propositions is called ___________.

A
socialistic economics

B
capitalistic economics

C
positive economics

D
normative economics

Solution

Normative economics is concerned with welfare propositions, since what is good or what is bad ultimately depends upon the welfare of the individual and the society.
Question 6
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In drawing a production possibilities curve, which of the following is (are) held constant?

A
The supply of natural resources and the supply of labor.

B
Technology and the educational attainment of the work force.

C
Both (a) and (b)

D
None of the above.

Solution

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources i.e both material and labour and technology which are assumed to be constant and fully utilized.
Question 7
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If the marginal (additional) opportunity cost is constant, then the PPC would be __________.

A
convex to the origin

B
straight line

C
backward bending

D
concave to the origin

Solution

The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope.
Question 8
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Directions For Questions

Assume that in the given diagram, X and Y axes indicate quantities of Product X and Y respectively.

...view full instructions

The given slope of the PPC is attributed to __________.

A
opportunity costs

B
resource scarcity

C
both (a) and (b)

D
neither (a) nor (b)

Solution

The slope of production possibility curve is the marginal opportunity cost which refers to the additional sacrifice that an economy makes when they shift resources and technology from the production of one commodity to the other. Since resources are used specific, therefore every time when one more unit of product X is produced, more units of the product Y are sacrificed that results in increasing marginal/opportunity cost.
Question 9
1 / -0

Directions For Questions

Assume that in the given diagram, X and Y axes indicate quantities of Product X and Y respectively.

...view full instructions

Which of the following represents the concept of trade-offs?

A
A movement from Point A to Point B

B
A movement from Point D to Point F

C
Point E

D
Point F

Solution

The concept of trade offs refers to shift from production of one unit to the production of some other unit where to produce the other commodity, the production of the former commodity is reduced owing to limited resources and technology. So a shift from point A to point B indicates that production of product Y is reduced to increase the production of product X.
Question 10
1 / -0

Which of the following is correct?

A
Normative economics is not concerned with value judgements.

B
A market is a process that reconciles consumer decisions, production decisions and labour decisions.

C
A mixed economy has a certain level of Government intervention in the economy along with private sector ownership of the economy.

D
Both (b) and (c).

Solution

In a market economy, an effective relationship is set up between all the factors that are involved in the market like consumer, producer, and labour where their decision are reconciled to decide the price of various related commodities.
In a mixed economy, private decisions are intervened by the government due to which there is problem in market mechanism where prices of a commodity is decide by the forces of demand which involves consumers and supply which involves producers and labours.
Normative economics is concerned with value judgements , so B ans C is correct.

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Introduction to Microeconomics Test 17

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Introduction to Microeconomics Test 17

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Question 1

convex

parallel

concave

perpendicular

Solution

Question 2

positive aspects

normative aspects

both (a) and (b)

neither (a) nor (b)

Solution

Question 3

positive

normative

both (a) and (b)

neither (a) nor (b)

Solution

Question 4

Lionel Robbins

Alfred Marshall

Both (a) and (b)

Neither (a) nor (b)

Solution

Question 5

socialistic economics

capitalistic economics

positive economics

normative economics

Solution

Question 6

The supply of natural resources and the supply of labor.

Technology and the educational attainment of the work force.

Both (a) and (b)

None of the above.

Solution

Question 7

convex to the origin

straight line

backward bending

concave to the origin

Solution

Question 8

opportunity costs

resource scarcity

both (a) and (b)

neither (a) nor (b)

Solution

Question 9

A movement from Point A to Point B

A movement from Point D to Point F

Point E

Point F

Solution

Question 10

Normative economics is not concerned with value judgements.

A market is a process that reconciles consumer decisions, production decisions and labour decisions.

A mixed economy has a certain level of Government intervention in the economy along with private sector ownership of the economy.

Both (b) and (c).

Solution

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