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Introduction to Microeconomics Test 20

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Introduction to Microeconomics Test 20
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Weekly Quiz Competition
  • Question 1
    1 / -0
    A production possibility curve presents valuable information about production. Which of the following statements describes the information best?
    Solution
    Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced at the maximum in an economy with given the scarce resources and technology which are to be fully utilized.
  • Question 2
    1 / -0
    The norms of behaviours which satisfy the requirements of social rationality of economic activity are established by ________.
    Solution
    Normative economics deals with "what ought to be", i.e, it provides advice. Thus, the norms of behaviours which satisfy the requirements of social rationality of economic activity are established by normative economics.
  • Question 3
    1 / -0
    Point inside the production possibility curve represents _________.
    Solution
    Production possibility curve shows the different combinations of the production of two commodities that can be achieved if efficient production takes places in an economy given the resources and technology. So if an economy operates inside the PPF, then it indicates that the firm is not utilizing the supplied resources and technology efficiently.
  • Question 4
    1 / -0
    PPC shifts to left because of _____________.
    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 and technology which are to be fully utilized. When the resources are reduced due to some economic distortion or calamity in the economy then the production of commodities also decreases as they use these resources to develop the commodities. Therefore, if the production of the commodities decreases it leads to inward shift in the production possibility curve. 

  • Question 5
    1 / -0
    Which of the following is an important message that a production possibility curve conveys about an economy?
    Solution

    Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced at the maximum in an economy at a given period of time with given the scarce resources and technology which are to be fully utilized.

  • Question 6
    1 / -0
    If there is a natural calamity, what will happen to PPF?
    Solution
    When the resources are reduced due to some reason like natural calamity in the economy then the production of commodities also decreases as they use these resources to develop the commodities. Therefore, if the production of the commodities decreases it leads to inward or leftward shift in the production possibility curve. 
  • Question 7
    1 / -0
    A statement which does not offer any suggestion is known as ____________.
    Solution
    Positive statements refers to those statements that describe matters which have been proven through facts and figures after careful observations and are verifiable.

  • Question 8
    1 / -0
    Multiple choice question:
    In which of the following situations, does scarcity arise?
    Solution

    Scarcity of resources refers to the situation where resources are limited in quantity and have alternative uses in production of various commodities. So the problem of these scarce resources is reflected in the aggregate supply of the economy which is also limited owing to limited source of inputs and unlimited demands as human wants are unlimited. 

  • Question 9
    1 / -0
    Use the figure given to answer question:
    Which combination of goods cannot be produced with the resources the country has?

    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 and technology which are to be fully utilized. So any point that lies beyond the production possibility curve like Point R cannot be achieved with the provided resources and technology. 

  • Question 10
    1 / -0
    Whose definition studies normative aspect of economics?
    Solution

    Alfred Marshall was a British economist who proposed the definition of welfare according to which economics should be a science of creation of welfare for both human as well as society believed that the subject studies the creation of materialistic things in the economy for personal gains which is not good for the welfare of the society. Therefore, he proposed a normative definition on economics. 

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