Introduction to Microeconomics Test 5

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Introduction to Microeconomics Test 5

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Weekly Quiz Competition

Question 1
1 / -0

If a firm is operating at any point inside the PPF, the firm is _______.

A
efficient firm

B
inefficient firm

C
poised for abnormal growth

D
none of the above

Solution

If a firm is operating at any point inside the PPF, the firm is an inefficient firm. The points inside the PPF represent the inefficient utilization of resources. When the actual production falls short of its capabilities or there is a wastage or under-utilization of resources, the firm operates on a point inside the curve.
Question 2
1 / -0

If the economy is producing a combination of goods inside its production possibilities frontier then __________.

A
resources are being optimally used

B
there is fall in demand of the goods being produced

C
there is qualitative improvement in technology

D
some of the resources are lying idle
Question 3
1 / -0

Who alleged that economics should not be normative in character?

A
Jacob Viner

B
AC Pigou

C
Robbins

D
Samuelson

Solution

Lionel Robbins stated that economics should not be normative in character ,that is, it should not proclaim 'what ought to be' .Economics should not be based on value judgements according to Robbins.
Question 4
1 / -0

Positive economic theory deals with ____________.

A
what is or how the economic problem facing the society are solved

B
how the problem should be solved

C
what to produce

D
when to produce

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 5
1 / -0

Which of these is/are a positive statement(s).

A
export of onion ought to be banned to check rising prices of onion in domestic market

B
forwarding trading in commodities ought to be banned to curb rising prices

C
export of onion has created shortage of domestic supply of onions

D
all 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.
Both the statements A and B are giving suggestions but C is stating a fact and it not suggesting anything. Thus option C is a positive statement.
Question 6
1 / -0

____________ is a positive statement.

A
To check inflation public spending should be controlled

B
Price control has led to artificial shortage of edible oils.

C
Minimum wage rates should be fixed to avoid exploitation of workers

D
Government should enforce social security laws strictly

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 A, C and D are giving suggestions but B is stating a fact and it not suggesting anything. Thus option B is a positive statement.
Question 7
1 / -0

_______ determine shape of the production-possibility frontier.

A
Advertisement and fashion

B
Prices and profit

C
Technology and resources

D
Tastes and profits

Solution

For production both resources as well as technology is required at a sufficient and advance level. Therefore, while making Production possibility curve of two commodities it is decided how resources and technology are to be used which decides the shape of PPC.
Question 8
1 / -0

$$25$$ point reduction in CRR has increased money supply is a ____________ statement.

A
subjective

B
negative

C
positive

D
normative

Solution

25 point reduction in CRR has increased money supply 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 9
1 / -0

If there is a production method with improved efficiency, holding all else constant, ______.

A
the production possibilities frontier will shift inward

B
there may be increase in cost of production

C
the production possibility curve will shift inward

D
the production possibilities frontier will shift outward

Solution

If there is a production method with improved efficiency, holding all else constant, the production possibility frontier will shift outward. Where there is an advancement of technology or increase in availability of resources or introduction of a production method with improved efficiency in respect to both the goods, then PPF will shift to the right, i.e. outwards. This is because the more of both are goods are being produced due to the above factors.
Question 10
1 / -0

The slope of the production possibility frontier exhibit ______.

A
relative marginal costs of the two goods

B
relative price of the two goods

C
relative profitability of two goods

D
marginal rate of substitution between two goods
Solution
- The slope of PPF indicates the relative marginal cost of two goods that is the opportunity cost of one good in terms of another.
- PPF shows all the maximum possible combination of two goods, which can be produced with the given level of resources and technology.
- In such a case, more of one good can be produced by taking resources away from the production of another good.
- Thus the slope indicates the inverse relationship between the change in quantity one commodity to the change of quantity of another commodity.

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Re-Attempt Weekly Quiz Competition

Introduction to Microeconomics Test 5

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Introduction to Microeconomics Test 5

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Rank

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SHARING IS CARING

Question 1

efficient firm

inefficient firm

poised for abnormal growth

none of the above

Solution

Question 2

resources are being optimally used

there is fall in demand of the goods being produced

there is qualitative improvement in technology

some of the resources are lying idle

Question 3

Jacob Viner

AC Pigou

Robbins

Samuelson

Solution

Question 4

what is or how the economic problem facing the society are solved

how the problem should be solved

what to produce

when to produce

Solution

Question 5

export of onion ought to be banned to check rising prices of onion in domestic market

forwarding trading in commodities ought to be banned to curb rising prices

export of onion has created shortage of domestic supply of onions

all of the above

Solution

Question 6

To check inflation public spending should be controlled

Price control has led to artificial shortage of edible oils.

Minimum wage rates should be fixed to avoid exploitation of workers

Government should enforce social security laws strictly

Solution

Question 7

Advertisement and fashion

Prices and profit

Technology and resources

Tastes and profits

Solution

Question 8

subjective

negative

positive

normative

Solution

Question 9

the production possibilities frontier will shift inward

there may be increase in cost of production

the production possibility curve will shift inward

the production possibilities frontier will shift outward

Solution

Question 10

relative marginal costs of the two goods

relative price of the two goods

relative profitability of two goods

marginal rate of substitution between two goods

Solution

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