Introduction Question Bank

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1 Introduction Question Bank 1. Science of wealth is the definition given by 2. Economics is the study of mankind of the ordinary business of life given by 3. Science which tells about what it is & what ought to be is 4. Positive economics does not give value judgments (True / False) 5. Positive economics says only about the ends. (True / False) 6. Normative economics is concerned with welfare judgments (True / False) 7. Microeconomics is also known as 8. In which type of economic system has government no control over price fluctuation. 107

2 Answer Sheet 1. Adam Smith 2. Alfred Marshall 3. Normative Science 4. False 5. True 6. True 7. Price Theory 8. Market Economy 108

3 9. In which economic system is cost benefit analysis used to answer the fundamental question what, how & for whom to produce? 10. In Static economic models,variables do not have a time dimensions. (True / False) 11. Economics is what economists do was stated by 12. Micro economic theory deals with 13. What is the main problem of every economy? 14. In economic theory the term means refers to 15. Who described economics in terms of material welfare? 16. Cetris paribus means 17. The term ends refer to 18. Who alleged that economic should not be normative in character. 109

4 Answer Sheet 9. Mixed Economy 10. True 11. Jacob Viner 12. Economic behaviors of individual economic decision making units. 13. Scarcity of economic resources 14. Resources 15. Cannon 16. Other things being constant 17. Wants 18. Robbins 110

5 19- Wealth is a concept in economic. 20- In economics Income is a concept. 21- The basic assumption of an economic analysis are 22- Who one is known as father of economics? 23- Who said, when six economist gathers there are seven opinions. 24- The concept of consumer surplus was coined by 25- The term Micro is derived from the Greek word which means. 26- Deductive method goes from general to particular. (True / False) 27- Inductive method is also known as 111

6 Answer Sheet 19. Stock 20. Flow 21. Cetris Paribus & Rational Behavior 22. Adam Smith 23. Barbara Wotten 24. Alfred Marshall 25. Small 26. True 27. Historical, Realistic & Analytical 112

7 Demand Question Bank 1. A desire culminates into demand when it is backed by 2. The price that a customer is willing to pay for a given quantity is called demand price. 3. Goods or services that are not necessary for living are 4. Complementary goods are those which are consumed 5. If price of sugar will increase the demand for coffee will 6. Increase in price of a product results in increased consumption of the product as the product become cheaper compared to other products. This effect is known as 7. Traditional approach to law of demand was propounded by 8. According to modern approach, law of demand is caused by 113

8 Answer Sheet 1. Purchasing power & willingness to spend money 2. Maximum Price 3. Wants 4. Simultaneously 5. Fall 6. Income effect 7. Alfred Marshal 8. Income & Substitution effect 114

9 9. Increase in Demand is also known as 10. Decrease in Demand is also known as 11. Tea & Coffee are 12. Which type of relationship exists between the price & quantity demanded? 13. Demand curve slopes 14. Shift in demand not take place because of 15. For what type of goods does demand fall with a is decrease in income level of household? 16. demand explains the collective behavior of all the buyers in a market price? 17. The goods that can be substituted for each other is called 18. The Law of demand is 19. The law of demand is quantitative statements. (True / False) 115

10 Answer Sheet 9. Expansion in demand 10. Constraction in Demand 11. Alternative goods 12. Inverse 13. Downward from left to right 14. Change in price of the product 15. Inferior Goods 16. Aggregate Demand 17. Substitute Goods 18. Price falls, demand rises 19. True 116

11 20. In case of normal goods the the income effect is 21. The price elasticity of demand would be higher for those product which have 22. The Price elasticity of demand for addictive products would be 23. Inferior goods have a negative income elasticity of demand.(true / False) 24. IF two products are good substitute, the value of cross elasticity will be 25. Usually the demand for necessities is highly inelastic. (True / False) 117

12 Answer Sheet 20. Positive 21. Large number of substitutes 22. Less than True 24. Positive 25. True 118

13 Cost & Law of Supply Question Bank 1. Benefit foregone in favor of alternative course of action is called, 2. If there is no production in short run, TC will be 3. In the short run, TC start from 4. Economics cost means 5. Accounting Cost means 6. Outlay cost means the cost incurred actually. (true / False) 7. The minimum price that a supplier expects to make available a specific quantity for sale is called 8. The maximum quantity that a supplier is prepared to supply in market at a given price is called 9. Under law of supply, ceteris paribus is 119

14 Answer Sheet 1. Opportunity cost 2. Positive 3. Positive vertical intercept 4. Explicit cost + Implicit cost 5. Explicit cost or money cost 6. True 7. Supply Price 8. Supply Quantity 9. Cost of production & Production technology 120

15 10. According to Law of supply higher the price higher the quantity the seller is prepared to supply in market. (True / False) 11. The measurement of sensitivity of quantity demand to change in price is called, 12. Utility elasticity is a type of elasticity in economics. (True / False) 13. Point elasticity concept was propounded by 14. Demand of Salt is inelastic because of 15. Price elasticity of demand is not affected by cost of production. (True / False) 16. Luxury goods have degree of elasticity. 17. Number of buyers is a factor in market supply of product. (True / False) 121

16 Answer Sheet 10. True 11. Price elasticity 12. False 13. Marshal 14. No substitute 15. True 16. High 17. False 122

17 18. When the price of complementary products falls, the demand of the other product will. 19. The elasticity of demand of normal goods is generally > The elasticity of complementary goods is generally < The elasticity of substitute goods is generally > The supply curve is normally downward. 23. If supply curve is relatively elastic it means that elasticity value is than one. 123

18 Answer Sheet 18. Increases 19. Income elasticity 20. Cross elasticity 21. Cross elasticity 22. Upward rising 23. Less 124

19 Production Question Bank 1. Production includes mining, manufacturing & service providing. (True / False) 2. Production can be defined as 3. Production just shows the relationship between input & output.(true / False) 4. Production reveals the output that yields the maximum profit. (True / False) 5. Production function shows the output produced with a given amount of input.(true / False) 6. Variable factors means those factor of production which can be changed in 7. Change in total revenue due to incremental change in quantity supplied. 125

20 Answer Sheet 1. True 2. Creation or addition of utility. 3. False 4. False 5. True 6. Short run 7. Marginal Revenue 126

21 8. Which law examines the production function keeping one factor variable? 9. During the stage of decreasing returns 10. The introduction of new product with added features in the market is known as 11. At what point is the marginal product maximum? 12. Isoquant is also known as 13. Isocost is also known as 14. Usually isoquants are Convex to the origin. (True / False) 15. If there is fixed factor & variable factor the law should be Law of 16. Cost function is related to production function. (True /False) 17. Who regards fixed costs as supplementary cost? 127

22 Answer Sheet 8. Law of variable proportion. 9. MP is decreasing 10. Product innovation 11. Inflection point 12. Production indifference curve 13. Price line 14. True 15. Variable proportion 16. True 17. Marshal 128

23 18. Term private & social cost were first used by 19. The law of diminishing returns applies in 20. Social cost is the cost which is incurred by 21. Private cost is the cost which is incurred by 22. Positive externality arises when 23. Labour supply curve is 24. In economic theory, in short run all the cost are 25. Discrepancies between private cost & social cost give rise to 129

24 Answer Sheet 18. Pigou 19. Short run 20. Society 21. Industry / Firm 22. Social cost is less than the private cost 23. Backward sloping 24. Fixed 25. Externalities 130

25 Consumer Behavior Question Bank 1. Law of diminishing Marginal utility states that with successive increase in consumption of additional unit marginal utility also decreases. (True / False) 2. Supply refers to the quantity which a firm is 3. Benefit foregone by not putting the resources to their next alternative use is called 4. Various combinations of two commodities that give same level of consumer satisfaction, is called 5. A line which shows combination of two commodities that a consumer can buy within same budget, is called 6. Difference between what a customer is willing to spend for a product & what he actually pays for it, is called 131

26 Answer Sheet 1. True 2. Willing to supply at a given price. 3. Opportunity Cost 4. Indifference Curve 5. Budget Line 6. Consumer Surplus 132

27 7. Indifference curve are convex to the origin due to 8. If indifference curve is concave to the origin it would implies 9. Higher indifference curve indicates 10. In short run producer surplus is 11. In long run producer surplus is 12. Who propounded Kinked demand curve hypotheses 13. Total utility is maximum when 14. MU curves will be below X-axis when 15. When the total utility is increasing at an increasing rate marginal utility is 16. Utility or satisfaction is subjective concept therefore it could only be ranked defines the position of 17. A=B=5, this statement is a 18. The want satisfying the power of a commodity is known as 133

28 Answer Sheet 7. Diminishing marginal rate of substitution 8. Increasing marginal rate of substitution 9. Higher level of satisfaction combination 10. Greater than economic profit 11. Equal to economic profit 12. Sweezy 13. Marginal utility is zero 14. MU is negative 15. Increasing 16. Ordinal utility theorist 17. Cardinal measure of utility 18. Utility 134

29 19. Utility measured in terms of 20. The total utility divided by the number of units consumed is known as 21. The point where marginal utility become zero, is called 22. The book Value & Capital is written by 23. Diminishing return occurs when a firm uses more & more on same inputs while holding all other inputs constant. (True /False) 24. Consumer s surplus is highest in the case of 25. Which one theory can be used to argue in favor of direct taxes? 135

30 Answer Sheet 19. Utils 20. Average utility 21. Point of safety 22. J R Hicks 23. True 24. Necessities 25. Equi marginal utility 136

31 Price & Output Determination Question Bank 1. rent is equal to firm s total profits. 2. A monopoly is one in which a monopolist is facing a monopsonist. 3. The theory of monopolistic competition is developed by, 4. Under perfect competition the number of firms are large. (True / False) 5. Under competition the price of product can not be controlled. 6. Which price refers to the price at which seller refuse to supply the goods. 7. In the very run demand only can change. 8. In the run both demand & supply can change. 137

32 Answer Sheet 1. Quasi 2. Bilateral 3. H E Chamberlin 4. True 5. Perfect 6. Reserve Price 7. Short run 8. Long run 138

33 9. Equilibrium price may be determined through, 10. What is the shape of the demand curve faced by a firm under perfect competition? 11. Under market condition, firms make normal profit in the long run, 12. The no. of sellers under Perfect competition is, 13. The no. of sellers under Monopolistic competition is, 14. The no. of sellers under oligopoly is, 15. The no. of sellers under monopoly is, 16. Product differentiation under Perfect competition is, 17. Product differentiation under Monopolistic competition is, 18. Product differentiation under Oligopoly is, 139

34 Answer Sheet 9. Demand & Supply 10. Horizontal 11. Perfect competition. 12. Many 13. Many 14. Few 15. One 16. None 17. Extreme 18. Not substantial 140

35 19. Product differentiation under Monopoly is, 20. Price elasticity of demand for a firm under Perfect competition is, 21. Price elasticity of demand for a firm under Monopolistic competition is, 22. Price elasticity of demand for a firm under Oligopoly is, 23. The degree of control over price under Perfect competition is, 24. The degree of control over price under Monopolistic competition is 25. The degree of control over price under Oligopoly is, 26. The degree of control over price under Monopoly is, 141

36 Answer Sheet 19. None 20. Infinite 21. Large 22. Small 23. None 24. Some 25. Some 26. Considerable 142

37 Price & Output Determination II Question Bank 1. What should firm do if total revenue from its product does not equal or exceeds its variable cost? 2. What should firm do when marginal revenue is greater than marginal cost? 3. If any unit of production adds more to revenue than to cost it will result, 4. If any unit of production adds more to cost than to revenue it will result, 5. Which one market never suffers losses in long run? 6. How prices are determined under Perfect competition? 7. What does the Kink demand curve explains? 8. The price is determined according to Australian approach by, 143

38 Answer Sheet 1. Stop production 2. Expand output 3. Increase in profits 4. Decrease in profits 5. Monopoly 6. Equilibrium prices of industry 7. Rivalry reactions in an oligopoly. 8. Utility 144

39 9. In the long run, prices are governed by, 10. Who called price mechanism as invisible hands? 11. Bilateral monopoly is where, 12. BEP means 13. Super normal profit occurs when 14. What is the other name given to average revenue curve? 15. Average profit is the difference between, 16. refers to increase in welfare of one individual without decreasing the welfare of another individual. 17. is a situation in which it is not possible to make someone better off without making someone worse off. 18. is the price at which demand for a commodity is equal to its supply. 145

40 Answer Sheet 9. Cost of production 10. Adam Smith 11. One buyer & one seller 12. TR = TC 13. AR is more than AC 14. Demand Curve 15. AC & AR 16. Distribution efficiency 17. Pareto efficiency 18. Equilibrium price 146

41 19. refers to a market where goods & services are bought & sold. 20. refers to a market where services of factors of production are bought & sold. 21. Externalities are also called, 22. When price discrimination extends two or more countries, it is called, 23. Adam Smith called price mechanism as 24. Australian approach is also known as 147

42 Answer Sheet 19. Goods market 20. Factor market 21. Spill over 22. Dumping 23. Invisible Hands 24. Psychological & Subjective approach 148

PRACTICE PAPER - 30 Dr. A. THANGAVEL WIN ACADEMY MICRO ECONOMICS PGTRB ECONOMICS COACHING

PRACTICE PAPER - 30 Dr. A. THANGAVEL WIN ACADEMY MICRO ECONOMICS PGTRB ECONOMICS COACHING PRACTICE PAPER - 30 1. Economics is the science, which studies human behaviour as a relationship between ends and scarce means which have alternative uses. These lines can be attributed to (a) Lionel Robbins