Economics can be defined as

• education in spending in the face of competitive alternatives
• the study of economic aggregates like inflation and national income
• economic behaviour of small units like the household and the firm
• allocation of resources to alternative uses

A change in supply is best described as a

• movement along the supply curve
• shift of the supply curve to the left or to the right
• shift of supply curve to the left
• shift of the supply curve to the right

When a generalization is made based on observed facts, it is known as

• deductive reasoning
• inductive reasoning
• theoretical reasoning
• normative reasoning

A major problem facing all economies is how to

• increase consumption of imported goods
• improved trade among increase nations
• transform from a developing to a developed economy
• allocate scarce resources

A vertical supply curve indicates that

• the quantity supplied is responsive to price
• the same fixed quantity will be supplied no matter the price
• increase in price will result in an increase in the quantity supplied
• there is a fixed price for the commodity below which no supply will be made

The diagram below shows the total utility curve. At the point M, marginal utility

• increases

• is unity

• diminishes

• is zero

If the price elasticity of demand for a good is 0.43, an increase in the price of the good will result in

• an increase in profit by 43%
• a net gain
• a decrease in profit by 43%
• a net loss

In a free market economy, the price system allocates resources

• under government’s directives
• to ensure general welfare
• to their best alternative uses
• to reduce poverty

At consumer equilibrium, the slope of the indifference curve is

• half the slope of the budget constraint line
• equal to the slope of the budget constraint line
• greater than the slope of the budget constraint line
• less than the slope of the budget constraint line

For a supply curve, an increase in the price of a commodity will result in

• a decrease in supply
• a decrease in the quantity supplied
• an increase in supply
• an increase in the quantity supplied