Bus. Eco_Ch1: Nature & Scope of Business Economics (SM 1 to 10)

Economists regard decision making as important because:

• The resources required to satisfy our unlimited wants and needs are finite, or scarce

• It is crucial to understand how we can best allocate our scarce resources to satisfy society’s unlimited wants and needs.

• Resources have alternative uses.

• All the above.

Business Economics is

• Abstract and applies the tools of Microeconomics.

• Involves practical application of economic theory in business decision making.

•             Incorporates tools from multiple disciplines.

• (b) and (c) above.

In Economics, we use the term scarcity to mean;

• Absolute scarcity and lack of resources in less developed countries.

• Relative scarcity i.e. scarcity in relation to the wants of the society.

• Scarcity during times of business failure and natural calamities.

• Scarcity caused on account of excessive consumption by the rich.

What implication(s) does resource scarcity have for the satisfaction of wants?

• Not all wants can be satisfied.

• We will never be faced with the need to make choices.

• We must develop ways to decrease our individual wants.

• The discovery of new natural resources is necessary to increase our ability to satisfy wants.

Which of the following is a normative statement?

• Planned economies allocate resources via government departments

• Most transitional economies have experienced problems of falling output and rising prices over the past decade

• There is a greater degree of consumer sovereignty in market economies than planned economies

• Reducing inequality should be a major priority for mixed economies

In every economic system, scarcity imposes limitations on

• households, business firms, governments, and the nation as a whole

• households and business firms, but not the governments

• local and state governments, but not the federal government

• households and governments, but not business firms

Macroeconomics is also called——— economics

• applied

• aggregate

• experimental

• none of the above

An example of ‘positive’ economic analysis would be

• an analysis of the relationship between the price of food and the quantity purchased

• determining how much income each person should be guaranteed

• determining the ‘fair’ price for food

• deciding how to distribute the output of the economy

A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of

• Macro-Economics.

• Descriptive Economics

• Micro-economics

• Normative economics

Which of the following does not suggest a macro approach for India?

• Determining the GNP of India.

• Finding the causes of failure of ABC Ltd

• Identifying the causes of inflation in India

• Analyse the causes of failure of industry in providing large scale employment