Recap 2 | Part 1

The central problem of economics is,

• Establishing a fair tax system.

• Ensuring a minimum income for each citizen.

• Allocating scarce productive resources to satisfy wants.

• Enacting a set of laws that prevent resources from overuse.

• Producing goods and services without being wasting resources.

Which of the following would cause an outward or rightward shift in the production possibilities curve?

• An increase in unemployment.

• An increase in inflation.

• An increase in capital stock.

• A decrease in natural resources.

• A decrease in the number of workers.

Economic resources can be simply classified into two main categories such as

• Capital resources and natural resources.

• Land and capital.

• Natural resources and human resources.

• Property resources and human resources.

• Labour and entrepreneurship.

What is the fundamental difference between needs and wants as analyzed in Economic?

• Needs are essential for survival while wants are desires only.

• Wants are essential for survival while needs are desires only.

• Needs and wants are considered to be synonymous in Economics.

• Wants can be satisfied with limited resources while needs cannot be satisfied with limited resources.

• Needs are changing over time while wants do not change over time.

Which of the following is appropriate to identify an economic good?

• An economic good is a good that cannot be exchanged for money
• An economic good is a good that has no value
• An economic good is a good that is free and abundant
• An economic good is a good or service that has an opportunity cost is created in the production.

• An economic good is a good that is not desired by consumers

The points which are marked on the Production Possibilities Curve imply.

• Unlimited resources
• The inefficiency of the production.

• That all the existing resources are fully utilized.

• Without decreasing the production of one good, the production of the other good can be increased

• The production resources are imperfectly utilized

Market demand equation of a particular good is Qd = 70 – 2P. if this demand curve changed as Qd = 50 – 2P the reason that can affect for this change is,

• Increase in price of the considering good.

• Increase in consumer income.

• increase in consumer taste.

• increase in price of a substitute.

• Increase in price of a complement.

Which of the following helps in explaining why the demand curve for an inferior good is downward sloping?

• The income and substitution effects move the quantity demanded in the same direction.

• The income effect equals the substitution effect.

• The negative income effect dominates the substitution effect.

• The substitution effect dominates the negative income effect.

• The consumer increases the consumption of the goods with an increase in income.

Assume that goods X and Y are complements. What will be the effect on the equilibrium price and quantity of good X, if an increase in the supply of good Y, while other things remain unchanged?

• Equilibrium price and equilibrium quantity of X Decrease.

• Equilibrium price of X decrease while equilibrium quantity increase.

• Equilibrium price of X increase while equilibrium quantity decrease.

• Equilibrium price and equilibrium quantity of X increase.

• Equilibrium price of X decrease while equilibrium quantity remain unchanged.

The market demand curve for a certain product is drawn in the diagram below. Between the price of Rs. 10 and Rs. 8, the demand curve shown in the above diagram is,

• Perfectly elastic.

• Relatively elastic.

• Relatively inelastic.

• Unitary elastic.

• Perfectly inelastic.