NATURE AND SCOPE OF BUSINESS ECONOMICS

Top 36 Introduction to Economics Important Question

Q1. The term Economics is derived from a

  • Latin word
  • Greek word
  • Russian word
  • Indian word

Ans. Greek word

Q2. Microeconomics deals primarily with

  • Comparative statics, general equilibrium and positive economics.
  • Comparative static, partial equilibrium and normative economics
  • Dynamics, partials equilibrium and positive economics
  • Comparative statics, partial equilibrium and positive economics.

Ans. Comparative statics, partial equilibrium, and positive economics.

Q3. Which of the following is concerned with microeconomics?

  • The size of national output
  • The level of employment
  • Change in the general level of prices
  • Nine of the above

Ans. None of the above

Q4. Since microeconomics splits up the entire economy into smaller parts for the purpose of intensive study, it is also known as

  • Slicing method
  • Bulldozer method
  • Micro- macro method
  • Micro foundation of macro method

Ans. Slicing method

Q5. The expansion of microeconomics into other social sciences has caused economics to be called as the

  • Imperialist social science
  • Queen of social science
  • Traditional social science
  • Inter- disciplinary social science

Ans. Imperialist social science

Q6. Microanalysis deals with the

  • Allocation of resources of the economy as between production of different goods and services
  • Determination of prices of goods and services
  • Behavior of individual decision makers
  • All of the above

Ans. All of the above

Q7. Business Economics is

  1. Abstract and applies the tools of Microeconomics.
  2. Involves practical application of economic theory in business decision making
  3. Incorporation tools from multiple discipline
  4. (2) and (3) above.

Ans. (2) and (3) above

Q8. Which of the following statement is incorrect?

  • Micro economics is primarily concerned with the problem of what, how and when to produce.
  • Micro economics is primarily concerned with the economic behaviour of individual decision-making units when at equilibrium.
  • Micro economics is primarily concerned with the time, path and process by which one equilibrium position evolves into another.
  • Micro economics is primarily concerned with comparative statics rather than dynamics.

Ans. Microeconomics is primarily concerned with the time, path, and process by which one equilibrium position evolves into another.

Q9. Which of the following is not the subject matter of Business Economics?

  • Should our firm be in this business?
  • How much should be produced and at price should be kept?
  • How will the product be placed in the market?
  • How should we decrease unemployment in the economy?

Ans. How should we decrease unemployment in the economy?

Q10. Find the correct match:

  • An enquiry into the nature and causes of the wealth of the nation: A.C. Pigou
  • Science which deals with wealth: Alfred Marshall.
  • Economics is the science which studies human behavior as a relationship between ends and source means which have alternative uses: Robbins.
  • The range of our enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rode of money: Adam Smith.

Ans. Economics is the science that studies human behavior as a relationship between ends and source means which have alternative uses: Robbins.

What is Positive and Normative Science? Explained!

Q11. Rational decision making requires that:

  • One’s choices be arrived at logically and without error.
  • One’s choices are consistent with one’s goals.
  • One’s choices never vary.
  • One makes choices that do not involve trade- offs.

Ans. One’s choices are consistent with one’s goals.

Q12. Adam Smith book “An Enquiry into the Nature and Causes of Wealth of Nations” was published in

  • 1576
  • 1874
  • 1776
  • 1930

Ans. 1776

Q13. (A) There is a similarity between Robbin’s definition and Samuelson’s definition

(B) Samuelson’s definition is not only dynamic in content; it is also wider in scope.

Of these

  • (A) is true, but (B) is false
  • (A) is false, but (B) is true
  • Both (A) and (B) are true
  • Both (A) and (B) are false

Ans. Both (A) and (B) are true

Q14. The most prominent member of the Neoclassical school of economics is

  • Adam Smith
  • Milton Friedman
  • Lucas
  • Alfred Marshall

Ans. Alfred Marshall

Q15. “Economics is the oldest of the arts, newest the sciences, indeed the Queen WsociaJ sciences” This is remarked by

  • Haberler
  • Hicks
  • Jacob Viner
  • Samuelson

Ans. Samuelson

Q16. Wealth and welfare are one the same, is considered by

  • Pigou
  • Marshall
  • Adam Smith
  • J.S. Mill

Ans. Adam Smith

Q17. In every economic system, scarcity imposes limitations on

  • Households, business firms, government, and the nation as a whole
  • Households and business firms, but not the government.
  • Local and state government, but not the federal government.
  • Households and government, but not business firms.

Ans. Households, business firms, government, and the nation as a whole

Q18. “Economics is neutral between ends” was remarked by

  • Robbins
  • Marshall
  • Samuelson
  • Hazlitt

Ans. Robbins

Q19. Which of the following is a statement of normative economics?

  • The minimum wage is good because it raises wages for the working poor
  • The minimum wage is supported by unions
  • The minimum wage reduces jobs for less skilled workers
  • The minimum wage encourages firms to substitute capital for labour

Ans. The minimum wage is good because it raises wages for the working poor

Q20. The deductive approach to establish economic generalizations was extensively used by

  • Classical and Neo- classical economics
  • Post- Keynesian economics
  • Physiocrats
  • Mercantalists

Ans. Classical and Neoclassical economics

Q21. The term “invisible hand” is mainly associated with the name of

  • Stigler
  • Marshall
  • Lipsey
  • Adam Smith

Ans. Lipsey

Q22. Holding all other influencing variables constant is often the equivalent Latin phrase

  • Sine qua non
  • Vis- a- vis
  • Ceteris paribus
  • Laisses- faire

Ans. Ceteris paribus

Q23. Bearing in mind the assertion that economics is a “positive” and not a “normative” science’ with which of the following problems would an economist as an economist be concerned?

  1. The unfairness of the distribution of wealth
  2. The effect on prices due to speculation in raw- materials
  3. The results of union pressure for increased wages
  4. The rights and wrongs of exaggerated advertising claims
  1. I only
  2. II, III
  3. I, III
  4. I, II, III. IV

Ans. (23) II, III

Q24. The difference between positive and normative Economics is:

  • Positive Economics explains the performance of the economy while normative Economics finds out the reasons for poor performance.
  • Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
  • Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people.
  • Positive Economics prescribes while normative Economics describes.

Ans. Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.

Q25. 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

Ans. Macro Economics

Q26. 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.

Ans. Finding the causes of failure of ABC Ltd.

Q27. In a mixed economy

  • All economic decisions are taken by the central authority.
  • All economic decisions are taken by private entrepreneurs.
  • Economic decisions are partly taken by the state and partly by the private entrepreneurs.
  • None of the above

Ans. Economic decisions are partly taken by the state and partly by the private entrepreneurs.

Q28. Producing the most wanted products in the least costly way is

  • Full employment
  • Fair income distribution
  • Economic growth
  • Economic efficiency

Ans. Economic efficiency

Q29. Which of the following statements does not apply to a market economy?

  • Firms decide whom to hire and what to produce.
  • Firms aim at maximizing profits
  • Households decide which firms to work for and what to buy with their incomes.
  • Government policies are the primary forces that guide the decision of firms and households.

Ans. Government policies are the primary forces that guide the decision of firms and households.

Q30. The capital intensive technique would get chosen in a

  • Labour surplus economy where the relative price of capital is lower.
  • Capital surplus economy where the relative price of capital is lower
  • Develop economy where technology is better
  • Developing economy where technology is poor.

Ans. A capital surplus economy where the relative price of capital is lower

Q31.Larger production of ____ goods would lead to higher production in the future.

  • Consumer goods
  • Capital goods
  • Agricultural goods
  • Public goods

Ans. Capital goods

Q32. On a production possibilities curve, the opportunity cost of good X in terms of good Y is represented by

  • The distance to the curve from the vertical axis
  • The distance to the curve from the horizontal axis
  • The movement along the curve
  • All of the above

Ans. The movement along the curve

Q33. A production possibility curve shows

  • How much of the resources of the society are used to produce a particular commodity?
  • The various alternative combination of two commodities that can be produced
  • The rate of unemployment in the economy.
  • The rate of inflation in the economy.

Ans. The various alternative combination of two commodities that can be produced

Q34. Production possibility curve under increasing cost conditions is

  • Concave to the origin
  • Convex to the origin
  • Straight line curve
  • All the above

Ans. Concave to the origin

Q35. A capitalist economy uses _________________ as the principal means of allocating resources.

  • Demand
  • Supply
  • Efficiency
  • Prices

Ans. Efficiency

Q36. Exploitation and inequality are minimal under:

  • Socialism
  • Capitalism
  • Mixed economy
  • None of the above

Ans. Socialism

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