Class: C.

S Foundation
Subject: Business Economics
Topic: Nature & Scope of Economics

Time: 30 Minutes Total marks: 60

Note: All Questions are compulsory
Choose the correct option:
1. Want which are satisfied by the consumption of 5. Macroeconomics is concerned with the overall
goods and services is — performance of the
(a) Society
(a) Non-economic wants
(b) Government
(b) Economic wants
(c) Individuals
(c) Human wants
(d) Economy
(d) None of the above
6. _________is concerned with the behavior of
individual entities.
2. The line "If economist were laid end to end, they
(a) Government
would not reach a conclusion “ said by —
(b) Microeconomics
(a) Prof. Marshall
(c) Macroeconomics
(b) Prof. Samuelson
(d) Society
(c) George Bernard Shaw
(d) Prof. Robbins
7. Economics as a positive science should be
_______between ends.
3. Indicate the suitable match.
(a) Conservative
(a) Economics is the science of wealth - Adam
(b) Neutral
Smith
(c) Diplomatic
(b) Economics is the science of material well being -
(d) None of the above
Samuelson
(c) Economics is the science of choice making -
8. Income from Railways, refer to the__________
Marshall
approaches from a national angle.
(d) Economics is the science of growth and
(a) Micro
development – Robbins
(b) Macro
(c) Both a) and b) above
4. The definition "Economics is a study of man in the
(d) None of the above
ordinary business of life. It enquires how he gets his
income and how he uses it. Thus, it is on the one side,
9. Which of the following statement is not true about
the sudy of wealth and on the other and most impor-
positive and normative sciences?
tant side, a part of the study of man" is given by —
(a) Positive economics says nothing about the
(a) Prof. Adam Smith
ends.
(b) Prof. Colin Smith
(b) Positive economics is not concerned with moral
(c) Alfred Marshall
judgments.
(d) Samuelson
(c) Positive economics is concerned with moral
judgments.

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(d) A normative statement involves ethical values. (a) PE describes the positive effects of economic
decisions while NE describes both positive and
10. Which of the following statement regarding negative effects of economic decisions.
market economy is not TRUE? (b) NE describes the facts of an economy while PE
(a) Price plays a major role in a market economy. involves value judgments.
(b) The Government controls production and (c) NE describes the demand-supply theories of
distribution of goods. individual markets and firms while PE describes
(c) Consumers choose goods they want. the total world economy as a whole.
(d) Efficiency is achieved through the profit motive. (d) PE describes the facts of an economy while NE
involves value judgments.
11. In which type of economic system has the
Government no control over price fluctuations? 15. Why do central problems arises?
(a) Market economy (a) Because of unlimited wants
(b) Command economy (b) Because of limited means
(c) Mixed economy (c) Both (a) and (b) above
(d) Regulated economy (d) None of the above

12. The norms of behaviour which satisfy the 16. Right of private property is found in -
requirements of social rationality of economic activity are (a) Socialism
established by - (b) Mixed Economy
(a) Positive economics (c) Government's Economy
(b) Normative economics (d) Capitalism
(c) Business economics
(d) Mathematical economics 17. The law of scarcity -
(a) Applies only to the less developed countries.
13. The difference between micro economics and (b) Implies that consumers wants Will never be
macroeconomics is - com¬pletely satisfied.
(a) Microeconomics is positive economics while (c) Does not apply to rich, developed countries.
macroeconomics is normative. (d) Implies that consumers wants will be satisfied in
(b) Microeconomics is classical, pre-Keynesian a socialist system
economics while macroeconomics is modern
and post-Keynesian. 18. A capitalist economy is -
(c) Microeconomics is concerned with the behaviour (a) The one in which there is government ownership
of individual entities like markets, firms etc. while of the means of production.
macroeconomics, with the overall performance of (b) The one in which there is private ownership of
the economy. the means of production and production
(d) None of the above. decisions are meant for profit maximization.
(c) The one in which there is private ownership of
14. The difference between positive economics (PE) the means of production and production
and normative economics (NE) is - decisions are meant for welfare maximization.
(d) All of the above

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19. The aim of an entrepreneur is to earn much profit (a) Positive Economy
as possible. The entrepreneur belongs to - (b) Producer Sovereignty
(a) socialist economy (c) Consumer Sovereignty
(b) capitalist economy (d) Economic Power of Choice
(c) mixed economy
(d) all of the above 25. Opportunity costs are a result of-
(a) Scarcity
20. An example of POSITIVE economic analysis would (b) Overproduction
be - (c) Technology obsolescence
(a) Determining the fair price for food. (d) Abundance of resources
(b) Determining how much income each person
should be guaranteed. 26. The PPC does not give the desirable point of
(c) Deciding how to distribute the output of the production; it only indicates the possible combination of
econo¬my. ______that can be produced with the available resources.
(d) An analysis of the relationship between the (a) A single good
price of food and the quantity purchased. (b) Two goods
(c) Three goods
21. A capitalist economy uses_____ as the principal (d) Number of goods
means of allocating resources.
(a) Supply 27. The bent shape of production possibility curve
(b) Prices indicates the -
(c) Demand (a) Increasing opportunity cost
(d) Efficiency (b) Decreasing opportunity cost
(c) Diminishing opportunity cost
22. In a free market economy the allocation of (d) Constant opportunity cost
resources is determined by -
(a) A central planning authority Refer to the following graph and answer the foilowings:
(b) The level of profits of firm
(c) Votes taken by consumers
(d) By consumer preference

23. Capital intensive technique would be chosen in a -

(a) Developed economy
(b) Developing economy
(c) Labour surplus economy
(d) Capital surplus economy

24. In an economy people have the freedom to buy or

not to buy the goods offered in the market place, and this
freedom to choose what they buy dictates what producers 28. Which of the following represents the concept of
will ultimately produce. The key term defining this tradeoffs?
condition is-

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(a) A movement from point A to point B. (c) An improvement in the overall level of
(b) A movement from point U to point C. technology.
(c) Point W (d) An increase in the population growth rate.
(d) Point U 30. Un-employment or underemployment of one or
more resources is illustrated by production at point -
29. Which of the following would not move the PPF (a) A
for this economy closer to point W? (b) U
(a) A decrease in the amount of unemployed (c) W
labour resources. (d) C
(b) A shift in preferences towards greater capital
formation.

Compiled By CA Sumit Biyani (94250 42967)

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