Economics | Study Mode

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Question 1
A
its issues can be easily verified by reference to facts 
B
it adopts scientific methods in making its analysis 
C
its issues are relevant for national development 
D
its subject matter studies human behaviour 
Explanation.
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First is Robbins' famous all-encompassing definition ofeconomicsthat is still used to define the subject today: Economicsis thesciencewhich studies human behavior as a relationship between given ends and scarce means which have alternative uses


Correct Option:
D
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Question 2
A
tuition, fees and books 
B
boarding and lodging 
C
the wages given up to attend the university 
D
transportation and entertainment 
Explanation.
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Opportunity costis the value of the next best thing you give up whenever you make a decision. It is "the loss of potential gain from other alternatives when onealternativeis chosen". it is simply the forgone alternative

If, forexample, you spend timeandmoney going to a movie, you cannot spend that time at home reading a book,andyou can't spend the money on something else.


Correct Option:
C
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Question 3
A
raw material 
B
money 
C
fuel 
D
machinery 
Explanation.
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Circulating capitalcan consist of cash, operating expenses, raw materials, inventory in process, finished goods inventory and accounts receivable.

Circulating capitalis frequently referred to as workingcapitalor alternatively, revolvingcapital.


Correct Option:
D
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Question 4
A
directives of the government 
B
the pattern of consumers spending 
C
producers of consumer goods 
D
people producing what they want 
Explanation.
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Consumer preferences and resource scarcity determine which goods are produced and in what quantity; the prices in a market economy act as signals to producers and consumers who use these price signals to help make decisions. Governments play a minor role in the direction of economic activity.


Correct Option:
B
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Question 5
A
3.5 kg 
B
4.0 kg 
C
4.2 kg 
D
5.0 kg 
Explanation.
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Themeanis theaverageof the numbers. It is easy to calculate: add up all the numbers, then divide by how many numbers there are. In other words it is the sum divided by the count.

thus we have;

mean =3.5 + 3.0 +4.2 +5.0 +4.3 = 20 / 5 = 4


Correct Option:
B
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Question 6
A
complements 
B
substitutes 
C
luxurious 
D
inferior 
Explanation.
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Apositive cross-priceelasticityvalue indicates that the twogoodsare substitutes.

Twogoodsthat complement each other have a negativecross elasticity of demand: as the price of goodYrises, thedemandfor good X falls.


Correct Option:
B
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Question 7
A
desire for the commodity 
B
significance of the commodity 
C
ability to pay for the commodity 
D
economic value of the commodity 
Explanation.
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So, the keydifference between wantsanddemandis desire. Consequently,forpeople, who can afford a desirable product are transforming theirwantsintodemands. In other words, if a customer is willing and able to buy a need or awant, it means that they have ademand forthat need or awant.


Correct Option:
A
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Question 8
A
fairly elastic demand 
B
perfectly elastic demand 
C
perfectly inelastic 
D
fairly inelastic demand 
Explanation.
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When thedemand curveisparallel to the vertical axis, it means, that the same amount of goods are demanded at any price level. Which further means that there is no effect of change in price on the quantity demanded. Hence, the product is perfectly Inelastic and quantitatively, elasticity ofdemandis 0.


Correct Option:
C
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Question 9
A
the level of technology 
B
the price of the commodity 
C
cost of production 
D
taxation 
Explanation.
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Supply curve shift: Changes in production cost and related factorscan causean entiresupply curvetoshift rightor left. Thiscausesa higher or lower quantity to be supplied at a given price. The ceteris paribus assumption:Supply curvesrelate prices and quantities supplied assuming no other factorschange.


Correct Option:
C
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Question 10
A
from a single producer 
B
in the warehouse of producers 
C
offered for sale at a market place 
D
produced for the market 
Explanation.
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In economics,effectivedemand (ED) in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. it is theQuantity of a good or service that consumersareactually buying at the current market price.


Correct Option:
C
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