´ IMPORTANT
MCQS AND IMPORTANT POINTS
FOR CA FOUNDATION ECONOMICS AND OTHER COMPETITIVE EXAM
FOR CA FOUNDATION ECONOMICS AND OTHER COMPETITIVE EXAM
´ MATCH THE FOLLOWING:-
a)
SCIENCE OF WEALTH 1 MARSHALL
b)
SCIENCE OF WELFARE 2 SAMUELSON
c)
SCIENCE OF GROWTH 3. ROBBINS
d)
SCIENCE DEALING WITH SCARCITY 4 ADAM SMITH
A.
4,1,2,3 RIGHT ANSWER IS A
B.
1,2,3,4
C.
2.1.3.4
D.
4,3,2,1
´ ECONOMICS IS
WHAT ECONOMICS DO WAS STATED BY
a)
ADAM SMITH
b)
ALFRED MARSHALL
c)
MRS ROBINSON
d) JACOB VINER
RIGHT ANSWER IS d
THE
FUNDAMENTAL ECONOMIC PROBLEM BEING FACED IS ONE OF:-
a)
DIFFERENCE IN THE LIVING STANDARD OF THE PEOPLE
b)
DECISION MAKING BY THE GOVERNMENT
c) MULTIPLICITY
OF WANTS AND SCARCITY OF RESOURCES RIGHT ANSWER
d)
SHORTAGE OF LABOUR
´ SOCIETY FACES
ECONOMIC PROBLEMS BECAUSE:-
a)
THERE IS MONEY
b)
PEOPLE’S WANTS ARE UNLIMITED RIGHT ANSWER
c)
TECHNOLOGY IS NOT GOOD ENOUGH
d)
ALL OF THE ABOVE
§
MICRO ECONOMICS THEORY STUDIES HOW AN ECONOMY
DETERMINES
a)
THE PRICE OF THE GOODS
b)
THE PRICE OF THE SERVICES
c)
THE PRICE OF THE ECONOMIC SERVICES
d) ALL OF THE
ABOVE THE RIGHT ANSWER
´ WHICH OF THE
FOLLOWING STATEMENT IS INCORRECT:-
a)
MICRO ECONOMICS IS PRIMARILY CONCERNED WITH THE
PROBLEM OF WHAT,HOW AND FOR WHOM TO PRODUCE
b)
MICRO ECONOMICS IS PRIMARILY CONCERNED WITH THE BEHAVIOR OF INDIVIDUAL DECISION MAKING UNITS WHEN IN
c) MICRO
ECONOMIC IS PRIMARILY CONCERNED WITH THE TIME PATH AND PROCESSES BY WHICH ON
EQUILIBRIUM POSITION EVOLVES INTO ANOTHER RIGHT ANSWER
d)
MICRO ECONOMICS IS PRIMARILY CONCERNED WITH
COMPARATIVE STATISTICS RATHER THAN DYNAMICS
´ MATCH THE
FOLLOWING
a)
WHAT IS
b)
WHAT OUGHT TO BE
c)
AGGREGATES
d)
INDIVIDUAL UNITS
1.
MACRO ECONOMICS
2.
MICRO ECONOMICS
3.
POSITIVE ECONOMICS
4.
NORMATIVE ECONOMICS
´ RIGHT ANSWER
a)
WHAT IS POSITIVE ECONOMICS
b)
WHAT OUGHT TO BE NORMATIVE ECONOMICS
c)
AGGREGATES MACRO ECONOMICS
d)
INDIVIDUAL UNITS MICRO
´ WHICH ONE OF
THE FOLLOWING STATEMENT IS NOT TRUE
a)
EXCHANGE IS ONE METHOD OF HELPING TO SOLVE THE
BASIC ECONOMIC PROBLEM
b)
THE BASIC ECONOMIC PROBLEM IS ONE OF THE CHOICE
c) CHOICE IS
NECESSARY BECAUSE OF LIMITED WANTS RIGHT ANSWER
d)
THE MEANS TO SATISFY WANTS ARE LIMITED
´ MATCH THE
FOLLOWING
a)
PROBLEM OF RESOURCE ALLOCATION
b)
PROBLEM OF CHOICE OF TECHNIQUE
c)
PROBLEM OF DISTRIBUTION
d)
PROBLEM OF CHOICE
1.
HOW TO PRODUCE
2.
FOR WHOM TO PRODUCE
3.
SCARCITY
4.
WHAT TO PRODUCE
´ RIGHT ANSWER
1.
PROBLEM OF RESOURCE ALLOCATION
2.
PROBLEM OF CHOICE OF TECHNIQUE
3.
PROBLEM OF DISTRIBUTION
4.
PROBLEM OF CHOICE
a)
WHAT TO PRODUCE
b)
HOW TO PRODUCE
c)
FOR WHOM TO PRODUCE
d)
SCARCITY
´ THE MARKET EQUILIBRIUM FOR A COMMODITY IS DETERMINED BY
a)
THE MARKET DEMAND FOR THE COMMODITY
b)
THE MARKET SUPPLY OF THE COMMODITY
c) THE BALANCING
FORCES OF THE DEMAND AND SUPPLY RIGHT ANSWER
d)
ANY OF THE ABOVE
§
PRODUCTION POSSIBILITY CURVE INDICATES THE
a)
ALLOCATION OF THE SUPPLY OF COMMODITIES AMONG
THE MEMBERS OF A COMMUNITY
b)
EFFICIENCY WITH WHICH A COMMUNITY’S RESOURCES
ARE USED TO SATISFY ITS WANTS
c) ATTAINABLE
COMBINATION OF COMMODITIES FOR A COMMUNITY USING ALL AVAILABLE RESOURCES
´ ASSUME THAT A
FARMER SELLS HIS PRODUCE TO AN AGRICULTURAL MARKETING BOARD. HE IS NOT ALLOWED
TO SELL TO ANY OTHER INSTITUTION OR TO ANY OTHER PERSONS IN EFFECT THE BOARD IS
FROM HIS VIEW IS
a)
MONOPOLY
b)
OLIGOPOLY
c) MONOPSONY THE
RIGHT ANSWER
d)
DUOPOLY
§
ECONOMICS IS THE STUDY OF THE PROBLEMS ARISING
FROM:-
a)
THE DISTRIBUTION OF VARY SCARCE GOODS
b) PRODUCTION
,DISTRIBUTION AND EXCHANGE RIGHT ANSWER IS
c)
PRODUCTION AND PRICING OF DURABLE COMMODITIES
d)
EXCHANGE OF SERVICES FOR THE MONEY
´ THE CONSUMER
LIKE GOVERNMENT MUST TIME TO TIME ALLOCATE LIMITED RESOURCES AMONG THE LARGE
NUMBER OF COMPETING WANTS SO AS TO ACHIEVE:-
1.
OPTIMUM OPPORTUNITY COST
2.
AERAGE OPPORTUNITY COST
3.
FREEDOM OF EXCHANGE
4. MAXIMUM
SATISFACTION RIGHT ANSWER
§
ECONOMICS THE TITLE ITSELF WAS CONDEMNED AS
DISMISAL SCIENCE AS A BASTARD SCIENCE AND A SCIENCE OF BREAD AND BUTTER BY BY
RUSKIN
´ THE BASIC
CHARACTERSTICS OF A CAPITALISTICS ECONOMY IS
a)
FULL EMPLOYMENT
b) THE PRIVATE
OWNERSHIP OF THE MEANS OF PRODUCTION RIGHR ANSWER
c)
AN ABSENCE OF MONOPOLY
d)
LARGE SCALE PRODUCTION OF PRIMARY INDUSTRIES
§
IN FREE ENTERPRISE ECONOMY THE PROBLEM OF
WHAT,HOW AND FOR WHOM ARE SOLVED BY :-
a)
A PLANNING COMMITTEE
b)
THE ELECTED
c) THE PRICE
MECHANISM RIGHT ANSWER
´ THE IMPORTANT CHARACTERISTICS OF A MIXED ECONOMY SYSTEM ARE :-
a)
CO EXISTENCE OF PUBLIC AND PRIVATE SECTOR
b)
USE OF MARKET MECHANISM
c)
USE OF THE ECONOMIC PLANNING
d)
GOVERNMENT REGULATION AND CONTROL OF THE EONOMY
e) ALL OF THE
ABOVE RIGHT ANSWER
§
IN PLANNED ECONOMY,THE ECONOMIC PROBLEM OF WHAT
SHALL BE PRODUCED IS DETERMINED BY DIRECTION OF THE GOVERNMENT
´ THE LAW OF
DEMAND REFER TO
a)
PRICE SUPPLY RELATIONSHIP
b)
PRICE COST RELATIONSHIP
c) PRICE DEMAND
RELATIONSHIP RIGHT ANSWER
d)
PRICE INCOME RELATIONSHIP
§
THE PRICE OF DEMAND FUNCTION FOR A COMMODITY
REFERS TO:
§
FUNCTION OF THE GOODS ‘S OWN PRICE,THE PRICE OF
THE SUBSTITUTE AND THE BUYER’S INCOME
´ DEMAND
SCHEDULE IS SHOWN AS:-
a)
A RESULT OF INCREASE IN THE SIZE OF THE FAMILY
b)
A RESULT OF CHANGES IN THE TASTE
c) A FUNCTION FO
PRICE ONLY RIGHT ANSWER
d)
NONE OF THE THESE
§
IMPORTANT POINTS
1.
ECONOMICS IS SCIENCE IS CONCERNED WITH THE PROBLEM OF ALLOCATING
SCARCE RESOURCES AMONG COMPETING ENDS
2.
BUSINESS ECONOMICS REFERS TO THE APPLICATION OF
ECONOMIC THEORY AND DECISION TOOLS TO FIND THE OPTIMAL SOLUTIONS TO MANAGERIAL
DECISION MAKING.
´ A TYPICAL
DEMAND CUVE CAN NOT BE
1.
CONVEX TO THE POINT OF ORIGIN
2.
A STRAIGHT LINE PARRALEL RO X AXIS
3.
A STRAIGHT LINE PARRALE TO Y AXIS
4. RISING UPWARD
TO THE RIGHT RIGHT ANSWER
§
TWO GOODS HAVE TO BE CONSUMED SIMULTANEOUSLY
ARE COMPLEMENTRIES
§
A FALL IN THE
PRICE OF THE COMMODITY LEADS TO
1.
A SHIFT TO DEMAND
2.
A FALL IN DEMAND
3. A RISE IN
CONSUMER REAL INCOME RIGHT ANSWER
4.
A FALL IN THE CONSUMER REAL INCOME
´ EXTENSION AND
CONTRACTION OF DEMAND ARE RESULTS OF :-
1.
CHANGE IN THE CONSUMER’S INCOME
2.
CHANGE IN THE CONSUMER’S TASTE
3. CHANGE IN THE
PRICE RIGHT ANSWER
4.
NONE OF THESE
WHEN THE
DEMAND CUVE IS RECTANGULAR HYPERBOLA IT REPRESENTS
1. UNITARY
ELASTIC DEMAND RIGHT ANSWER
2.
PERFFECTLY ELASTIC DEMAND
3.
PERFECTLY INELASTIC DEMAND
4.
RELATIVELY ELASTIC DEMAND
´ GIFFEN GOODS ARE THOSE GOODS
1.
FOR WHICH DEMAND INCREASES AS PRICE INCREASE
RIGHT ANSWER
2.
WHICH HAVE A HIGH INCOME ELASTICITY OF DEMAND
3.
WHICH ARE IN VERY SHORT SUPPLY
§
CROSS ELASTICITY OF DEMAND BETWEEN PETROL AND
AUTOMOBILE IS
§
NEGATIVE
§ MAXIMIZATION OF TOTAL UTILITY IS AN ASSUMPTION
OF A CONSUMER IN AN ANALYSIS THAT IS :-
1.
INDIFFERENCE CURVE APPROACH
2.
DEMAND ANALYSIS
3.
UTILITY ANALYSIS
4. MARGINAL
UTILITY ANALYSIS RIGHT ANSWER IS
´ ORDINAL
APPROACH IS BASED ON:-
1.
LAW OF MAXIMUM SATISFACTION
2.
UTILITY CAN NOT BE MEASURED IN CARDINAL NUMBERS
3. UTILITY COULD
NOT BE MEASURED
4.
UTILITY CAN BE MEASURED
§
ECONOMISTS ASSOCIATED WITH THE DEVELOPMENT
OF INDIFFERENCE CURVE ANALYSIS ARE j.R
HICKS AND ALLEN
§
THE CONCEPT OF INDIFFERENC CURVE ANALYSIS WAS GIVEN SCIENTIFIC TOUCH BY SLUTSKY
IN 1915
´ AN
INDIFFERENC CURVE TECHNIQUE IS A SERIES OF POINTS RELATING TO THE COMBINATION
OF TWO COMMODITIES BETWEEN THE CONSUMER HAS NO
´ INDIFFERENC
CURVE IS ALWAYS CONVEX TO THE POINT OF ORIGIN
´ THE
CONSUMER EQUILIBRIUM POINT:
•
THE POINT OF INTERSECTION OF BUDGET LINE AND
INDIFFERENCE CURVE
•
THE POINT OF TANGENCY OF BUDGET LINE AND
INDIFFERENCE RIGHT ANSWER
•
THE POINT JUST ABOVE THE INTERSECTION OF THE
TWO
•
THE POINT JUST BELOW THE INTERSECTION OF THE
TWO
´ IMPORTANT
POINTS OF INDIFFERENCE CURVE
- ALSO KNOWN AS ORDINAL UTILITY APPROACH
- NOT BASED ON UNREALISTIC ASSUMPTION OF CARDINAL UTILITY
- ORDINAL UTILITY APPROACH IS BASED ON COMPARABILITY OF CHOICE
- FIRST GIVEN BY EDGEWORTH AND PARETO
- FURTHER DEVELOPED BY ALLEN AND HICKS
- THE LAW OF DIMINISHING MARGINAL RATE OF SUBSTITUTION IS THE BASIS OF
INDIFFERENCE CURVE ANALYSIS
- MRSXY=
∆Y/∆X
- MARGINAL RATE OF SUBSTITUTION OF X FOR Y
- IT IS ALWAYS NEGATIVE BECAUSE OF WHEN THE QUANTITY OF ONE IS INCREASES
THE QUANTITY OF THE OTHER IS DECREASED
- PRICE LINE REPRESENTS ALL POSSIBLE COMBINATIONS OF TWO GOODS THAT A
CONSUMER CAN PURCHASE WITH HIS GIVEN INCOME AND THE GIVEN PRICES OF TWO
GOODS
- SLOPE OF
PRICE LINE=PX/PY
- CONDITIONS OF CONSUMER’S
- PRICE LINE MUST BE TANGENT TO AN INDIFFERENCE CURVE OR MRSXY=
∆PX/PY
- INDIFFERENCE
CURVE MUST BE CONVEX TO THE POINT OF ORIGIN
- IN CASE OF
PERFECT SUBSTITUTE THE SHAPE OF INDIFFERENCE CURVE IS STRAIGHT LINE
DOWNWARD SLOPING
- IN CASE OF
COMPLEMENTARY GOODS THE SHAPE IS RIGHT ANGLED
´ IMPORTANT
POINTS
1.
ECONOMICS IS THE SOCIAL SCIENCE THAT STUDIES
THE PRODUCTION,DISTRIBUTION AND CONSUMPTION OF THE GOODS AND SERVICES
2.
ADAM SMITH FATHER OF ECONOMICS DEFINED IN 1776
ECONOMICS WHICH WAS CALLED POLITICAL ECONOMY AS AN INQUIRY INTO THE NATURE AND
CAUSES OF THE WEALTH OF THE NATIONS
3.
RENAMED ECONOMICS BY ALFRED MARSHALL IN 19 TH
CENTURY
4.
LIONEL ROBBINS ( 1932) ECONOMIC IS A SCIENCE
WHICH STUDIES HUMAN BEHAVIOR AS A RELATIONSHIP BETWEEN ENDS AND SCARCE
RESOURCES WHICH HAVE ALTERNATIVE USES
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