Nature And Scope Of Business Economics Multiple Choice Question and Answers

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Multiple Choice Questions

Question 1. Economics is the study of mankind in the ordinary business of life was given by

  1. Adam Smith
  2. Lord Robbins
  3. Alfred Marshall
  4. Samuelson

Answer: 3. Alfred Marshall

‘Economics is a study of mankind in the ordinary business of life’ is the welfare definition given by Alfred Marshal

Question  2. The branch of economic theory that deals with the problem of allocation of resources is

  1. Microeconomics
  2. Macroeconomics
  3. Econometrics
  4. None of these

Answer: 1. Microeconomics

The study of microeconomics deals with how a producer allocates his resources and fixes the price of his product for the optimum utilization of resources

Question 3. Capitalistic Economy is used as the principal means of allocating resources

  1. Demand
  2. Supply
  3. Price
  4. All of the above

Answer:  3. Price

A capitalistic economy is characterized by the absence of state  intervention This economy uses a price mechanism (forces of demand and supply) to solve their basic economic problems Demand and supply both depend upon price and therefore capitalistic economy uses price as the principal means of allocating resources

Question 4. A study of how an increase in the corporate income tax rate will affect the natural unemployment rate is an example of

  1. Macroeconomics
  2. Descriptive Economics
  3. Microeconomics
  4. Normative Economies

Answer: 1. Macroeconomics

Macroeconomics studies the economy as a whole Therefore increase in Corporate income tax rate and its effect on  unemployment is at the macro level

Question 5. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply? 

  1. Open Economy
  2. Controlled Economy
  3. Command Economy
  4. Market Economy

Answer: 4. Market Economy

In a capitalistic economy, producers make their choices based on market forces of demand and supply The capitalist economy works under the price mechanism ie prices are determined by the free interplay of demand and supply forces A capitalist economy is also known as Market Economy
 
Question 6. Under a free economy, prices are

  1. Regulated
  2. Determined through a free interplay of demand and supply
  3. Partly regulated
  4. None of these

Answer:  2. Determined through a free interplay of demand and supply

Under the free economy (capitalist economy) prices are determined by the price or the market mechanism ie there is no authority to determine prices but they are decided by forces of demand and supply

Question 7. Which of the following falls under microeconomics? – –

  1. National income
  2. General price level
  3. Factor pricing
  4. National saving and investment –

Answer: 3. Factor pricing

Microeconomics studies the economic behavior of individual economic units Factor pricing is pricing of every factor and hence is a micro concept
 
Question 8. In a free-market economy when consumers increase their purchase of goods and the level of ___________ exceeds _____________  then prices tend to rise

  1. Demand, Supply
  2. Supply, Demand
  3. Prices, Demand
  4. Profits, Supply

Answer: 1. Demand, Supply

In a market (capitalist) economy prices are determined by market forces of demand and supply When the demand for goods increases the supply remains the same the prices of goods rise

Question 9. Linder the Inductive method the logic proceeds from

  1. General to particulars
  2. Particular to general
  3. Both 1 and 2
  4. None

Answer: 2. Particular to general

Under the inductive method conclusions are drawn based on the collection and analysis of facts relevant to the inquiry The logic proceeds from particular to general The generalizations are based on the observations of individual examples

Question 10. According to Robbins‘means’are

  1. Scarce
  2. Unlimited
  3. Undefined
  4. All of these

Answer: 1. Scarce

Robbins in his definition of scarcity explains that there are unlimited ends (wants) and limited means (resources) Resources are limited in nature and have alternative uses
 
Question 11. Economics is the study of

  1. How society manages its unlimited resources
  2. How to reduce our wants until we are satisfied
  3. How society manages its scarce resources
  4. How to fully satisfy our unlimited wants

Answer: 3. How society manages its scarce resources

Society has scarce resources and unlimited wants Economics is the study of how to manage scarce resources to fulfill unlimited ends Economics deals with how to make optimum utilization of scarce resources
 
Question 12. A mixed economy means 

  1. Co-existence of small and large industries
  2. Promoting both agriculture and industries in the economy
  3. Co-existence of rich and poor
  4. Co-existence of public and private sectors

Answer: 4.  Co-existence of rich and poor

A mixed economy is characterized by the presence of both the private and the public sectors Under this economy prices are determined both by planning authority and market forces

Question 13. Who defines Economics in terms of Dynamic Growth and Development?

  1. Robbins
  2. Paul A Samuelson
  3. Adam Smith
  4. None

Answer: 2. Paul A Samuelson

Economics in terms of Dynamic Growth and Development was given by Paul A Samuelson Who states that “Economics is the study of how men and society choose with or without the use of money to enjoy scarce productive resources which could have alternative uses to produce various commodities over time and to distribute them for consumption now and in the future of amongst various people and groups of society

Question 14. A Free Market- economy solves its Central Problems through

  1. Planning authority
  2. Market mechanism
  3. Both
  4. None

Answer: 2. Market mechanism

A free market economy also known as a capitalist economy has no central planning authority to decide what how and for whom to produce Such an economy uses the impersonal market forces of demand and supply or the price mechanism to solve its central problems
 
Question 15. The normative aspect of Economics is given by 

  1. Marshall
  2. Robbins
  3. Adam Smith
  4. Samuelson

Answer: 1. Marshall

The normative aspect is concerned with welfare propositions Such an aspect of economics is prescriptive and describes ‘what should be the thing’ Example questions like what should be the level of national income how the fruits of national product be distributed among people An aspect of economics given by ‘Alfred Marshall’

Question 16. Which one is not the characteristic of a capitalistic economy?

  1. Profit motive
  2. Income inequality
  3. Free Employment
  4. Collective ownership

Answer: 4. Collective ownership

The characteristic of collective ownership does not belong to a capitalistic economy The characteristic of collective ownership is that of a socialistic economy where the entire control is of the Government

Question 17. Mixed economy means

  1. All economic decisions are taken by the Central Authority
  2. All economic decisions are taken by private entrepreneurs
  3. Economic decisions are partly taken by the state and partly by private entrepreneurs
  4. None of these

Answer: 3. Economic decisions are partly taken by the state and partly by private entrepreneurs

A mixed economy is characterised by the presence of both private and public enterprises In this economy the government as well as private enterprises exist and hence economic decisions are taken by the government and private enterprises both

Question 18. A capitalistic Economy is used as the principal means of allocating resources

  1. Demand
  2. Supply
  3. Price
  4. All of the above

Answer:  3. Price
 
Question 19. Economic Problem arises when 

  1. Wants are unlimited
  2. Resources are limited
  3. Alternative uses of resources
  4. All of the above

Answer: 4 . All of the above

Economic problem arises when wants are unlimited resources are limited and resources have alternative uses These reasons give rise to basic economic problems of “what to produce” “Flow to produce” and “For whom to produce”
 
Question 20. Microeconomics is also known as

  1. Public economics
  2. Price Theory
  3. Income Theory
  4. Demand theory

Answer: 2. Price Theory

Microeconomics is also known as Price Theory.
 
Question 21. A developed economy uses techniques in the production of labour

  1. Labor-intensive
  2. Capital intensive
  3. Home-based
  4. Traditional

Answer: 2.  Capital intensive

Developed Economies have more technology so they use capital-intensive techniques in production to minimize the cost of production

Question 22. Which one is the feature of Marshall’s definition?

  1. Limited ends
  2. Scarce means
  3. Study of wealth as well as the study of man
  4. Study of allocation of resources

Answer: 3. Study of wealth as well as the study of man

Alfred Marshall pointed out that economics is on the one side a study of wealth and on the other and more important side a part of a study of man
 
Question 23. Which one in the following is not correct

  1. There are limited wants
  2. Means are scarce
  3. Resources have alternative uses
  4. Economics is science

Answer: 1. There are limited wants

According to two fundamental facts human beings have unlimited wants and the means of satisfying the wants are scarce

Question 24. Micro Economics is concerned with

  1. Consumer Behaviour
  2. Product pricing
  3. Factor Pricing
  4. All of the above

Answer: 4. All of the above

Micro-economics is concerned with:

  1. Product pricing
  2. Consumer behaviour
  3. Factor pricing
  4. Economic conditions of a section of the people
  5. Study of firms
  6. Location of an industry

Question 25. Who gave the positive aspect of science?  

  1.  Alfred Marshall
  2. AC Pigou
  3. Adam Smith
  4. Robbins

Answer: 4. Robbins

A positive or pure science analyses cause and effect relationship between variables but it does not pass value judgments This positive aspect of science was emphasized by Professor Robbins
 
Question 26. A mixed economy means

  1. Coexistence of both private and public sector
  2. Coexistence of poor and rich people
  3. Both 1 and 2
  4. None

Answer: 1. Coexistence of both private and public sector

A mixed economy is an economy that includes the best features of both the controlled economy and the market economy The most important feature of a mixed economy is the co-existence of both private and public enterprises

Question 27. Which of these is a part of microeconomics?

  1. Factor pricing
  2. National Income
  3. Balance of payment
  4. None

Answer: 1. Factor pricing

Microeconomics is the study of the economic behaviour of an individual firm or industry in the national economy It is the study of a particular unit Factor pricing relates to the pricing Of individual factors and hence is a subject of microeconomics

Question 28. Which of these is an example of macroeconomics 

  1. The problem of unemployment in India
  2. The rising price level in the country
  3. Increase in disparities of income
  4. All of the above

Answer: 4. All of the above

In macroeconomics, we study the economic behavior of large aggregates such as overall conditions of the economy total production etc Therefore all these are subject of macroeconomics

Question 29. In a capitalist economy, the allocation of resources is performed by

  1. Producers
  2. Government
  3. Planners
  4. Price mechanism

Answer: 4. Price mechanism

A capitalistic economy has no central planning authority to decide what how and for whom to produce Thus the allocation of resources is performed  by the market forces of demand and supply known as the price mechanism

Question 30. Which of the following statements is incorrect?

  1. Alfred Marshall propagated the wealth definition of Economics
  2. L Robbins introduced the “Scarcity” definition of Economics
  3. Samuelson emphasized the “growth” aspect of Economics
  4. AC Pigou believed in the “welfare” aspect of Economics

Answer: 1. Alfred Marshall propagated the wealth definition of Economics

The ‘wealth’ definition of Economics was given by Adam Smith and ‘ JB Say“An inquiry into the nature and causes of the wealth of the nations” – Adam Smith

“Science which deals with wealth” – JB Say

Question 31. Inequalities of income do not perpetuate in

  1. Socialism
  2. Mixed economy
  3. Capitalism
  4. None

Answer: 1. Socialism

The relative equality of income is an important feature of a socialistic economy Educational and other facilities are enjoyed more or less equally thus the basic causes of inequalities are removed

Question 32. Which of the following are the features of a mixed economy?

  1. Planned economy
  2. The dual system of pricing exists
  3. Balanced regional development
  4. All of the above

Answer: 4. All of the above

An economy that incorporates the features of capitalism and socialism both the economies is called a mixed economy

It has the following features:

  • A mixed economy is a planned economy where the government has a clear and definite economic plan
  • In a mixed economy, the prices are determined both by price mechanism and central planning authority Hence a dual system of pricing exists
  • There is a balanced regional development in a mixed economy as the public sector enterprises will be set up in backward areas for balanced development

Hence the answer will be all of these

Question 33. Normative Economics is based on

  1. Ethical Considerations
  2. Facts and Generalisation
  3.  What is
  4.  All of the above

Answer: 1. Ethical Considerations

Normative economics is concerned with welfare propositions It states “what should be the things” It does not deal with facts but involves value judgments The ethical aspect of economics is normative economics

Example:  What should be the wage rate level? This is a normative statement

Question 34. The dual system of pricing exists in

  1. Free market economy
  2. Socialistic economy
  3. Mixed economy
  4. None of the above

Answer: 3. Mixed economy

A mixed economy is a type of economy that combines the features of both capitalistic and socialistic economy In this economy the dual system of  pricing exists ie prices of essential commodities are determined by the government while the prices of other commodities are fixed by the price  mechanism (by the interaction of demand and supply

Question 35. In the Inductive method, logic proceeds from

  1. General to Particular
  2. Particular to General
  3. Both 1 and 2
  4. None of these

Answer: 2. Particular to General

Under the inductive method, conclusions are drawn based on the collection and analysis of facts relevant to the inquiry Here the logic proceeds  from particular to general This means generalizations are made based on facts collected

Question 36. In a capitalist economy allocation of resources is done by

  1. Producers
  2. Government
  3. Planners
  4. Price mechanism

Answer: 4. Price mechanism

In a capitalist economy there is no government intervention In this economy the resources are allocated based on the demand of the consumers Producers will produce those goods that are in demand without thinking about public welfare Hence this economy is guided by the price mechanism

Question 37. A Capitalist Economy follows the policy of

  1. Laissez- faire
  2. Regulated markets
  3. Promoting public sector
  4. None of the above

Answer: 1. Laissez- faire

One of the guiding principles of the capitalistic economy is that the economic system should be free from government interventions and be driven by  market forces Laissez-faire means allows to pass Thus the capitalistic economy follows the policy of laissez-faire
 
Question 38. ‘Economics is the science of choice-making implies

  1. No choice is to be made
  2. The choice to be made between alternative uses
  3. The choice to be made between means and ends
  4. None of the above

Answer:  2. The choice to be made between alternative uses

Robbins gave the following definition of economics “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses” Thus economics is a science of choice which is to be made between alternative uses

Question 39. Which of the following is a part of the subject matter of macroeconomics?

  1. Study of firms
  2. Aggregate profits of a firm
  3. Market demand for a product
  4. Net national product

Answer: 4. Net national product

In macroeconomics, we study the economic behavior of large aggregates such as overall conditions of the economy total production, etc Out of the given options only NNP studies the national income which is related to the entire economy
 
Question 40. A capitalist economy is by and large _____________________

  1. A closed economy
  2. A free market economy
  3. A centrally controlled economy
  4. An economy in which a government neither collects any taxes nor Incurs any expenditure

Answer: 2. A free market economy

A capitalist economy also known as- a market economy has no central planning authority to decide what how and for whom to produce Such an economy  uses the impersonal force of the market- demand and supply or the price mechanism to solve its central problems

Question 41. Deductive and Inductive methods are complementary to each other It is 1 correct

  1. Absolutely Correct
  2. Absolutely Incorrect
  3. Partially incorrect
  4. None of the above

Answer:  1. Absolutely correct

Deductive and inductive methods are not mutually exclusive and are used side by side in any scientific inquiry Conclusions drawn from the deductive  method of reasoning is verified by the inductive method of observing concrete facts of life Thus it can be said that Deductive and inductive methods  are complementary to each other is correct

Question 42. A free-market economy driving force is

  1. Profit motive
  2. The welfare of the people
  3. Rising income and levels of living
  4. None of the above

Answer: 1. Profit motive

A free market economy or a capitalist economy is one in which all the means of production are owned and controlled by private individuals for profit Thus the profit motive is the driving force of a free market economy

Question 43. “Economics is neutral between ends” The statement is given by

  1. L Robbins
  2. Mrs. Joan
  3. Alfred Marshall
  4. AC Pigou

Answer: 1. L Robbins

According to Prof Lionel Robbins, “economics is neutral between ends” Ends refer to wants Human wants are unlimited When one – want is satisfied  other wants crop up

Question 44. A system of economy in which all the means of production are owned and controlled by private individuals for profit is called

  1. Socialist Economy
  2. Capitalist Economy
  3. Mixed Economy
  4. All of the above

Answer: 2. Capitalist Economy

The capitalistic economic system is one in which all the means of production are owned and controlled by private individuals for profit In this system the government does not interfere in the management of economic affairs

Question 45. Where does the price mechanism exist?

  1. Capitalist Economy
  2. Socialist Economy
  3. Beth types of economies
  4. None of the above

Answer: 1. 1 Capitalist Economy

A capitalistic economy has no central planning authority to decide what how and for whom to produce This economy uses the impersonal forces of the market demand and supply or price mechanism to solve its central problems

Question 46. Economics which is concerned with welfare propositions is called

  1. Socialistic economics
  2. Capitalistic economics
  3. Positive economics
  4. Normative economics

Answer: 4. Normative economics

The normative aspect is concerned with welfare propositions It involves value judgements It is prescriptive in nature and describes ‘what should be the things’ Eg what should be the level of national income what should be the wage rate

Thus Normative economics is the correct option
 
Question 47. In which among the following systems the ‘right to property’ exists

  1. Mixed economy
  2. Capitalist economy
  3. Socialist economy
  4. Traditional economy

Answer: 2. Capitalist economy

Capitalism is an economic system in which all the -means of production are owned and controlled by private individuals for profit The right of private  property means that productive factors such as land factories machinery mines etc are under private ownership The owners of these factors are free  to use them in the manner they like

Question 48. Positive science only explains

  1. What is?
  2. What ought to be?
  3. What is right or wrong
  4. None of the above

Answer: 1. What is?

A positive or pure science analyses cause and effect relationship between variables but it does not pass value judgment It states  what is and not what ought to be

Question 49. Socialist Economy is also known as

  1. Mixed Economy
  2. Centrally Planned Economy
  3. Capitalist Economy –
  4. None of the above

Answer: 2. Centrally Planned Economy

A Socialist economy is also known as a centrally planned economy because there is a central authority to set and accomplish socioeconomic goals
 
Question 50. Which of the following is not a feature of a capitalist economy?

  1. Right to private property
  2. Restrictions on consumers right to choose
  3. Profit motive
  4. Freedom of enterprise

Answer: 2. Restrictions on consumers’ right to choose

The features of a capitalist economy are

  • The right of private property
  • Freedom of enterprise
  • Freedom to choice by the consumers
  • Profit motive
  • Competition
  • Inequalities of income
  • Hence restrictions on consumers’ right to choose is not a feature of a capitalistic economy

Question 51. The term “Mixed Economy” denotes

  1. Co-existence of both consumers and producers goods industries in the economy
  2. Co-existence of both private and public sectors in the economy
  3. Co-existence of both rural and urban sectors in the economy
  4. Co-existence of both large and small industries in the economy

Answer: 2. Co-existence of both private and public sectors in the economy

The term “Mixed Economy” denotes the co-existence of both private & public sectors in the economy In fact in a mixed economy there are three sectors of industries

  • Private sector
  • Public sector
  • Combined sector

Question 52. The most important function of an entrepreneur is to

  1. Innovate
  2. Bear the sense of responsibility
  3. Finance
  4. Earn profit

Answer: 1. Innovate

An entrepreneur is one of the factors of production He is the one who coordinates with other factors like land labor capital etc Various functions of entrepreneurs are decision-making managerial functions organizational functions etc while the most” important function of an entrepreneur is to innovate

Question 53. Under the Inductive method, logic proceeds from

  1. General to particular
  2. Positive to normative
  3. Normative to positive
  4. Particular to general

Answer: 4. Particular to general

Under the inductive method, conclusions are drawn based on the collection and analysis of facts relevant to the inquiry The logic in this case proceeds  from the particular to general

Question 54. The meaning of the time element in economics is

  1. Calendar time
  2. Clock time
  3. Operational time in which supply adjusts with the market demand
  4. None of the above

Answer: 3. Operational time in which supply adjusts with the market demand

Operational time in which supply adjusts with the market demand

Question 55. All wants of an individual are not of

  1. Equal importance
  2. Immediate importance
  3. Fixed importance
  4. All of the above

Answer:  1. Equal importance

All wants of individuals are not of equal importance as all cannot be fulfilled

Question 56. is another name of the production possibility curve

  1. Indifference Curve
  2. ISO-Product Curve
  3. Transformation Curve
  4. Diminishing Utility Curve

Answer: 3. Transformation Curve

PPC is also known as Production Possibility Curve Production Possibility Boundary Transformation Line/Curve

Question 57. Who is the author of “The Nature and Causes of Wealth of Nations”?

  1. Karl Marx
  2. Adam Smith
  3. J B Say
  4. A C Pigou

Answer: 2. Adam Smith

Science of wealth:

Although the activity of acquiring and increasing material wealth is as old as civilization a disciplined study of the wealth-producing activities commenced about 235 years back (in 1776) when Adam Smith the father of Economics published ‘The Nature and Causes of Wealth of Nations”

Question 58. Microeconomics does not study

  1. Consumer behaviour
  2. Factor pricing
  3. General price level
  4. Firms equilibrium

Answer: 3. General price level

Microeconomics is the study of particular firms particular households individual price wage income individual industries and particular commodities

  • We mainly study the following
  • Product Pricing
  • Consumer Behaviour
  • Factor Pricing
  • Economic conditions of a section of the people
  • Study of firms
  • Location of industry

Question 59. Find out the correct statement

Higher prices lower the quality demanded of a product is a – normative statement

  • Micro and macro-economics are interdependent
  • In a capitalist economy, the economic problems are solved by the planning commission
  • In the deductive method, the logic proceeds from the particular to the general

Answer: 2.  Micro and macro-economics are interdependent

Micro and macroeconomics are interdependent because they both play a vital and in most cases, they play complementary roles Ex.National income cannot grow unless the production in individual firms and factories rises

Question 60. Which of the following illustrates a decrease in unemployment using the PPF?

  1. A movement down along the PPF
  2. A rightward shift of the PPF
  3. A movement from a point on the PPF to a point inside the PPF
  4. A movement from a point inside the PPF to a point on the PPF

Answer: 4. A movement from a point inside the PPF to a point on the PPF

A movement of point inside the PPF to on the PPF indicates the actual growth in an economy and wherever there is a decrease in unemployment it shows that
an economy is making progress towards growth by optimizing its full resources

Question 61. Microeconomics is the study of

  1. Individual parts of the economy
  2. The economy as a whole
  3. Choice making
  4. Development of the economy

Answer: 1. Individual parts of the economy

The term microeconomics is derived from the Greek word micros meaning “small” In microeconomics we study the economic behaviour of an individual  firm or industry It is thus a study of a particular unit rather than all the units combined

Question 62. Freedom of choice is the advantage of

  1. Socialism
  2. Capitalism
  3. Mixed Economy
  4. Communism

Answer:  2. Capitalism

Freedom of choice is the advantage of capitalism

Question 63. The definition of economics given by Robbins does not deal with one of the following aspects Indicate that aspect

  1. Scarce means
  2. Limited ends
  3. Alternative uses
  4. Economics is a science

Answer: 2. Limited ends

The definition of economics given by Robbins does not deal with limited ends as in the definition he deals with unlimited ends

Question 64. An economic system in which all means of production are owned and controlled by private individuals for profit is called

  1. Mixed Economy
  2. Socialist Economy
  3. Capitalist Economy
  4. Developed Economy –

Answer: 3. Capitalist Economy

A capitalist economy is an economic system in which all means of production are owned and controlled by private individuals for profit

Question 65. In which of the following methods conclusions are drawn based on the collection and analysis of facts?

  1. Deductive method
  2. Scientific method
  3. Inductive method
  4. Experimental method

Answer:  3. Inductive method

Inductive Method Under this method conclusions are drawn based on the collection and analysis of facts relevant to the inquiry The logic in this case proceeds from particular to general The generalizations are based on observation of individual examples

Question 66. Which Economic System is described by Schumpeter as ‘capitalism in the oxygen tent’?

  1. Laissez-Faire Economy
  2. Command Economy
  3. Mixed Economy
  4. Agrarian Economy

Answer: 3. Mixed Economy

Mixed economy is described by Schumpeter as “Capitalism in the oxygen tent” According to him it is only a trick of the capitalists to cheat the working class by offering them some temporary advantages like social security upliftment of the depressed classes etc Thus option c is correct

Question 67. The production Possibility Curve (PPC) is also known as

  1. Indifference Curve
  2. Supply Curve
  3. Transformation Curve
  4. Demand Curve

Answer: 3. Transformation Curve

The production-possibility curve is also known as the transformation curve It is a graph that shows the different rates of production of two goods that an individual or group can efficiently produce with limited productive resources

Question 68. The Central problem in every economic society is

  1. To ensure a minimum level of income for every individual
  2. To allocate scarce resources in such a manner that society’s unlimited wants are satisfied in the best possible manner
  3. To ensure that production occurs in the most efficient manner
  4. To provide jobs to every job seeker

Answer: 2. To allocate scarce resources in such a manner that society’s unlimited wants are satisfied in the best possible manner.

Every economic system be it capitalist socialist or mixed has to deal with this central problem of scarcity of resources relative to wants for The central economic problem is further

Divided into four basic economic problems these are:

  1. What to produce
  2. How to produce
  3. For whom to produce
  4. What provisions (if any) are to be made for economic growth?

Question 69. The Socialist Economy was propounded by

  1. Karl Marx
  2. Samuelson
  3. AC Pigou
  4. Adam Smith (1 mark)

Answer: 1.  Karl Marx

Karl Marx gave the theory of socialist economy

Question 70. The concept of Business Economics was given by

  1. Joel Dean
  2. Alfred Marshall
  3. Adam Smith
  4. L Robbins

Answer: 1. Joel Dean

The concept of Business economics was given by Joel Dean

Question 71. Features of the book Wealth of Nations

  1. It was the first book written on economics
  2. It was created in 1776
  3. It was also known as the ‘wealth of nations’
  4. All of the above

Answer: 4. All of the above

Adam Smith was the father of Economics He wrote the book ‘the Nature and Causes of Wealth of Nations in 1776 This book was also known as ‘Wealth of  Nations’ He defined economics in ‘An Inquiry into the Nature and Causes of Wealth of Nations’

Question 72. In India, a Mixed Economy exists due to

  1. Coexistence of public sector and private sector
  2. Individual forces of demand and supply
  3. Orders by government
  4. None of these

Answer: 1. Coexistence of public sector and private sector

There are three types of economy These are

  1. Capitalist economy (private enterprises)
  2. Socialist economy (governed by government)
  3. Mixed economy (public and private enterprises)

A mixed economy means a co-relation or co-existence of public and private sector

Question 73. Which economic system is described by Schumpeter as capitalism in the oxygen tent?

  1. Laissez-faire Economy
  2. Command Economy
  3. Mixed Economy
  4. Agrarian Economy

Answer: 3. Mixed Economy

A mixed economy is described by Schumpeter as ‘capitalism in an oxygen tent’ According to him it is only a trick of capitalism to cheat the working class by offering them some temporary advantages like social security upliftment of depressed classes etc

Question 74. A capitalistic Economy is used as the principal means of allocating resources

  1. Demand
  2. Supply
  3. Price
  4. All of the above

Answer: 3. Price

Price is the principal means of the economy while it is not so in a is characteristic is capitalist allocating resources in a capitalist socialist economy Price Mechanism economy

Question 75. Under the inductive method, the logic proceeds from

  1. General to particular
  2. Positive to narrative
  3. Normative to positive
  4. Particular to general

Answer: 4. Particular to general

The inductive Method is based on facts and in this method logic proceeds from? particular to general White deductive method is based on assumptions and in this logic proceeds from general to particular

Question 76. Human wants are in response to satisfy their wants.

  1. Unlimited
  2. Limited
  3. Scarce
  4. Multiple

Answer: 1. Unlimited

Human beings have unlimited wants and the means to satisfy these unlimited wants are relatively scarce’ from the subject matter of  Economics

Question 77. Price Mechanism is the main feature of which economy?

  1. Capitalistic Economy
  2. Mixed Economy
  3. Socialist Economy
  4. All of the above

Answer: 1. Capitalistic Economy

Capitalism is self-regulating and works automatically through the price mechanism

Question 78. Business Economics is also known as?

  1. Applied Economics
  2. Managerial Economics
  3. Micro Economics
  4. All of the above

Answer: 2. Managerial Economics

Business economics also referred to as managerial economics generally refers to the integration of economic theory with business practice

Question 79. A business economy involves the theory of Business economics with

  1. Normative Economics
  2. Business practices
  3. Micro Economics
  4. Macro Economics

Answer: 2. Business practices

Business economy Involves theory of business with business practices (application of theory)

Question 80. Which is not included in Economics?

  1. Family Structure
  2. Managerial Economics
  3. Micro Economics
  4. Macro Economics

Answer: 1. Family Structure

Family structure in no sense affects economics therefore it is not included in economics

Question 81. Business Economics involves the elements of

  1. Micro Environment
  2. Macro Environment
  3. Both 1 and 2
  4. None of the above

Answer: 3. Both 1 and 2

Business economics involves the economy as a whole and therefore elements of macroeconomics and microeconomics are included in it

Question 82. In which economy market and government both play an important role?

  1. Mixed economy
  2. Socialistic economy –
  3. Capitalistic economy
  4. Business Economy

Answer: 1. Mixed economy

The mixed economic system depends on the market and government for the allocation of resources every economy in the real world makes use of both market and government and therefo4. re is a mixed economy in its nature;

Question 83. Which factor is included in business Economics?

  1. Business Economics is an art
  2. Interdisciplinary in nature
  3. Normative in nature
  4. All of the above

Answer: 4. All of the above

Factors of business economics are:

  • It is a science
  • It is normative
  • It is Interdisciplinary
  • It is pragmatic in approach

Therefore Answer will be all of the above

Question 84. Which out of these are the features of capitalism?

  1. Profit motive
  2. Human welfare
  3. Work through the price mechanism
  4. All of These

Answer: (1) and (3)

Features of a capitalist economy:

  1. Profit motive
  2. Work through the price mechanism
  3. A high degree of operative efficiency

Therefore human welfare is not a feature of the capitalist economy

Question 85. Business Economics is

  1. Normative in nature
  2. Interdisciplinary in nature
  3. Both
  4. None

Answer: 3. Both

The nature of business economics can be explained by the following points

  • Business Economics is a science
  • It is based on microeconomics and also incorporates the elements of macroeconomics
  • It is normative ie it involves value judgments ie it also deals with ‘what should be’
  • Interdisciplinary in nature ie it incorporates tools from other disciplines including Mathematics Operational Research Finance Marketing etc

Question 86. Socialism ensures

  • Rapid growth and balanced development
  • Right to work
  • Incentives for efficient economic decisions
  • Both 1 and 2

Answer:  4. Both 1 and 2

  • In a socialist economy production and distribution of goods are aimed at maximising the welfare of the community as a whole
  • It ensures rapid and balanced economic development as the central planning authority efficiently coordinates all resources according to  predetermined priorities
  • It also ensures the right to work and a minimum standard of living to all people However no importance is given to personal efficiency  and  productivity

Question 87. Macroeconomics includes

  1. Product pricing
  2. Consumer behavior
  3. External value of money
  4. Location of industry

Answer: 3. External value of money

Macroeconomics is the study of the overall phenomena or the economy as a whole rather than its parts It includes

  • National income and national output
  • General price level and interest rates ”
  • Balance of trade and balance of payment
  • The overall level of savings and investment
  • The level of employment and rate of economic growth
  • The external value of the currency

Question 88. Exploitation and inequality will be more in

  1. Socialism
  2. Capitalism
  3. Mixed
  4. All of the above

Answer: 2. Capitalism

  • In a capitalist economy, all means of production are owned and controlled by private individuals for profit
  • There is vast economic inequality and social injustice which reduces the aggregate economic welfare of society as a whole
  • In a socialist economy there is an equitable distribution of wealth and equal opportunities for maintaining economic and social justice In a mixed economy there is the co-existence of both the public and private sectors which prevents exploitation and inequality Thus among the three inequalities and exploitations are the characteristics of capitalism-

Question 89. Shyam: This year due to heavy rainfall my onion crop was damaged

Krishna: Climates affect crop yields Some years are bad others are good

Hari:  Don’t worry – The price increase will compensate for the fall in quantity supplied

Radhe: The Government ought to guarantee that our income will not fall

In this conversation, the normative statement is made by

  1. Shyam
  2. Krishna
  3. Hari
  4. Radhe

Answer: 4.  Radhe

A normative statement involves value judgements and suggests what ought to be or what should be a particular course of action under given circumstances Statements made by

Shyam Krishna and Hari are positive as they merely show cause-and-effect relationships and do not involve value judgment However Radhe’s statement shows a particular course of action should be taken by stating that the government ought to guarantee that
income will not fall

Question 90. Which of the following is correct?

  1. 49% FDI is allowed in defense production
  2. 49% FDI is allowed in private-sector banking
  3. 74% FDI is now allowed in multi-brand retail
  4. 100% FDI is allowed in insurance

Answer: 2. 49% FDI is allowed in private-sector banking

49% FDI is allowed in private-sector banking

Question 91. A capitalist economy consists of

  1. Central planning authority
  2. A mechanism to decide what how and for whom to produce
  3. Both 1 and 2
  4. None of the above

Answer: 2. A mechanism to decide what how and for whom to produce

A capitalist economy does not have a central planning authority to decide what how and for whom to produce It uses the impersonal forces of the market
demand and supply or the price mechanism to solve its central problems

Question 92. As per the World Bank’s International Debt Statistics 2017, India continues to be amongst the _______________________ countries

  1. More debt
  2. Less debt
  3. More vulnerable
  4. Less Vulnerable

Answer: 4. Less Vulnerable

A normative statement involves value judgments and suggests what ought to be or what should be a particular course of action under given circumstances Statements made by Shyam Krishna and Hari are positive as they merely show cause-and-effect relationships and do not involve value judgment However Radhe’s statement shows a particular course of action should be taken by stating that the government ought to guarantee that income will not fall

Question 95. Due to the recession, the employment rate and output

  1. Rises ; rises
  2. Falls; falls
  3. Rises ; falls
  4. Falls ; rises

Answer: 2. Falls; falls

During the contraction or recession phase of the business cycle there is a fall in levels of investment and employment The decrease in demand pulls down prices investors’ confidence is at its lowest Employment rate falls and so is the output

Question 96. Freedom of choice is the advantage of

  1. Socialism
  2. Capitalist-
  3. Mixed economy
  4. None of the above

Answer: 2. Capitalist

In a Capitalist economy, consumers benefit due to competitive forces a variety of good quality products, and affordable prices This not only ensures freedom of choice but also maximum satisfaction to the consumers

Question 97. Refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity such that if they are removed the total level of output remains unchanged

  1. Voluntary
  2. Disguised
  3. Structural
  4. Technological

Answer:  2. Disguised

Disguised unemployment A kind of unemployment where more people are engaged in work than required Disguised refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity such that if they are removed the total level of output remains unchanged

Question 98. Socialist economy is ____________________________

  1. Self- regulation
  2. Profit Oriented
  3. Command economy
  4. Allocation of resources as per market requirements

Answer: 3. Command economy

A socialist economy is also called a “Command Economy” or “Centrally Planned Economy” This economy will not provide incentives to hard work in the form of profit Here resources are allocated according to the commands of the central planning authority rather than market requirements

Question 99. A study of have increase in the corporate tax rate will affect national

  1. Unemployment rate is
  2. Macroeconomics
  3. Descriptive economics
  4. Microeconomics
  5. Normative economics

Answer: 1. Unemployment rate is

Macroeconomics is the study of the overall economic phenomena or the economy as a whole rather than its parts Therefore a study of have increase in the corporate tax rate will affect the national unemployment rate is of Macro environment

Question 100. A capitalist economy is used as a principal means of allocating resources

  1. Demand
  2. Supply
  3. Efficiency
  4. Price

Answer:  1. Demand

A capitalistic economy uses price as a principal means of allocating resources It is the economic system in which all the resources are owned and  controlled by private individuals for

Question 101. In a market economy, all assets are held by

  1. Investors
  2. Privately
  3. Government
  4. Jointly by government

Answer: 2. Privately

In the market, all assets are held by private owners as they fix their prices and sell the goods at their own fixed price So all the  assets are held by private owners in the market

Question 102. The branch of economic theory that deals with the problem of the allocation of resources

  1. Microeconomics
  2. Macroeconomics
  3. Econometrics
  4. None

Answer: 1.  Microeconomic

The branch of economic theory that deals with the problem of allocating resources

Question 103. Larger production of ______________________________ goods would lead to higher production in the Future

  1. Consumer goods
  2. Capital goods
  3. Agricultural goods
  4. Public goods

Answer: 2.  Capital goods

Question 104. Which of the following is not within the scope of business economics?

  1. Capital budgeting
  2. Risk analysis
  3. Business cycle
  4. Accounting Standards

Answer: 4. Accounting Standards

Business economics may be defined as the use of economic analysis to make business decisions involving the best use of..an organization’s scarce resources. It involves linear programming, regression analysis, capital budgeting, break-even analysis and cost analysis.

Accounting Standards is not within the scope of business economics.

Question 105. Which is the first book of Economics named as

  1. The Wealth of Nations
  2. Economics
  3. Nations of Wealth
  4. Political Economy

Answer:  1. The Wealth of Nations

The term Economics owes its origin to the Greek word ‘Oikonomia’ which means household’. Till the 19th century, economics was known as ‘Political Economy’. The book named ‘An inquiry into the

Nature and Causes of the Wealth of Nations (1776) usually abbreviated as The Wealth of Nations by Adam Smith is considered as the first modern work of Economics.

Question 106. Which type of scarcity is referred to in economics

  1. Relative scarcity
  2. Absolute scarcity
  3. Both (1) and (2)
  4. None

Answer:  1. Relative scarcity

The scarcity in economics is referred as relative scarcity. As the resources are limited and these resources have alternative uses and wants of people are unlimited. Therefore, all wants cannot be satisfied.

Financial resources can be used for many purposes. If the resources were unlimited, people would be able to satisfy all their wants and there would be no economic problem. Alternatively, if a resource has only a single use, then all economic problems would not arise.

Question 107. Consumer sovereignty is which of the following characteristics?

  1. Capitalist economy
  2. Mixed economy
  3. Socialist economy
  4. Democracy

Answer: 1. Capitalist economy

Consumer Sovereignty is the characteristics of a capitalist economy which states that consumer is the king under capitalism. Consumer sovereignty means that buyers ultimately determine which goods and services will be produced and in what quantities. Consumer have unbridled freedom to choose the goods and services which they would consume. In other words, based on the purchases they make, consumers decide how the economy’s limited resources are allocated.

Question 108. Who defines Economics in terms of Dynamic growth and development?

  1. Robbins
  2. Paul A Samuelson
  3. Adam Smith
  4. None

Answer:  2. Paul A Samuelson

Economics in terms of Dynamic Growth and Development was given by Paul A. Samuelson. Who states that “Economics is the study of how men and society choose, with or without the use of money to enjoy scarce productive resources which could have alternative uses, to produce various commodities over time and to distribute them for consumption now and in the future of amongst various people and groups of society

Question 109 ____________ Economics explain economic phenomena according to their cause and effects

  1. Normative
  2. Empirical
  3. Positive
  4. Applied

Answer: 3. Positive

A positive or pure science analyses cause and effect relationship between variables but it does not pass value judgments

Question 110. The study of the behavior of different individual organizations within an economic system is known as

  1. Micro Economics
  2. Macro Economics
  3. Welfare Economics
  4. None

Answer: 1. Micro Economics

Microeconomics is the study of the economic behavior of an individual firm or industry in the national economy it is the study of a particular unit

Question 111. The nature of Business economics is

  1. Positive in nature
  2. Pragmatic
  3. Pure science-
  4. Independent

Answer: 2. Pragmatic

Micro – Economics is abstract and purely theoretical and  analyses economic phenomena under unrealistic assumptions In contrast Business Economics is pragmatic in its approach as it tackles practical problems which the firms face in the real world

Question 112. Economics is a term for Dynamic Growth and development defined by

  1. Alfred Marshall
  2. Adam Smith
  3. Robbins
  4. Paul A Samuelson

Answer: 4. Paul A Samuelson

The term Dynamic Growth and development is defined by the famous author Mr Paul A Samuelson

Question 113. A socialistic economy is also called as

  1. Profit oriented economy
  2. Self-regulatory economy –
  3. Centrally planned economy
  4. Unorganized economy

Answer:  3. Centrally planned economy

A socialist economy is also called as “Command Economy” or a “Centrally Planned Econdmy” Here the resources are allocated according to the commands  of a central planning authority and therefore market forces have no role in the allocation of resources

Question 114. In a capitalistic economy and will be more

  1. Inequalities exploitation
  2. Exploitation equalities
  3. Equalities Nonexploitation
  4. Non-exploitation inequalities

Answer: 1. Inequalities exploitation

Capitalism can also lead to inequality which may be seen as unfair For example a firm may develop monopoly power Therefore capitalists with access to private property can exploit – their monopoly power to  make a much higher profit than other people in society inheritance

Question 115. In which economy cost-benefit analysis is used to The fundamental questions of the economy?

  1. Mixed economy
  2. Socialistic economy
  3. Capitalistic economy
  4. Regulatory economy

Answer:  1. Mixed economy

In a mixed economy, all the central problems of an economy is solved keeping in mind the cost of the factors of production with economic gains and  social welfare

Question 116. A system of economy in which all the means of production are owned and controlled by private individuals for profits is called

  1. Socialist economy
  2. Capitalist economy
  3. Mixed economy
  4. All of these

Answer:  2. Capitalist economy

Capitalistic is an economic system in which all the means of production are owned and controlled by private individuals for profit The government do not interfere in the management of economic affairs under this system –

Question 117. In which economic system production and distribution of goods and services aimed at maximizing the welfare of the community as a whole?

  1. Capitalistic economy
  2. Normative
  3. Mixed
  4. Socialist economy

Answer: 4. Socialist economy

In a socialist economy production and distribution of goods are  aimed at maximising the welfare of the community as a whole It also ensures right to work and a minimum standard of living to all people However no importance is given to personal efficiency and productivity-

Question 118. Are responsible for all economic problems

  1. Unlimited wants
  2. Alternative resource
  3. Scarcity of resource
  4. Others

Answer: 3. Scarcity of resource

Scarcity of resources is responsible of all economic problems because if sufficient economic resources are available then all problems will be automatically solve

Question 119. The capitalist system offers incentives for

  1. Efficient business decisions
  2. Efficient government decisions
  3. Efficient non-government decisions
  4. Efficient economic decisions

Answer: 4. Efficient economic decisions

Efficient economic decisions the capitalist system offers incentives for efficient economic decisions

Question 120. Macro-economic is also called economics

  1. Applied
  2. Aggregate
  3. Micro
  4. Experimental

Answer: 2. Aggregate

Aggregate, A macro economy is also called as Aggregate economy

Question 121. The book “Wealth of Nations” was written by

  1. Alfred Marshall
  2. John Robinson
  3. Adam Smith
  4. Robert Malthus

Answer: 3. Adam Smith

Adam Smith: The book Wealth of Nations was written by ‘Adam Smith’

Question 122. Rama:  My com harvest this year is poor.

Manoj: Don’t worry Price increase will compensate for the fall in quantity supplied

Meera: Climate affects crop yield Some years are bad others are good

Bharti:  The Government ought to guarantee that our income will not

  1. Rama
  2. Manoj
  3. Meera
  4. Bharathi

Answer: 4.  Bharathi

The normative statement is made by Bharti which means what ought to be.

Question 123. In a mixed economy, there are sectors of industries

  1. Two
  2. Three
  3. Four
  4. Five

Answer:  2. Three

Three In a mixed economy, there are three sectors of industries

Question 124. An economy exists because of two basic facts ie

  1. Human wants are limited and resources are unlimited
  2. Human wants are unlimited and resources are unlimited
  3. Human wants are unlimited and resources are scare
  4. Human wants are limited and resources are abundant

Answer: 3. Human wants are unlimited and resources are scare

  • Human wants are unlimited and resources are scarce
  • Two basic facts of economic
  • Human wants are unlimited
  • Resources are scarce

Question 125. An economy is called a capitalist economy when is given

  1. Right to private property
  2. Freedom of government interference «
  3. Freedom of business choices
  4. Discrimination

Answer: 1. Right to private property

Right to private property. An economy is called a capitalist economy when the right to private property is given

Question 126. The coexistence of the public and private sectors is the feature of

  1. Capitalist Economy
  2. Mixed Economy
  3. Socialist Economy
  4. Federal Economy

Answer: 2. Mixed Economy

Mixed economy: The coexistence of public and private sectors is a feature of a mixed  economy

Question 127. Which one of the areas comes under macro-economics?

  1. Product pricing
  2. Consumer behaviour
  3. The general price level and interest rates
  4. Economics conditions of a Section of people

Answer: 3. The general price level and interest rates

The general price level of interest rates the general price level of interest rate comes under macroeconomics

Question 128. Laissez-Faire economy is also known as

  1. Capitalist economy
  2. Socialist economy
  3. Mixed economy
  4. Communist economy

Answer: 1. Capitalist economy

A capitalist economy, a Laissez-faire economy is also called as capitalist economy

Question 129. In economics, we use the term scarcity to mean

  1. Absolute scarcity and lack of resources in less developed countries
  2. Relative scarcity ie scarcity about the wants of the society
  3. Scarcity during times of business failure and natural calamities
  4. Scarcity caused on account of excessive consumption by the rich

Answer: 2. Relative scarcity ie scarcity about the wants of the society

Relative scarcity ie scarcity about wants of the society In economics we use the term scarcity to mean relative scarcity which is the scarcity about wants of the society

Question 130. Microeconomics is also known as

  1. Public economics
  2. Price Theory
  3. Income Theory
  4. Demand theory

Answer: 2. Price Theory

Price Theory – Microeconomics is also known as price theory (self-explanatory)

Question 131. The Famous book abbreviated as “The Wealth of Nations” which is also considered the first modern work of Economics was written by

  1. Frederic Engels
  2. Karl Marx
  3. David Ricardo
  4. Adam Smith

Answer: 4. Adam Smith

‘The Wealth of Nations’ given by Adam Smith is considered the first modern work of economics

Question 132. The economic system in which the production and distribution of goods are aimed at maximizing the welfare of the community as a whole is known as

  1. Capitalism
  2. Socialism
  3. Mixed economy
  4. Communist economy

Answer: 2. Socialism

In a socialistic economy, there will be better utilization of resources and it ensures maximum production Equitable distribution of goods or wealth for  all helps to maintain economic and Social Welfare

Question 133. The Central Economics Problem does not deal with which of the following economic problems?

  1. What to produce?
  2. How to produce?
  3. For whom to produce?
  4. Where to produce?

Answer: 4. Where to produce?

The Central economic problem is further divided into four basic economic problems These are-

  1. What to produce?
  2. How to produce?
  3. For whom to produce?
  4. What provisions are to be made for economic growth?

Question 134. The study of the behavior of different individuals and organizations within an economic system is called

  1. Industrial Economics
  2. Macro Economics
  3. Micro Economics
  4. Welfare Economics

Answer: 3. Micro Economics

Microeconomics is the study of the behavior of different  individuals and organizations within the economic system In  other words microeconomics examines how individual units  make decisions as to how efficiently allocate their scarce  resources

Question 135. The concept of a socialist economy was propounded by

  1. Karl Marx and Adam Smith
  2. Frederic Engels and Adam Smith
  3. Frederic Engels
  4. Karl Marx and Frederic Engels

Answer:  4. Karl Marx and Frederic Engels

The concept of a socialist economy was propounded by Karl Marx and Frederic Engels In this economy material means of production ie Factories mines  capital etc are owned by the whole community represented by the state A socialist economy is also called a “Command economy” or “Centrally Planned Economy”

Question 136. Which of the following is not a study of Macroeconomics?

  1. Consumer behaviour
  2. National Income
  3. General Price Level
  4. Level of Employment

Answer: 1. Consumer behavior

Consumer behavior is not a study of macroeconomics Macroeconomics is the study of overall economic phenomena or economy as the whole rather than  its parts In macroeconomics we study the behavior of large economic aggregates such as overall levels of output

Question 137. Which one of the following is not the scope of business economics?

  1. Cost Standard
  2. Cost Analysis
  3. Demand Analysis
  4. Inventory Management

Answer: 1. Cost Standard

The scope of Business Economics is:

  • Demand analysis
  • Cost analysis
  • Inventory management
  • Market structure and pricing policies
  • Resource allocation
  • Profit analysis
  • Risk and uncertainty analysis

Question 138. Which of the following statements is correct?

  1. A mixed economy is not always a golden between capitalism and socialism
  2. Socialistic economy is not always a golden path between mixed and capitalism
  3. Capitalism economy is not always a golden path between mixed and socialism
  4. A mixed economy is always a golden path between capitalism and socialism

Answer: 1. A Socialistic economy is not always a golden path between mixed and capitalism

A mixed economy is not always a ‘golden path’ between capitalism and socialism It suffers substantial uncertainty mixed economy is characterised by excessive control by the state resulting in reduced intensive constrained growth of the private sector and poor implementation and lack of efficiency.

Question 139. The central economic problem of an economy arises due to;

  1. Scarcity of resources related to their wants
  2. Co-existence of private and public sector
  3. Govt interference in economic activities –
  4. Federal structure of the constitution

Answer: 1. Scarcity of resources related to their wants

Central economic problem of an economy arises due to scarcity of resources related to their wants

Question 140. Business Economics is essentially a component of Applied Economics as it includes the application of selected quantitative techniques which technique is not included in it?

  1. Regression analysis
  2. Economic analysis
  3. Capital budgeting
  4. Linear programming

Answer: 2. Economic analysis

Business Economics is essentially a component of Applied Economics as it includes the application of selected quantitative techniques such as linear programming regression analysis capital  budgeting break-even analysis and cost analysis

Question 141. Business economics is pragmatic in its approach because?

  1. It tackles practical problems that the firm faces in real world
  2. It tackles practical problems that the firm faces due to WTO policies
  3. U tackles practical problems which the firms face due to the lack of directors
  4. Business economics is abstract and purely theoretical

Answer: 1. It tackles practical problems that the firm faces in real world

Business economics is pragmatic in its approach because Micro Economics is abstract and purely theoretical and analyzes economic phenomena under unrealistic assumptions and it tackles practical problems that the firm faces in the real world

Question 142. Socialist Economy is also known as

  1. Private Economy
  2. Consumer Economy –
  3. Centrally Planned Economy
  4. Mixed Economy

Answer: 3. Centrally Planned Economy

A socialist economic system can also be called a command economy centrally planned economy or controlled economy because the means of production and distribution are owned controlled and regulated by the public either through the state or through cooperatives

Question 143. The term socialist economy was coined by

  1. Alfred Marshall
  2. Albert Einstein
  3. Joel Dean
  4. Karl Marx and Friedrich Engels

Answer: 4. Karl Marx and Friedrich Engels

By the late 19th century after the work of Karl Marx and his collaborator Friedrich Engels socialism had come to signify opposition to capitalism and advocacy for a post-capitalist system based on some form of social ownership of the means of production

Question 144. The most important feature of a capitalist economy is ___________________________

  1. State-run-economy
  2. Competition
  3. Inefficient allocation of resources
  4. Socialism

Answer: 2. Competition

Competition Competition is the most important feature of the capitalist economy Competition brings out the best among buyers and sellers and results in the efficient use of resources

Question 145. Mr Rohit invited a consultant to know staff requirements consumer behaviour and product pricing The approach consultant is looking-

  1. Micro Economics
  2. Applied Economics
  3. Macro Economics
  4. Econometrics

Answer:  1. Micro Economics

Microeconomics is the study of what is likely to happen – (tendencies) when individuals make choices in response to changes in incentives prices resources and/or methods of production These groups create the supply and demand for  resources using money and interest rates as a pricing mechanism for coordination

Question 146. Which of the following is not included in Microeconomics?

  1. Wages of workers in the steel industry
  2. Location of a particular firm
  3. General pricing level in the market
  4. Price of a product

Answer:  3. General pricing level in the market

The general pricing level in the market is not included in microeconomics Business Economics makes use of microeconomic analysis such as demand analysis  and forecasting production and cost Analysis inventory management market structure and pricing policies resource allocation theory of capital and  investment decisions profit analysis and risk and uncertainty analysis

Question 147. A mixed economy refers to ________

  1. All economic decisions are taken by the central authority
  2. All economic decisions are taken by private entrepreneurs
  3. Co-existence of both private and public sector
  4. None of these

Answer: 3. Co-existence of both private and public sector

A mixed economy refers to the co-existence of both private and public sectors The mixed economic system depends on both markets  and governments for the allocation of resources every economy in the real world makes use of both markets and governments and therefore is a mixed economy in its nature

Question 148. Which of the following is not within the scope of Business Economics?

  1. Capital Budgeting
  2. Risk Analysis
  3. Business cycle
  4. Accounting Standards

Answer: 4. Accounting Standards

Accounting standards are not within the scope of business economics The scope of Business Economics is quite wide It covers most of the practical problems a manager or a firm faces There are two categories of business issues to which economic theories can be directly applied namely

Internal issues or operational issues (this can be solved using microeconomics) – External issues or environmental issues (this can be solved using macroeconomics)

Question 149. Which are the areas that come under Macroeconomics?

  1. Demand for a firm’s product
  2. General price level and interest rates
  3. Location of Industry
  4. Price of a product

Answer: 2. General price level and interest rates

A few areas that come under Macro Economics are

  • National Income and National Output
  • The general price level and interest rates
  • Balance of trade and balance of payments ~
  • The external value of the currency
  • The overall level of savings and investment; and
  • The level of employment and rate of economic growth

Question 150. Economics is

  1. Driven by profit
  2. Driven by sentiments
  3. Driven by emotions
  4. Driven by Altruism

Answer: 1. Driven by profit

In turn, production tends to increase to satisfy the demand since producers are driven by profit Hence economics is driven by profits

Question 151. Which of the following is a demerit of capitalism

  1. There is the precedence of property rights over human rights
  2. It functions in the domestic framework’
  3. The high degree of operative efficiency
  4. None of these

Answer: 1. There is the precedence of property rights over human rights

Private property rights are central to a capitalist economy its execution and its legal defenses Capitalism is built on the free exchange of goods and services between different parties and nobody can rightfully trade property they do not own.

Conversely, property rights provide a legal framework for prosecuting – aggression against non-voluntary means of acquiring resources; there is no need for capitalist trade in a society where people could simply take from others what they want by force or the threat of force

Question 152. The scarcity definition in economics in given by

  1. Lipsey
  2. Adam Smith
  3. JB says
  4. Robbins

Answer:  4. Robbins

The scarcity definition was given by Prof Lionel Robbins in his book ‘An Essay on the Nature and Significance of Economic Science1 published in 1932 He stated “Economics as the science which studies human behavior as a relationship between ends and scarce means which have alternate uses”

Question 153. Normative economics can be explained through

  1. Fairness to tax
  2. Incidence to tax
  3. Effect of tax on incentive to work
  4. None of these

Answer: 1. Fairness to tax

Normative economics can be explained through fairness to the tax

Normative economics (as opposed to positive economics) is a part of economics whose objective is fairness or what the outcome of the economy or goals of public policy ought to be Economists commonly prefer to distinguish normative economics (“what ought to be” in economic matters) from positive  economics (“what is”)

Question 154. Socialist Economy is also known as

  1. Private Economy
  2. Consumer Economy
  3. Command Economy
  4. Mixed Economy

Answer: 3. Command Economy

A Socialist economy is also known as a “command economy” or “centrally planned economy”

Question 155. Predominance of bureaucracy under which system?

  1. Mixed Economy
  2. Socialist Economy
  3. Capital Economy –
  4. None of the above

Answer:  2. Socialist Economy

A Socialist economy involves the predominance of bureaucracy resulting in inefficiency and delays

Question 156. Find the correct statement

  1. A mixed economy is not a golden path between a socialist & capitalist economy
  2. A Socialist economy is not a golden path between a mixed & capitalist economy
  3. The capitalist economy is not a golden path between a socialist economy & mixed economy
  4. None of the above

Answer: 1. A Mixed economy is not a golden path between a socialist & capitalist economy

A mixed economy is not always a golden path between a socialist and capitalist economy Sometimes it is very difficult to maintain a proper balance between the public and private sectors

Question 157. Microeconomics is also known as

  1. Public economics
  2. Price Theory
  3. Income Theory
  4. Demand theory

Answer: 2. Price Theory

Price Theory: Microeconomics is also known as price theory (self-explanatory)

158. Normative science refers to

  1. What to Produce
  2. How to Produce
  3. Whom to Produce
  4. What should be

Answer: 4. What should be

Normative science is prescriptive It involves value judgments It is prescriptive in nature and suggests ‘what should be’ a particular course of action in different circumstances

Question 159. Business is Pragmatic in approach

  1. True
  2. False
  3. None of the above
  4. Uncertain

Answer:  1. True

Business economics is pragmatic in its approach as it tackles practical problems which the firms face in the real world

Question 160. Central problems of economics –

  1. Scarcity of resources
  2. Poverty
  3. Unemployment
  4. All of the above

Answer: 1. Scarcity of resources

The central problem of the economy is the scarcity of resources The resources are limited society has to decide the central problem of scarcity of resources

Question 161. Business economics being in approach -tackles  practical problems

  1. Interdisciplinary
  2. Normative
  3. Positive
  4. Pragmatic

Answer: 4. Pragmatic

Business economics is pragmatic in approaching practical problems and deals with them on a practical and theoretical basis.

Question 162. _________________________________economic system is self-regulating and run by invisible hands

  1. Mixed
  2. Socialistic
  3. Capitalistic
  4. Planned

Answer:  3. Capitalistic

Capitalism is a self-regulating economy and works automatically through price mechanism The “invisible hands” is a metaphor for how in a free market economy self-interested individuals operate through a system of mutual interdependence

Question 163. Indian economy is classified as

  1. Mixed economy
  2. Capitalist economy
  3. Socialist economy
  4. Free market economy

Answer: 1. Mixed economy

India has a mixed economy therefore public as well as private entities co-exist

Question 164. The basic problem of scarcity gives rise to

  1. Technological problems
  2. Social problems
  3. Cultural problems
  4. Economic problems

Answer: 4. Economic problems

The basic problem of scarcity gives rise to economic problems The basic problems of an economy are that resources available are scarce and our wants are unlimited Hence choice is made to allocate resources to alternative uses is such a way that maximum satisfaction can be achieved

Question 165. J Which of the following is NOT a basic problem of all economies?

  1. Whether to produce more consumer goods or capital goods
  2. Whether to lay emphasis or labour intensive techniques or no capital-intensive techniques
  3. Whether to produce for rich people or poor people
  4. Whether to accept direct investment in the economy

Answer: 4. Whether to accept direct investment in the economy

The baste problems of all economies are:

  • What to produce to produce more of consumer goods or capital goods –
  • How to produce-whether to employ more of labor-intensive or capital-intensive techniques
  • For whom to produce – How the goods and services should be distributed among the members of society ie decision about shares of different  people in the national cake of goods and services
  • What provision should be made for economic growth – How much saving and investment would be made for future progress?

Question 166. ______________________________ _ involves the predominance of bureaucracy resulting in Inefficiencies and delays

  1. Socialistic economy
  2. Capitalist economy
  3. Mixed economy
  4. Free market economy

Answer: 1. Socialistic economy

A Socialist economy involves the predominance of bureaucracy resulting in inefficiencies and delays _

Question 167. The capitalist system offers incentives for

  1. Efficient business decisions
  2. Efficient government decisions
  3. Efficient non-governmental decisions
  4. Efficient economic decisions

Answer: 4. Efficient economic decisions

One of the merits of the capitalist system is that it offers incentives for efficient economic decisions and their implementation

Question 168. Analysis of the impact of COVID-19 on the Indian Economy’ is a part of

  1. Macroeconomics
  2. Microeconomics
  3. Economics slicing
  4. Normative economics

Answer: 1. Macroeconomics

Macroeconomics focuses on the performance of economies- changes in economic output inflation interest and foreign exchange rates and the balance
of payments Poverty reduction social equity and sustainable growth are only possible with sound monetary and fiscal policies

The COVID-19 pandemic has caused direct impacts on income due to premature deaths workplace absenteeism and reduction in productivity and has created  a negative supply shock with manufacturing productive activity slowing down due to global ~ supply chain disruptions and closures of factories These consequences have impacted the Indian economy on a macro ‘ level

Question 169. The ‘communist manifesto’ related to the socialist economy propounded by Karl Marx and Frederic Engels was published in

  1. 1950
  2. 1848
  3. 1849
  4. 1951

Answer: 2. 1848

Karl Marx in 1848 and Frederic Engels published the ‘Communist Manifesto’ related to socialist economy

Question 170. ‘Consumer sovereignty’ is a feature of

  1. Capitalist
  2. Socialist
  3. Mixed
  4. Command

Answer: 1.  Capitalist

‘Consumer Sovereignty’ is the characteristic of a capitalist economy which states of that the consumer is the king under capitalism Consumer sovereignty means that buyers ultimately determine which goods and services will be produced and in what quantities

Consumers have unbridled freedom  to choose the goods and services which they would consume In other words based on the purchases they make Consumers decide how the economy’s limited resources are allocated

Question 171. Which one of the following is not a central problem of an economy?

  1. What to produce?
  2. How to produce?
  3. When to produce?
  4. For whom to produce?

Answer: 3. When to produce?

Every economic system be it capitalist socialist or mixed has to deal with this Central problem of scarcity of resources relative to the wants This is generally called ‘the Central economic problem’

These economic problems are further divided into four basic economic problems

These are

  1. What to produce?
  2. How to produce?
  3. For whom to produce?
  4. What provisions (if any) are to be made for economic growth? –

Question 172. The price of hot dogs increases by 22% and the quantity demanded falls by 25% This indicates that demand for hot dogs is

  1. Elastic
  2. Inelastic
  3. Unitarily elastic
  4. Perfectly elastic

Answer: 1. Elastic

Price elasticity of demand expresses the responsiveness of the quality of a good to a change in its price given the consumer’s income; his taste and prices of all other goods

Price elasticity = Ep = % change in quantity demand % change in price

Ep = \(\frac{25}{22}\)

= 1.13636

ie = elastic

Question 173. Which of the following is the central problem of the economy?

  1. Scarcity of resources
  2. Unemployment
  3. Poverty
  4. Inflation

Answer: 1. Scarcity of resources

Scarcity of Resources, The Central Problem of the Economy is a scarcity of resources and unlimited wants

Question 174. Economics is classified into

  1. Normative and Positive
  2. Micro and Macro
  3. Internal and External
  4. None of the above

Answer: 2. Micro and Macro

Micro and Macro

Economics as a whole is classified into Micro and Macro Economics ’

Question 175. Under which of the following economy the consumer have limited freedom of choice?

  1.  Socialist
  2. Mixed
  3. Capitalist
  4. Restricted

Answer: 1.  Socialist

Socialist, Since a Socialist Economy is a planned and enrolled economy so consumer have limited freedom of choice

Question 176. Which of the following is not the Subject matter of microeconomics?

  1. Consumer Behaviour
  2. Foreign Exchange Rate
  3. Behaviour of Firms
  4. Location of Industry

Answer: 2. Foreign Exchange Rate

Foreign Exchange Rate, Foreign Exchange Rate is based on Macro Economics

Question 177. Which of the following is one of the merits of socialism?

  1. Importance is given to productivity
  2. Importance is given to personal efficiency
  3. Rapid Growth and Balanced Economic Development
  4. Incentive for Economic Decision

Answer: 3. Rapid Growth and Balanced Economic Development

Rapid Growth and Balanced Economic Development

Socialist Economy is concerned with social welfare and equitable distribution of income which leads to rapid growth and balanced economic development

Question 178. Capitalist Economy solve their economic problems through which of the following?

  1. Central Planning Authority
  2. Price Mechanism
  3. Administered Prices
  4. Voting by Consumers

Answer: 2. Price Mechanism

Price Mechanism, The Price Mechanism helps in the allocation of resources under a Capitalist Economy

Question 179. An Economic system in which all means of production are owned and controlled by Private Individuals is called as?

  1. Free Economy
  2. Capitalist Economy
  3. Normative Economy
  4. Both 1 and 2

Answer: 4. Both 1 and 2

An economy is called a capitalist or free market economy or laissez-faire economy in which all means of production are owned and controlled by private individuals for profit since private property is the mainstay of capitalism and the profit motive is it observing force

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