DOON PUBLIC SCHOOL, PASCHIM VIHAR, NEW DELHI

Class-11
2023-24
ASSIGNMENT
Subject: ECONOMICS (Introductory Micro Economics)

Chapter number & name: Chapter 1- INTRODUCTION

Assignments :

MCQs
Question 1.  The law of scarcity

(a) Does not apply to rich, developed countries.

(b) Applies only to the less developed countries.
(c) Implies that consumers’ wants will be satisfied in a socialistic system.
(d) Implies that consumers’ wants will never be completely satisfied.
 
Question 2. The central problem in economics is that of

(a) Comparing the success of command versus market economies.

(b) Guaranteeing that production occurs in the most efficient manner.
(c) Guaranteeing a minimum level of income for every citizen.
(d) Allocating scarce resources in such a manner that society’s unlimited needs or wants are
satisfied in the best possible manner.

Question 3. Which one of the following bundles of goods cannot be produced with the resources
the economy currently has?

         
(a) A (b) B
(c) C (d) D

Question 4. An economy achieves “productive efficiency” when:

(a) Resources are employed in their most highly valued uses.

(b) The best resources are employed.
(c) The total number of produced goods is the greatest.
(d) Goods and services are produced at least cost and no resources are wasted.
Using the figure gives below answer the following (Q.5 to Q.7)
               

Question 5. Which point on PPF shows a “productively efficient” level of output?

(a) A (b) B
(c) C (d) All of the above.

Question 6. Which of the following clearly represents a movement toward greater productive
efficiency?

(a) A movement from point A to point B.

(b) A movement from point C to point D.
(c) A movement from point F to point C.
(d) A movement from point E to point B.

Question 7. Which one of the following alternatives illustrate a decrease in unemployment using
the PPF?

(a) A movement down along the PPF.

(b) A rightward shift of the PPF.
(c) A movement from a point on the PPF to a point inside the PPF.
(d) A movement from a point inside the PPF to a point on the PPF.

Question 8. If the PPF is linear, i.e., a straight line, which one of the following statements is true?

(a) As the production of a good increases, the opportunity cost of that good rises.
(b) As the production of a good increases, the opportunity cost of that good falls.
(c) Opportunity costs are constant.
(d) The economy is not at full employment when operating on the PPF.

Question 9. Which one of the following statements is a reason for the negative slope of PPF?

(a) The inverse relationship between the use of technology and the use of natural resources.
(b) Scarcity at any point of time due to limited amounts of productive resources.
(c) Resource specialisation.
(d) Increasing opportunity costs.

Question 10. Capital intensive technique is chosen in a

(a) Labour surplus economy.

(b) Capital surplus economy.
(c) Developed economy.
(d) Developing economy.

Question 11. Labour intensive technique is chosen in a

(a) Labour surplus economy.

(b) Capital surplus economy.
(c) Developed economy.
(d) Developing economy.

Question 12. If the marginal (additional) opportunity cost is a constant, PPC would be

(a) Convex.
(b) A straight line.
(c) Backward bending.
(d) Concave.

Question 13. The branch of economic theory that deals with the problem of allocation of resources
is

(a) Micro economic theory.

(b) Macroeconomic theory.
(c) Econometric’s.
(d) None of them.

Question 14. Which one of the following options is likely to cause an inward shift in a country’s
PPC?

(a) Earthquake destroying resources of the country.

(b) Scientists discovering new machines.
(c) Workers getting jobs in a new metro- project.
(d) The country finds new reserves of crude oil.
 
Question 15. The various combinations of goods that can be produced in any economy when it
uses its available resources and technology efficiently are depicted by

(a) Demand curve.

(b) Production curve.
(c) Supply curve.
(d) Production possibilities curve.

Question 16. Scarcity is a situation in which

(a) wants exceed the resources available to satisfy them

(b) something is being wasted
(c) people are poor
(d) none of them

Question 17. Production Possibilities Curve is also known as

(a) Demand curve

(b) Supply curve
(c) Indifference curve
(d) Transformation curve
 
Question 18. A lot of people die and many factories are destroyed due to floods in a country.

How will it affect the production possibility curve? [CBSE 2014]

(a) PPC will shift towards right
(b) PPC will shift towards left.
(c) PPC will remain the same
(d) None of the above.

Question 19. Which of the following is not a subject matter of microeconomics?

(a) Consumer’s behavior

(b) Market structure
(c) Monetary Policy
(d) Pricing of factor services

Question 20. Which of the following is an assumption of Production Possibility Frontier?

(a) Resources are not fully employed.

(b) Resources are not equally efficient for production of the two goods.
(c) Resources are not efficiently employed.
(d) Resources available are not fixed.

COMPETENCY BASED QUESTIONS

Higher Order Thinking Skills Questions

Question 1. Define Marginal Opportunity Cost.[AI 2008]                                                      [1 Mark]

Question 2. How does Maruti Udyog Ltd. fix the prices of its cars, is it studied in macroeconomics?
                                                                                                                                                         [ 1 Mark]

Question 3. Whether the cotton textile industry is an example of micro or macroeconomics?

Question 4. “Scarcity and choice go all together”. Defend or refute.                                        [3-4
Marks]

Question 5. “Only ‘Scarce Goods’ attract price.” Comment.                                                      [3-4 Marks]

Question 6. A lot of people died and many factories were destroyed in an earthquake. How will it
affect the PPC of the economy?                                                                                                             [3-4
Marks]

Question 7. Massive unemployment will shift PPC to the left. Defend or refute.                      [3-4
Marks]
 Value Based Questions

Question 8. A country’s resources are fully and p efficiently employed. The problem of scarcity
exists. What advice would be given to raise the efficiency level of the human resource to fight
scarcity?    
                                                                                                                                                                [1 Mark]

Question 9. In an underdeveloped economy why there is the need of efficient utilization of

resources?
                                                                                                                                                               [1 Mark]

Question 10. India is a labour abundance and capital scarce economy. Which technique of
production should be used to produce the commodity?                                                                                
[1 Mark]

Question 11. As water resources are limited in our country, how can we economise the water
resources so that it could not cause a future problem for us? Give any two suggestions.                      
[1 Mark]

Question 12. Scarcity of resources is a universal phenomenon and is not confined to poor and
backward countries only. Comment.

Question 13. The problems of scarcity of resources and their alternate uses arise everywhere but
particularly in backward countries. For their solution non-economic considerations can be stressed.
How?                                                                                                                                                         [1 Mark]

Question 14. Although water is useful, yet it is cheap. On the contrary, diamond is not much of use,
still it is very expensive. Give an economic reason for this paradox.                                          [ 1 Mark]

Question 15. Why is it that on one hand coal is found in plenty, yet it is scarce while on the other, a
rotten vegetable is rare but not scarce?                                                                                              [1 Mark]

Question 16. A farmer is getting more profit by producing opium rather than that of wheat. In
situation of famine which crop should be produced? [1 Mark]

Question 17. Large number of technical training institutions have been started by the government.
State its economic value in the context of production possibility frontier.                                [1 Mark]
Question 18. Unemployment is reduced due to the measures taken by the government. State its
economic value in the context of production possibilities frontier.                                              [1 Mark]

Question 19. The government has started promoting foreign capital. What is its economic value in
the context of Production Possibilities Frontier?                                                                             [1 Mark]

Question 20. Name the economic value achievable when attempts are made to increase resources
in the country.                                                                                                                                           [1 Mark]

Question 21. Production in an economy is below to its potentiality due to unemployment.

Government starts employment generation schemes. Explain its effects by using production
possibility curve.
                                                                                                                                                              [3-4 Marks]

                                                

Question 22. There are various sources of income a teacher has; such as,

1.  He can earn Rs 40000 from teaching in school.

2. He can earn Rs 50000 by tuition/ coaching
3. He earns Rs 60000 by writing the help book guides.
What is the opportunity cost of his teaching in school? Why should he choose teaching
profession?                                                                                                                                   [1 Mark]

Question 23. Economic slowdown in some parts of the world has adversely affected demand for
Indian exports. What will be its effect on the production Possibilities frontier of India? Explain.      

                                                                                                                                                              [3-4 Marks]

Question 24. Using a diagram explain what will happen to the PPC of Bihar if the river Kosi causes
widespread floods?                                                                                                                   [3-4 Marks]

Applications Based Questions

Question 25. A teacher is getting Rs 6,000 per month as salary. If he leaves the job and starts
tuition work, he is expected to earn Rs 5,000 per month. What would be his opportunity cost?      [1
Mark]

Question 26. A doctor has a private clinic in New Delhi and his annual earnings are Rs 10 lakh. If he
works in a government hospital in New Delhi, his annual earning will be Rs 8 lakh. What is the
opportunity cost of having a clinic in New Delhi?                                                                         [1 Mark]

Question 27. With the same amount of resources a farmer can feed the following combination of
goats and horses:

                                         

Taking into consideration the options available with him, find out the opportunity cost of the
farmer of feeding one horse.                                                                                                                            
[1 Mark]

Question 28. Why is production possibility curve also called opportunity cost curve?        [3 Marks]

Question 29. What will be the impact of recently launched ‘Clean India Mission’ (Swachh Bharat
Mission) on the Production Possibilities curve of the economy and why?                          [3 Marks]

Question 30. What will likely be the impact of large scale outflow of foreign capital on Production
Possibility Curve of the economy and why?                                                                                     [3 Marks]

                                                 

Question 31. What is likely to be the impact of ‘Make in India’ appeal to the foreign investors by
the Prime Minister of India, on the production possibilities frontiers of India? Explain.                 [3
Marks]
Question 32. What is likely to be the impact of efforts towards reducing unemployment on the
production potential of the economy? Explain.                                                                        [3 Marks]

Question 33. Giving reason comment on the shape of Production Possibilities curve based on the
following schedule.                                                                                                                                 [3 Marks]

                                              

Question 34. Giving reason comment on the shape of Production Possibilities curve based on the
following schedule.                                                                                                                         [3 Marks]

                                     

Question 35. Giving reason comment on the shape of Production Possibilities curve based on the
following schedule.                                                                                                                        [3 Marks]
                                              

Question 36. Giving reason comment on the shape of Production Possibilities Curve based on
the following schedule.                                                                                                                     [3
Marks]

-------------------------------------------------------------------------------------------------------------------

Chapter number & name: Chapter 2- CONSUMER EQUILIBRIUM

Assignments:

MCQs

Question 1. Total utility is maximum when:- 

(a) Marginal utility is zero.

(b) Marginal utility is at its highest point.
(c) Marginal utility is equal to average utility.
(d) Average utility is maximum.

Question 2. Which of the shaded area in the diagrams below represent total utility?  

                                      

Question 3. What does the area under the marginal utility curve depict? 

(a) Average Utility

(b) Total Utility
(c) Indifference Curve
(d) Consumer Equilibrium

Question 4. Which one of the following is not an assumption of the theory of demand based on
analysis of indifference curve?

(a) Given scale of preferences as between different combinations of two goods.

(b) Diminishing marginal rate of substitution.
(c) Constant marginal utility of money.
(d) Consumers would always prefer more of a particular piece of goods to less of it, other things
remaining the same.

Question 5. The consumer is in equilibrium at a point where the budget line—

(a) Is above an indifference curve.

(b) Is below an indifference curve.
(c) Is tangent to an indifference curve.
(d) Cuts an indifference curve.

Question 6. An indifference curve slopes down towards right since more of one commodity and less
of another result in—

(a) Same satisfaction.

(b) Greater satisfaction.
(c) Maximum satisfaction.
(d) Decreasing expenditure.

Question 7. The second glass of lemonade gives lesser satisfaction to a thirsty boy. This is a clear case
of

(a) Law of demand.

(b) Law of diminishing returns.
(c) Law of diminishing utility.
(d) Law of supply.

Question 8. The consumer is in equilibrium when the following condition is satisfied:

(a)MUxMUy > PxPy

(b)MUxMUy < PxPy
(c)MUxMUy = PxPy
(d)None of these.

Question 9. Which of the following options is a property of an indifference curve?

(a) It is convex to the origin.

(b) The marginal rate of substitution is constant as you move along an indifference curve.
(c) Marginal utility is constant as you move along an indifference curve.
(d) Total utility is the greatest where the 45 degrees line cuts the indifference curve.

Question 10. When economists speak of the utility of a certain good, they are referring to-
(a) The demand for the good.
(b) The usefulness of the good in consumption.
(c) The satisfaction gained from consuming the good.
(d) The rate at which consumers are willing to exchange one unit of good for an other one.

Question 11. Budget set is—

(a) Right angled triangle formed by the budget line with the axes.
(b) All points on the budget line.
(c) Points inside the budget line.
(d) Points on Y-axis from where budget line starts and the point on X-axis where budget line ends.

Question 12. If indifference curve is straight line downward sloping,

(a) MRS is increasing

(b) MRS is decreasing
(c) MRS is constant
(d) MRS is zero

Question 13. If X and Y are two commodities, indifference curve shows—

(a) X and Y are equally preferred

(b) Y is preferred to X
(c) X is preferred to Y
(d) None of these.

Question 14. If Marginal Rate of Substitution is constant throughout, the Indifference curve will be:

 
(a) Parallel to the x-axis.
(b) Downward sloping concave.
(c) Downward sloping convex.
(d) Downward sloping straight line.

Question 15. If Marginal Rate of Substitution

is increasing throughout, the Indifference curve will be:  

(a) Downward sloping convex.

(b) Downward’ sloping concave.
(c) Downward sloping straight line.
(d) Upward sloping convex.

Question 16. Which of the can be referred to as ‘point of satiety’?

(a) Marginal Utility is negative

(b) Marginal utility is zero
(c) Total Utility is rising
(d) Total Utility is falling

SHORT ANSWER QUESTIONS (KNOWLEDGE BASED)

Note: Questions 1, 2 and 3 have same figure.
Question 1.  Explain with diagram, the relationship between TU and MU.

                        

Question 2. How many chocolates will a consumer have, if they are available free of cost?

Question 3. “Total Utility remains the same, whether Marginal Utility is positive or negative”. Defend
or refute.

Question 4. State with reasons if the following statements are true or false:

1. At a grand family get-together party you go on eating and eating since you have not to pay.
2. As we consume more units of a commodity, our total utility from its consumption keeps falling.

Question 5. Explain the law of diminishing marginal utility with the help of a total utility schedule. 

Question 6. Derive MU Schedule from TU Schedule.

                   

Question 7.  A person’s marginal utility schedule is given below. Derive their total utility schedule.
                                 

                                  

Question 8. Calculate:

                      

Question 9. Derive the inverse relation between price of the good and its demand from single
commodity equilibrium condition “marginal utility = price”. 

Question 10.  A consumer consumes only two goods X and Y. At a consumption level of these two
goods, he finds that the ratio of marginal utility to price in case of X is higher than that in case of Y.
Explain the reaction of the consumer.
Or
A consumer consumes only two goods X and Y and is in equilibrium.
Price of X falls. Explain the reaction of the consumer through the Utility Analysis.

 Or
A consumer consumes only two goods X and Y and is in equilibrium. Price of good X falls. Show that it
will lead to rise in demand for good X. 
Or
By spending his entire income only on two goods X and Y a consumer

Question 11. A consumer consumes only two goods X and Y. At a certain consumption level of these
goods, he finds that the ratio of marginal utility to price in case of X is lower than that in case of Y.
Explain the reaction of the consumer. 

Or
By spending his entire income only on two goods X and Y a consumer finds that, MUxpx <
MUypy Explain how will the consumed react.
Or
A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of
good X rises, the consumer buys less of good X. Use utility analysis. 

Question 12. Explain the meaning of diminishing marginal rate of substitution with the help of a
numerical example.
Question 13.  Why is an Indifference curve generally , convex to the origin? 
1. The consumer forgoes less and less units of y as he acquires additional unit of x.

Question 14. Explain why an Indifference curve has a negative slope (i.e. IC slope down-wards to the
right).
Question 15. Why do Indifference curves not intersect each other?

Question 16. Explain that Higher IC provides higher level of satisfaction, or

‘Higher indifference curve represents higher level of satisfaction to the consumer’. Explain the
statement, also state the underlying assumption related to this property of indifference curve. 

COMPETENCY BASED QUESTIONS

 
Higher Order Thinking Skills (Hots)

Question 1. What does budget line in terms of price and money income indicate?                                                      
[1 Mark]
 
Question 2. What is the slope of budget line?                   [1 Mark]

Question 3. What is the horizontal (X-axis) intercept of budget line?                                                                               

[1 Mark]

Question 4. What is the Vertical (Y-axis) intercept of budget line?

Question 5. “Law of diminishing marginal utility will operate even if consumption takes place in
intervals.” Defend or refute.  
                                                                                                          [3-4 Marks]

Question 6. Derive the law of demand from the two commodity equilibrium condition “Marginal
Utility = price ratio through utility approach”.                                                                                     [3-4
Marks]

Question 7. Define market rate of exchange.                 [3-4 Marks]

Value Based Questions

Question 8.  How is the law of diminishing marginal utility applied with regard to education/
knowledge?                                       [1 Mark]

Application Based Questions

Question 9. A consumer has Rs 10, and both goods X and Y are priced at Rs 2 and are available in
integer units, (a) give the bundles that this consumer can afford to buy (bj give the bundles that cost
exactly Rs 10 (c) give two bundles that this consumer cannot afford to buy. [3-4 Marks]

Question 10. A consumer has Rs 40 and both goods X and Y are priced at Rs 20 and are available in
integer units, (a) Give the bundles that this consumer can afford (b) give the bundles that cost exactly
Rs 40. [3-4Marks]

Question 11. Give reasons for the following statements: 

                                                                                                          [3-4 Marks]
 1.  If the income of a consumer changes and prices of the two goods remain unchanged, a new
budget line will be formed which will be parallel to the original line.
2. If the income of the consumer remains unchanged and if the price of goods X rises, intercept
of the budget line of Y-axis will remain the same, but on the X-axis it will shift to the left.

Question 12. Giving reasons, comment on the following statements:                                                                             

[3-4 Marks]

1. A consumer’s equilibrium is always formed at a point on the given budget line.

2.  A consumer’s equilibrium will shift to a higher indifference curve with an increase in
consumer’s income.

Question 13. Giving reasons, state why the following two conditions must be satisfied when a
consumer is in equilibrium.  [3-4 Marks]

1. A budget line must be tangent to an indifference curve.

2.  Marginal rate of substitution must be diminishing.

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