_

MULTIP~E CHOICE Q UESTIONS_:...........__ ~

Activities which are performed with the motive of 8. 1s a curve th
l. earning money or livelihood are called- various combinations of two at shows
(a) b d d .
can e pro uce m an economy goods that
Non-economic activities
th . such
(b) Social activities all e given resources are utilised f that
(c) Welfare activities efficiently. Ully and
(d) Economic activities (a) Indifference curve
2. Identify which of the f o 11 owmg • not a coneept
• 1s ( ) Production Possibility Frontier
(b)
of microeconomic theory: c Demand curve
(a) Theory of Production (d) Supply curve
(b) Consumer Theory 9. Which of the.following is not a prime as .
(c) Theory of Income and employment .
of the production possibility frontier? sumpt10 n
(d) Theory of factor pricing · ;..,.:_ (a) Only two goo~s can be produced by the
3. Identify which of the following is not one of the economy at a time.
three central problems faced by an economy: (b) State of technology would remain fixed.
(o) What to produce and in what quantity (c) Resources are given and constant.
(b) How·to produce (d) All the resources are equally efficient in the
(c) For whom to produce production of all the commodities.
(d) Problem of choice 10. Increasing marginal opportunity cost results in a .
4. The problem that deals with the choice of the sloping curve.
technique of production is referred to as- (a) Concave downward
(o) What to produce and in what quantity (b) Concave upward
(b) How to produce
(c) Convex downward
(c) For whom to produce
(d) Straight line downward
(d) Problem of choice
11. The central problem of 'what to produce?'
5. Guiding principle to solve the problem of what
relates to-
to produce and in what quantity is to-
(a) Distribution of national income among
(a) Allocate resources in such a manner that
different factor inputs
they provide maximum satisfaction to the
concerned people. (b) Choice betw.een labour-intensive and
(b) Choose such an available technique of capital-intensive techniques of production
production which provides maximum output (c) Choice between land and technology to
to the producer with minimum possible add to the production capacity in the
cost-incurring combination of resources. economy ·
{c) Achieve equal distribution of income. (d) Problem of resource allocation between
{d) Produce maximum goods at high cost of different alternative uses
production. 12. Which of the following is not concerned with the
6. Opportunity cost can be defined as- problem of choice?
(o) Additional cost of producing a commodity (a) Alternative uses of resources
(b) Cost of next best alternative foregone (b) Excessive income
(c) Total cost of producing a commodity (c) Unlimited human ·wants
(d) Cost per unit of output (d) Limited (scarce) resources
7. _ __ can be defined as the ratio of number of 13. In which of the following situations does scarcity
units of a good sacrificed (say Good-Y) to produc~ arise? d
an additional unit of another good (say Good-X). (a) Supply of resources is more than deman ·
(o) Marginal rate of substitution (b) Supply of resources is less than dema nd .
(b) Marginal rate of cost
(c) Supply of resources equals dema nd.
(c) Marginal rate of transformation (d) Supply of resources is unrelated to
(d) Marginal rate of consumption demand.
 UNIT 1. INTRODUCTION TO MICROECONOMICS 3

14. Which of the following is not a combination of 21. The concept of scarcity of resources-
microeconomic variables? (a) Implies that consumer's wants will be satisfied
(a) Individual demand and market supply (b) Applies only to the less developed countries
(b) Price of a commodity and its supply . (c) Does not apply to developed countries
(c) Price of a commodity and its demand (d) Implies that consumer's wants will never be
(d) Wholesale price index and national income completely satisfied
15. The problem of unemployment can be identified 22. Nimisha is working as a professor on a salary of
as a- ~ 2,00,000 per month. She had other two job
(a) Micro level problem as it is about study of offers also:
an individual (i) To work as a financial analyst on a salary of
(b) Macro level problem as it is about study of ~ 3,00,000 per month, and
an individual (ii) To work as an investment banker on a salary
(c) Micro level problem as it studies economy of ~ 1,50,000 per month.
as a whole In the given case, her opportunity cost is
(d) Macro level problem as it studies economy (a) ~ 1,50,000
as a whole (b) ~ 2,00,000
16. The problem of 'for whom to produce' is also (c) ~ 3,00,000
known as- (d) ~ 1,00,000
(a) Problem of allocation of resources 23. Labour-intensive techniques of production are
(b) Problem of choice of technique opted in a-
(c) Problem of distribution of income (a) Labour displacing economy
(d) Problem of choice (b) Labour surplus economy
17. A teacher has an option of working in a (c) Capital surplus economy
government school and earn a salary of (d) Developed economy
~ 1,00,000 per month or running a coaching 24. A point on PPC represents that-
centre and earning ~ 1,20,000 per month. She (a) All the resources are equally efficient in the
chooses to work as a government employee. production of all the commodities . .
Identify the opportunity cost of her decision. (b) AI_Ithe resources are riot fully utilised.
(a) ~ 20,000 (b) ~ 1,20,000 (c) Combination of goods cannot be produced.
(c) ~ 1,00,000 (d) ~ 1,40,000 (d) All the given resources are utilised fully and
18. Production possibility curve can be a straight line efficiently.
when- ZS. A point below PPC indicates-
(a) Marginal opportunity cost is increasing (a) All resources are utilised fully and efficiently
(b) Marginal opportunity cost is diminishing (b) Overutilisation of resources
(c) Marginal opportunity cost is negative (c) Underutilisation of resources
· (d) Marginal opportunity cost remains constant (d) Resources are unlimited
19. _ _ _ _ _ is the slope of Production 26. Identify which of the following factors is not a
Possibility Curve. reason for the shift in the PPC:
(a) Marginal opportunity cost (a) Growth of resources
(b) Marginal rate of transformation (b) Upgradation of technology
(c) Opportunity cost (c) Degradation of technology
(d) Both marginal opportunity cost and marginal (d) Increase in production of Good-X and
rate of transformation reduction in production of Good-Y
20. If marginal opportunity cost is constant and equal 27. Which of the following illustrates a decrease in
to one, the production possibility frontier will be- unemployment using the PPC?
(a) A straight line sloping downward, cutting (a) A movement down along the PPC
both X-axis and Y-axis at equal distance from (b) A rightward shift of the PPC
the point of origin (c) A movement from a point on the PPC to a
(b) A convex curve sloping downward point inside the PPC
(c) A horizontal straight line (d) A movement from a point inside the PPC to
(d) A concave curve sloping downward a point on the PPC
4 TestFit CUET(UG)-2022 Economics

34. Statement 1: Launch of PM Gati Shakt~

28
·production - leads tocurve.
- - - possibility a rightward shift in the
to a rightward shift in the PPC.
1
lead
(a) Upgradation of technology •Statement 2: PPC shifts rightwards due to in
treas
(b) Degradation of technology in the resources or upgradation of technology. e
(c) Destruction of resources · 35. Statement 1: An efficient economy would al
(d) Reduction in efficiency produce a combination of goods that lies ;avs
0 th
29. A war going on between Ukraine and Russia has given Production Possibility Frontier. e
led to _ _ _ _ _ _ _ of Ukraine. State~ent 2: A Production Possibility Frontier
(a) Movement along the production possibility (PPF) 1s always represented as a down
.
sloping curve.
~~
curve
(b) Rightward shift in the production possibility 36. Statement 1: Production Possibility Curve is a
curve downward sloping curve because all the
(c) Leftward shift in the production possibility resources are not equally efficient in the
curve production of all the commodities.
(d) No shift in the production possibility curve
·Statement 2: Production Possibility Frontier is
30. Slope of PPC can be calculated as concave to the origin because of increasing MRT.
(a) llY/llX
Q. 37-39 to be answered on the basis of the following
(b) Y/X
diagram:
(c) Gain of a good/Sacrifice of a good Y-axis
(d) X/Y •R
•N
Questions 31-36 contain two statements-
Statement 1 and Statement 2. Each question has
FOUR choices (a), (b), (c), (d), only one of which is
correct.
In the light of these statements, choose the most o _ _ _ ___.__,. X-axis
Good-X
appropriate option:
(a) Both Statement 1 and Statement 2 are correct. 37. Point H indicates:
(b) Both Statement 1 and Statement 2 are (a) Full and efficient utilisation of resources
incorrect.
(b) Overutilisation of resources
(c) Statement 1 is correct but Statement 2 is
incorrect. (c) Underutilisation of resources
(d) Statement 1 is incorrect but Statement 2 .is (d) Growth of resources
correct. 38. Movement from point H to point Z on PPC can
take place whe·n-
31. Statement 1: An economy always manages to meet
(a) Resources are used fully and efficiently
all the needs of the people living in the country.
(b) Unemployment exists in the economy
Statement 2: Developing economies have to face
(c) Growth of resources
problem of choice while developed economies
(d) Upgradation of technology
do not face problem of scarcity.
32. Statement 1: In the context of an economy when 39. Economy can move to point R with
we talk about 'scarcity', we refer to short-run (a) Growth of resources
supply of money only. (b) Upgradation of technology
Statement 2: Growth of an economy is (c) Decrease in resources
represented in the form of a rightward shift of a (d) Increase in resources and upgradation of
Production Possibility Frontier. technology
· 33. Statement 1: Marginal. opportunity cost can be · 40. Which of the following is related to the problem
defined as cost of next best alternative foregone. of 'how to produce'?
Statement 2: When production of Good-X (a) Choice of technique
increases from 10 units to 11 units and that of (b) Factoral distribution of income
Good-Y decreases from 40 units to 35 units, (c) Choice of product
marginal opportunity cost equals o~e unit. . (d) All of the above
 UNIT 1. INTRODUCTION TO MICROECONOMICS 5
41. Whic_h of the followin g will lead to rightwa rd
rotation of PPC along X-axis? 44. Match List I with List II:
List I List II
(a) Upgrad ation of technol ogy of Good-X
(b) Upgrad ation of technol ogy of Good-Y A. Make in India (i) Leftwar d shift
(c) Upgrad ation of technol ogy of Good-X and in PPC
Good-Y B. Increase in (ii) Movem ent
(d) Degrad ation of technol ogy of Good-X unemp loymen t due along PPC
42. Match List I with List II: to pandem ic
C. Increase in (iii) Rightward shift
List I List 11
produc tion of Good-X in PPC
A. Margina l rate of (i) Cost of next best and reducti on in
transfo rmation alterna tive foregon e produc tion of Good-Y
B. Margin al (ii) Rate of a good to be D. War betwee n Russia (iv) No shift in PPC
Opport unity sacrific ed in order to and Ukraine
cost produc e an addition al
unit of the other
Options:
- (a) A-(iii), B-(iv), C-(ii), D-(i)
good
(b) A-(ii), B-(iii), C-(iv), D-(i)
C. Opport unity (iii) Various combin ations
(c) A-(ii), B-(iv), C-(i), D-(iii)
Cost of two goods that
(d) A-(iv), B-(ii), C-(i), D-(iii)
can be produc ed in
an econom y such 45. Match list I with List II:
that given resources List I List II
are utilised fully and
A. What to produc e and (i) Problem of
efficien tly
in what quantit y? choice
D. Produc tion (iv) Absolu te numbe r of
B. How to produce ? (ii) Choice of
Possibi lity units to be sacrificed
technol ogy
Curve in order to produce
an additio nal unit of C. For whom to (iii) Problem of
produc e? allocati on of
the other good.
resources
Options:
D. Economic problem (iv) Distribu tion of
(a) A-(i), B-(ii), C-(iv), D-(iii)
Income
(b) A-(ii), B-(iii), C-(iv), D-(i)
(c) A-(ii), B-(iv), C-(i), D-(iii) Options:
(a) A-(i), B-(ii), C-(iv), D-(iii)
(d) A-(iv), B-(ii), C-(i), D-(iii)
(b) A-(i), B-(ii), C-(iii), D-(iv)
43. Match list I with List II: (c) A-(iii), B-(ii), C-(iv), D-(i)
List I List II
(d) A-(i), B-(iii), C-(iv), D-(ii)
A. Increas ing MOC (i) PPC concav e to the 46. Identify which of the followin g is not true about
origin microec onomic s:
B. Consta nt MOC {ii) PPC convex to the (i) It studies behavio ur of individu al econom ic
origin units.
(iii) Downw ard sloping (ii) It is known as theory of income and
C. Diminis hing
PPC employ ment.
MOC
(iii) Its tools are demand and supply.
D. Resources are (iv) Straigh t line PPC
(iv) It deals with price determ ination.
given and fixed
Options:
Options: (a) (i) Only
(a) A-(i), B-(ii), C-(iv), D-(iii) (b) (ii) Only
(b) A-(i), B-(iv}, C-(ii), D-(iii) (c) (iii) Only
(c) A-(ii), B-(iii), C-(iv), D-(i) (d) (iv) Only
(d) A-(i), B-(iv), C-(iii), D-(ii)
 TestFit CUET(UG) 2022 Economics .
6 48. Which of the following will l e a d ~
47. Which of the following is not ~n assumption of shift in PPC? eftward
the production possibility frontier? . (i) Launch of Gati Shakti
(i) Only two goods can be produced in an
(ii) War between Russia and Ukraine
economy.
(iii) Inflow of foreign direct investment
(ii) Resources are given and fixed.
(iv) Influx of money due to foreign P
(iii) All the given resources are utilised fully and
investment . Ortfolio
efficiently. ·
(iv) All the resources are equally e~_icient in the Options:
production of all the commod1t1es. (a) (i) Only
(b) (ii) Only
Options:
(b) (ii) Only (c) (iii) Only
(a) (i) Only
(d) (iv) Only (d) (iv) Only
(c) (iii) Only

.. 'f\i"te.-;

,__·s___
,__,,_._N
CAS·E-BASED QUEST,10 ~-~J
Read the following text and answer questions 49-53.
Ronak is a final year MBA student and an aspiring entrepreneur. He has read that there is an opportunity cost
that has to be taken into consideration while making an economic decision. Ronak has always been fascinated
by beauty products and food joints and has even explored two lucrative business plans-one was to manufacture
face serums and the other to start a nutritious food joint with a limited amount of capital that he could invest.
By setting up a manufacturing unit, Ronak can .earn t 1,00,000 a month and through a chain of food joints, he
can earn t 2,00,000 a month. Ronak's father, however, wants him to take up a job in an MNC where he would
easily draw a salary oft 1,20,000 'a month. Ronak chooses to follow his passion of manufacturing.
49. Opportunity Cost can be defined as-
(a) Cost of owner's own employed resources
(b) Cost paid to outsiders
. (c) Cost of next best alternative foregone ·
(d) Cost that remains fixed
50. Why Ronak had to make a choice to choose any one of the business alternatives?
(a) Resources are unlimited
(b) Resources cannot be put to different uses
(c) Wants are limited
(d) Resources are Umited and can be put to different uses
51
• ~ona~ _chose to follow his passion and the opportunity cost of manufacturing beauty products can be
1dent1f1ed as t
(a) 1,20,000
---
(b) 1,00,000
(c) 2,00,000
(d) 1,50,000

52. If Ronak had listened to his father, the opportunity cost would be?
(a) 1,20,000 ·
(b) 1,00,000
(c) 2,00,000
(d) 1,50,000
53 · Identify which of the foll · .
(a) . owing statements 1s not true about opportunity cost.
It is the cost of next best alternative foregone
(b) Greater the opport ·t b· ·
(c) . uni Y co st , etter is the comparative advantage ·
0 pportumty cost is a concept ju t"f · h ·
(d) Opportuni . s I ymg t e efficient utilisation of scarce resources.
ty cost is generally expressed in monetary terms.
 UNIT 1. INTRODUCTION TO MICROECONOMICS 7
Read the following text and answer questions 54-58.
A production possibility curve shows various combinations of two goods that can
be produced in an economy such that all the given resources are utilised fully .F
and efficiently. PPC is a hypothetical curve that tells how much of one good has
to be sacrificed in order to produce an additional unit of the other good. <(
.E
"'
"CJ
Production Possibility Frontier shifts with the change in resources or technology g
\!)
and an economy can operate either on PPF or below PPF. Every economy has to
choose one of the many possibilities that it has. In other words, one of the central DX
0
problems of the economy is to choose from one of the many production Goods B
possibilities.
As indicated in the given diagram, four possible combinations reflect fuller utilisation of resources, underutilisation
of resources and overutilisation of resources.
54. Identify which of the following is not an assumption of PPC:
(a) Resources are given and fixed.
(b) All the resources are utilised fully and efficiently.
(c) All the resources are equally efficient in the production of all commodities.
(d) State of technology remains constant.
55. Point F outside PPC indicates-
(a) Fuller utilisation of resources
(b) Underutilisation of resources
(c) Unattainable combination .of 2 goods
(d) Attainable combination of 2 goods
56. Point E inside PPC indicates-
(a) Fuller utilisation of resources
(b) Underutilisation of resources
(c) Unattainable combination of 2 goods
(d) Attainable combination of 2 goods
57. ____ points indicate that all the resources are utilised fully and efficiently.
· (a) A and D
(b) A and E
(c) E and .F
(d) F and D
shows the rate at which a good has to be sacrificed in order to produce an additional unit of
58. -----
the other good.
(a) Marginal rate of substitution
(b) Marginal rate of transformation
(c) Opportunity cost
(d) Marginal rate of exchange