CUET Economics Sample Paper Set 02

Question: Which of the following statements about the production possibility frontier is accurate?
a) The production possibility frontier can be a straight line when there is a decrease in the production of both goods
b) The production possibility frontier can be a straight line when more amount of both the goods can be produced
c) The production possibility frontier can be a straight line when all the resources are equally efficient for the production of both the goods
d) None of the above

Answer: c

Question: Which of the following conclusions is true about the statement ‘Rich people should be taxed more’?
a) The statement ‘rich people should be taxed more is an example of positive economic analysis
b) The statement ‘rich people should be taxed more is an example of productive economic analysis
c) The statement ‘rich people should be taxed more is an example of normative economic analysis
d) The statement ‘rich people should be taxed more is an example of negative economic analysis

Answer: c

Question: The sign of free economy?
a) The prices are regulated
b) The prices are partly regulated
c) The prices are determined with the help of the forces of demand and supply
d) None of these

Answer: c

Question: The branch of economics that deals with the allocation of resources is .
a) Econometrics
b) Macroeconomics
c) Microeconomics
d) None of the above

Answer: c

Question: If a point falls inside the production possibility curve, what does it indicate?
a) Resources are over utilized
b) Resources are under utilized
c) There is employment in the economy
d) Both (b) and (c)

Answer: b

Question: in a free market economy, when consumers increase their purchase of a goods and the level of exceeds then prices tend to rise
a) Demand, Supply
b) Supply, Demand
c) Prices, Demand
d) Profits, Supply

Answer: a

Question: Macroeconomics deals with:
a) Theory of distribution
b) Theory of income and employment
c) Theory of economic growth
d) All of the above

Answer: d

Question: Smooth PPC is based on the assumption that:
a) Infinite production possibilities exist
b) Limited production possibilities exist
c) Two production possibilities exist
d) None of the above

Answer: a

Question: PPC is also called:
a) Opportunity cost
b) Transformation cost
c) Production possibility frontier
d) All of the above

Answer: d

Question: what is the main cause of all economic problems?
a) Abundance
b) Convenience
c) Scarcity
d) None of these

Answer: c

Question: Which of the following is not the feature of human wants?
a) Limited
b) Recurring
c) Both a and b
d) Neither a nor b

Answer: c

Question: The fact that people with higher incomes get to consume more goods and services address the question:
a) When
b) Where
c) For whom
d) How

Answer: c

Question: the scarce resources of an economy have
a) Competing usage
b) Single usages
c) Unlimited usages
d) None of the above

Answer: a

Question: Central problem of an economy includes
a) What to produce
b) How to produce
c) For whom to produce
d) All of the above

Answer: d

Question: The central problem of an economy is:
a) What to produce
b) How to produce
c) How to distribute goods
d) All of these

Answer: d

Question: Which of the following is not a factor of production?
a) Land
b) labour
c) Money
d) Capital

Answer: c

Question: The budget line is
a) Positively sloping
b) Negatively sloping
c) Horizontal
d) Not defined

Answer: b

Question: The demand for an inferior good increase the income
a) Increases
b) Decreases
c) Remains constant
d) Remains unaffected

Answer: b

Question: A rational consumer always chooses
a) Most preferred bundle
b) All of the goods on x axis
c) All of the goods on y axis
d) Chooses randomly

Answer: a

Question: Goods which are consumed together are called
a) Substitute goods
b) Complementary good
c) Inferior goods
d) Article of distinction

Answer: b

Question: In the case of complementary goods, the demand of goods moves in direction of the price
a) Opposite
b) Similar
c) Random
d) None of the above

Answer: a

Question: The rate at which the consumer will substitute good y for good x, without changing their total utility is
a) Elasticity of demand
b) Elasticity of supply
c) Marginal rate of substitution
d) None of these

Answer: c

Question: The consumer cannot buy every combination of two goods that she may want to consume, because
a) Fixed income
b) Elasticity of demand
c) Availability of goods’
d) All of the above

Answer: a

Question: Increase in the price of X-axis product will make the budget line
a) Steeper
b) Flatter
c) Parallel
d) None of the above

Answer: a

Question: In the demand curve, which of the following is independent variable
a) Quantity
b) Price
c) Quality
d) Demand

Answer: b

Question: The negative slope of the demand curve is due to the
a) Substitution effect
b) Income effect
c) Both of these
d) None of these

Answer: c

Question:Can a good be normal good at some levels and the inferior at other levels of income
a) Yes, it can be
b) No, it cannot
c) Information is not enough
d) This doesn’t only depend on the income alone

Answer: a

Question: What does movement along the demand curve indicate
a) shift in quantity demanded
b) complement effect
c) change in quantity demanded
d) income effect

Answer: c

Question: Which of the following explains the short-run production function ?
a) Law of Demand
b) Law of Variable Proportion
c) Returns to Scale
d) Elasticity of Demand

Answer: b

Question: At which time all the factors of production may be changed?
a) Short run
b) Long run
c) Very Long run
d) All the three

Answer: b

Question: Which of the following is a source of production?
a) Land
b) Labour
c) Capital
d) All of these

Answer: d

Question: Which of the following is included in money cost?
a) Normal Profit
b) Explicit Cost
c) Implicit Cost
d) All of these

Answer: d

Question: What happens when production is shut down ?
a) Fixed Cost Increases
b) Variable Costs Decline
c) Variable Costs become zero
d) Fixed Costs become zero

Answer: c

Question: What is an opportunity cost ?
a) The alternative fore gone
b) The opportunity lost
c) Transfer earnings
d) All of these

Answer: d

Question: Average variable costs can be defined as:
a) TVC x Q
b) TVC + Q
c) TVC-Q
d) TVC ÷ Q

Answer: d

Question: In which market MR may become zero or negative?
a) Monopoly
b) Monopolistic Competition
c) Both (a) and (b)
d) Perfect Competition

Answer: c

Question: With which condition, firm will get maximum profit ?
a) Where MR = MC
b) Where MC cuts MR from below
c) Both (a) and (b)
d) None of the above

Answer: c

Question: MR is shown as:
a) ΔTRΔQ
b) TRQ
c) ΔARQ
d) None of these

Answer: a

Question: The basic condition of firm’s equilibrium is:
a) MC = MR
b) MR = TR
c) MR = AR
d) AC = AR

Answer: a

Question: For a firm’s equilibrium:
a) MR = MC
b) MR > MC
c) MR < MC
d) MR = MC = 0

Answer: a

Question: In describing a given production technology, the short run is best described as lasting .
a) upto six months from now
b) upto five years from now
c) as long as all inputs are fixed
d) as long as at least one input is fixed

Answer: c

Question: Which of the following statement is true?
a) Price and quantity have direct relationship
b) Supply curve rises from left to right
c) Supply is affected by many factors
d) All the above

Answer: d

Question: es = 0 means that elasticity of supply is:
a) Perfectly Elastic Supply
b) Perfectly Inelastic Supply
c) Less Elastic Supply
d) Unit Elastic Supply

Answer: b

Question: When the proportionate change in the supply of goods is more than the proportionate change in its price, the elasticity of supply will be:
a) Less than Unit
b) Equal to Unit
c) Greater than Unit
d) Infinite

Answer: c

Question: Fixed cost is also known as:
a) Variable cost
b) Actual cost
c) Supplementary cost
d) Short-term cost

Answer: c

Question: In a small scale rubber plant, factors of production like labour, material and capital are increased by 10% and output increases by 20%. It implies that the Firm is experiencing .
a) Constant Returns to Scale
b) Decreasing Returns to Scale
c) Increasing Returns to Scale
d) Increasing as well as decreasing

Answer: c

Question: The difference between Cost & Revenue is:
a) Loss
b) Profit
c) Marginal Revenue
d) Marginal Cost

Answer: b

Question: How many factors of production are fixed in Long run?
a) One
b) Zero
c) Two
d) All the four

Answer: d

Question: The difference between the least cost output and actual output level is termed as .
a) Excess capacity
b) Unbalanced capacity
c) Balance capacity
d) Bottleneck capacity

Answer: a

Question: If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions: A Rational Producer will not operate in Stage I due to the reason that –
a) There is more scope for making the best use of the Fixed Factor
b) Total Output still shows an increasing trend
c) Optimal Combination of Fixed and Variable Factors is not yet achieved
d) All of the above

Answer: d

Question: Which of the following statements about the production possibility frontier is accurate?
a) The production possibility frontier can be a straight line when there is a decrease in the production of both goods
b) The production possibility frontier can be a straight line when more amount of both the goods can be produced
c) The production possibility frontier can be a straight line when all the resources are equally efficient for the production of both the goods
d) None of the above

Answer: c

Question: Which of the following conclusions is true about the statement ‘Rich people should be taxed more’?
a) The statement ‘rich people should be taxed more is an example of positive economic analysis
b) The statement ‘rich people should be taxed more is an example of productive economic analysis
c) The statement ‘rich people should be taxed more is an example of normative economic analysis
d) The statement ‘rich people should be taxed more is an example of negative economic analysis

Answer: c

Question: The sign of free economy?
a) The prices are regulated
b) The prices are partly regulated
c) The prices are determined with the help of the forces of demand and supply
d) None of these

Answer: c

Question: The branch of economics that deals with the allocation of resources is .
a) Econometrics
b) Macroeconomics
c) Microeconomics
d) None of the above

Answer: c

Question: If a point falls inside the production possibility curve, what does it indicate?
a) Resources are over utilized
b) Resources are under utilized
c) There is employment in the economy
d) Both (b) and (c)

Answer: b

Question: in a free market economy, when consumers increase their purchase of a goods and the level of exceeds then prices tend to rise
a) Demand, Supply
b) Supply, Demand
c) Prices, Demand
d) Profits, Supply

Answer: a

Question: Macroeconomics deals with:
a) Theory of distribution
b) Theory of income and employment
c) Theory of economic growth
d) All of the above

Answer: d

Question: Smooth PPC is based on the assumption that:
a) Infinite production possibilities exist
b) Limited production possibilities exist
c) Two production possibilities exist
d) None of the above

Answer: a

Question: PPC is also called:
a) Opportunity cost
b) Transformation cost
c) Production possibility frontier
d) All of the above

Answer: d

Question: what is the main cause of all economic problems?
a) Abundance
b) Convenience
c) Scarcity
d) None of these

Answer: c

Question: Which of the following is not the feature of human wants?
a) Limited
b) Recurring
c) Both a and b
d) Neither a nor b

Answer: c

Question: The fact that people with higher incomes get to consume more goods and services address the question:
a) When
b) Where
c) For whom
d) How

Answer: c

Question: the scarce resources of an economy have
a) Competing usage
b) Single usages
c) Unlimited usages
d) None of the above

Answer: a

Question: Central problem of an economy includes
a) What to produce
b) How to produce
c) For whom to produce
d) All of the above

Answer: d

Question: The central problem of an economy is:
a) What to produce
b) How to produce
c) How to distribute goods
d) All of these

Answer: d

Question: Which of the following is not a factor of production?
a) Land
b) labour
c) Money
d) Capital

Answer: c

Question: The budget line is
a) Positively sloping
b) Negatively sloping
c) Horizontal
d) Not defined

Answer: b

Question: The demand for an inferior good increase the income
a) Increases
b) Decreases
c) Remains constant
d) Remains unaffected

Answer: b

Question: A rational consumer always chooses
a) Most preferred bundle
b) All of the goods on x axis
c) All of the goods on y axis
d) Chooses randomly

Answer: a

Question: Goods which are consumed together are called
a) Substitute goods
b) Complementary good
c) Inferior goods
d) Article of distinction

Answer: b

Question: In the case of complementary goods, the demand of goods moves in direction of the price
a) Opposite
b) Similar
c) Random
d) None of the above

Answer: a

Question: The rate at which the consumer will substitute good y for good x, without changing their total utility is
a) Elasticity of demand
b) Elasticity of supply
c) Marginal rate of substitution
d) None of these

Answer: c

Question: The consumer cannot buy every combination of two goods that she may want to consume, because
a) Fixed income
b) Elasticity of demand
c) Availability of goods’
d) All of the above

Answer: a

Question: Increase in the price of X-axis product will make the budget line
a) Steeper
b) Flatter
c) Parallel
d) None of the above

Answer: a

Question: In the demand curve, which of the following is independent variable
a) Quantity
b) Price
c) Quality
d) Demand

Answer: b

Question: The negative slope of the demand curve is due to the
a) Substitution effect
b) Income effect
c) Both of these
d) None of these

Answer: c

Question:Can a good be normal good at some levels and the inferior at other levels of income
a) Yes, it can be
b) No, it cannot
c) Information is not enough
d) This doesn’t only depend on the income alone

Answer: a

Question: What does movement along the demand curve indicate
a) shift in quantity demanded
b) complement effect
c) change in quantity demanded
d) income effect

Answer: c

Question: Which of the following explains the short-run production function ?
a) Law of Demand
b) Law of Variable Proportion
c) Returns to Scale
d) Elasticity of Demand

Answer: b

Question: At which time all the factors of production may be changed?
a) Short run
b) Long run
c) Very Long run
d) All the three

Answer: b

Question: Which of the following is a source of production?
a) Land
b) Labour
c) Capital
d) All of these

Answer: d

Question: Which of the following is included in money cost?
a) Normal Profit
b) Explicit Cost
c) Implicit Cost
d) All of these

Answer: d

Question: What happens when production is shut down ?
a) Fixed Cost Increases
b) Variable Costs Decline
c) Variable Costs become zero
d) Fixed Costs become zero

Answer: c

Question: What is an opportunity cost ?
a) The alternative fore gone
b) The opportunity lost
c) Transfer earnings
d) All of these

Answer: d

Question: Average variable costs can be defined as:
a) TVC x Q
b) TVC + Q
c) TVC-Q
d) TVC ÷ Q

Answer: d

Question: In which market MR may become zero or negative?
a) Monopoly
b) Monopolistic Competition
c) Both (a) and (b)
d) Perfect Competition

Answer: c

Question: With which condition, firm will get maximum profit ?
a) Where MR = MC
b) Where MC cuts MR from below
c) Both (a) and (b)
d) None of the above

Answer: c

Question: MR is shown as:
a) ΔTRΔQ
b) TRQ
c) ΔARQ
d) None of these

Answer: a

Question: The basic condition of firm’s equilibrium is:
a) MC = MR
b) MR = TR
c) MR = AR
d) AC = AR

Answer: a

Question: For a firm’s equilibrium:
a) MR = MC
b) MR > MC
c) MR < MC
d) MR = MC = 0

Answer: a

Question: In describing a given production technology, the short run is best described as lasting .
a) upto six months from now
b) upto five years from now
c) as long as all inputs are fixed
d) as long as at least one input is fixed

Answer: c

Question: Which of the following statement is true?
a) Price and quantity have direct relationship
b) Supply curve rises from left to right
c) Supply is affected by many factors
d) All the above

Answer: d

Question: es = 0 means that elasticity of supply is:
a) Perfectly Elastic Supply
b) Perfectly Inelastic Supply
c) Less Elastic Supply
d) Unit Elastic Supply

Answer: b

Question: When the proportionate change in the supply of goods is more than the proportionate change in its price, the elasticity of supply will be:
a) Less than Unit
b) Equal to Unit
c) Greater than Unit
d) Infinite

Answer: c

Question: Fixed cost is also known as:
a) Variable cost
b) Actual cost
c) Supplementary cost
d) Short-term cost

Answer: c

Question: In a small scale rubber plant, factors of production like labour, material and capital are increased by 10% and output increases by 20%. It implies that the Firm is experiencing .
a) Constant Returns to Scale
b) Decreasing Returns to Scale
c) Increasing Returns to Scale
d) Increasing as well as decreasing

Answer: c

Question: The difference between Cost & Revenue is:
a) Loss
b) Profit
c) Marginal Revenue
d) Marginal Cost

Answer: b

Question: How many factors of production are fixed in Long run?
a) One
b) Zero
c) Two
d) All the four

Answer: d

Question: The difference between the least cost output and actual output level is termed as .
a) Excess capacity
b) Unbalanced capacity
c) Balance capacity
d) Bottleneck capacity

Answer: a

Question: If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions: A Rational Producer will not operate in Stage I due to the reason that –
a) There is more scope for making the best use of the Fixed Factor
b) Total Output still shows an increasing trend
c) Optimal Combination of Fixed and Variable Factors is not yet achieved
d) All of the above

Answer: d