CUET Economics Sample Paper Set 04

Question: Select the correct statement in relation to the production possibility curve?
a) The main reason for the rightward shift of the production possibility curve is war
b) The main reason for the rightward shift of the production possibility curve is migration
c) The main reason for the rightward shift of the production possibility curve is skill development programmes
d) The main reason for the rightward shift of the production possibility curve is natural disasters

Answer: c

Question: The situation of allocation of the resources:
a) Comes under the causes of economic problems
b) Comes under the causes of opportunity cost
c) Comes under the causes of central problems
d) Comes under the causes of marginal demand

Answer: c

Question: Which of the following statements about the production possibility curve is true?
a) If a point falls inside the production possibility curve, it indicates that the resources are over utilised
b) If a point falls inside the production possibility curve, it indicates that the resources are underutilised
c) If a point falls inside the production possibility curve, it indicates that there is adequate employment in the economy
d) If a point falls inside the production possibility curve, it indicates that there is inadequate employment in the economy

Answer: b

Question: Where do consumers and producers make choices based on market forces of supply and demand?
a) Market economy
b) Open economy
c) Controlled economy
d) Command economy

Answer: a

Question: A study of how increase in the corporate income tax rate, will affect the natural unemployment rate is an example of:
a) Macro Economics
b) Descriptive Economics
c) Micro Economics
d) Normative Economics

Answer: a

Question: which of the following falls under micro economics?
a) National income
b) General Price level
c) Factor pricing
d) National saving and investment

Answer: c

Question: Price theory studies the problem of:
a) What goods to produce and how much to produce
b) How to produce
c) For whom to produce
d) All of the above

Answer: d

Question: If PPC shifts to the right, it means:
a) Discovery of new stock
b) Advancement of technology
c) Generation of employment
d) All of the above

Answer: d

Question: who wrote ‘Nature and causes of wealth of Nations’?
a) Adam Smith
b) Alfred Marshall
c) Samuelson
d) Robbins

Answer: a

Question: Assumptions of PPC are:
a) There are only two goods
b) Resources are not specified
c) Resources are fully employed
d) All of the above

Answer: d

Question: which of the following are features of resources in an economy?
a) Limited supply
b) Alternative uses
c) Both a and b
d) None of these

Answer: c

Question: As an economic concept Scarcity applies to
a) Money but not time
b) Time but not money
c) Both time and money
d) Neither time nor money

Answer: c

Question: According to economic growth, production possibility curve will show
a) A downward shift
b) An inward shift
c) An outward shift
d) No effect

Answer: c

Question: Choice is created by the
a) Abundance of resources
b) Urgency of needs
c) Non-availability of resources
d) Scarcity of resources

Answer: d

Question: Which of the following is the salient feature of resources?
a) These are limited in comparison to wants
b) These have alternative uses
c) Both a) and b)
d) None of the above

Answer: c

Question: Positive economics involves statements which are
a) verifiable
b) not verifiable
c) may or may not be verifies
d) none of these

Answer: a

Question: The change un utility due to consumption of an additional unit is called
a) Total utility
b) Marginal utility
c) Average utility
d) Diminishing utility

Answer: b

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

Answer: a

Question: The consumer’s optimum bundle is located on
a) Y axis
b) Demand curve
c) Tangency between budget line and indifference curve
d) X axis

Answer: c

Question: When Elasticity is equal to infinity, what is it called
a) Perfectly elastic
b) Perfectly inelastic
c) Constant
d) None of the above

Answer: a

Question: An increase I the price of sugar is likely to cause
a) Decrease in demand of tea
b) Increase in demand of tea
c) No effect on demand of tea
d) None of the above

Answer: a

Question: The slope of indifference curve can be measure by
a) Elasticity of demand
b) Elasticity of supply
c) Marginal rate of substitution
d) None of these

Answer: c

Question: Can two indifference curve intersect each other
a) They can never intersect each other
b) They can intersect when the elasticity is equal to 1
c) They intersect when the choice is among inferior goods
d) They intersect when the choice is between superior and inferior goods

Answer: a

Question: A change in the income of the consumer will make the budget line
a) Becomes Concave
b) Becomes convex
c) Both of the above
d) None of the above

Answer: d

Question: The relation between consumer’s optimal choice and quantity of goods is called
a) Elasticity of Demand
b) Demand Function
c) Marginal rate of substitution
d) Elasticity of Supply

Answer: b

Question: In the demand curve where is the independent variable placed
a) X axis
b) Y axis
c) On the demand curve
d) None of these

Answer: b

Question: Demand for which goods move in the same direction with the income
a) Superior good
b) Inferior good
c) Giffen good
d) Normal good

Answer: d

Question: The law of demand is violated when
a) Negative income effect is greater than substitution effect
b) Negative income effect is less than substitution effect
c) Income effect is negative
d) Substitution effect is negative

Answer: a

Question: Which of the following is odd one out
a) Tea and sugar
b) Bread and jam
c) Coke and Pepsi
d) Bread and peanut butter

Answer: c

Question: The basic reason of operating the Law of Diminishing Returns is:
a) Scarcity of Factors
b) Imperfect Substitution between Factors
c) Both (a) and (b)
d) None of the above

Answer: c

Question: Law of variable proportion explains three stages of production. In the first stage of production:
a) Both MP and AP rise
b) MP rises
c) AP Falls
d) MP is zero

Answer: a

Question:The cycle which increases first and after being constant starts to reduce is called:
a) APP
b) MPP
c) TPP
d) All of these

Answer: d

Question: If all the factors of production are increased by same proportion and as a result output increases by a greater proportion than it is called :
a) Constant returns to scale
b) Decreasing returns to scale
c) All of these
d) None of these

Answer: d

Question: Changes in production quantity affect:
a) Both Fixed and Variable Cost
b) Only Variable Cost
c) Only Fixed Cost
d) None of the above

Answer: b

Question: Which statement of the following is true ?
a) AC=TFC – TVC
b) AC = AFC + TVC
c) AC=TFC + AVC
d) AC = AFC + AVC

Answer: d

Question: Which of the following is correct ?
a) TVC = TC – TFC
b) TC = TVC-TFC
c) TFC = TVC + TC
d) TC = TVC x TFC

Answer: a

Question: Whether a firm will plan for short-run or long-run production depends upon the
a) availability of inputs
b) nature of demand for its product
c) state of technology
d) all of the above

Answer: d

Question: To economists, the main difference between the short run and the long run is that .
a) in the short run all inputs are fixed, while in the long run all inputs are variable
b) in the short run the firm varies all of its inputs to find the least-cost combinations of inputs
c) in the short run, at least one of the firm's inputs levels is fixed.
d) in the long run, the firm is making a constrained decision about how to use existing plant and equipment efficiently.

Answer: a

Question: When 5 units of a goods are sold, total revenue is Rs. 100. When 6 units are sold, marginal revenue is Rs. 8. At what price are 6 units sold ?
a) Rs. 28 per unit
b) Rs. 20 per unit
c) Rs. 18 per unit
d) Rs. 12 per unit 

Answer: c

Question: Which of the following is a true statement ?
a) AR indicates price
b) AR Curve and Demand Curve are the same
c) Both (a) and (b)
d) None of the above

Answer: c

Question: Which is a method of producer’s equilibrium ?
a) TR and TC Method
b) MR and MC Method
c) Both (a) and (b)
d) None of the above

Answer: c

Question: The reason of decrease in supply is:
a) Increase in Production Cost
b) Increase in Price of Substitutes
c) Fall in number of Firms in the Industry
d) All the above

Answer: d

Question: Determination factor of supply of goods is:
a) Price of Goods
b) Price of Related Goods
c) Price of Factor of Production
d) All the above

Answer: d

Question: Which of the following is correct ?
a) Perfectly Elastic Supply es = ∞
b) High Elastic Supply es > 1
c) Perfectly Inelastic Supply es = 0
d) All the above

Answer: d

Question: When supply increases more with a result of small increase in price, the nature of supply will be :
a) Elastic
b) Inelastic
c) Perfectly Elastic
d) Perfectly Inelastic

Answer: a

Question: There are factors of productions:
a) Two
b) Three
c) Four
d) Five

Answer: d

Question: In the short-run following factors are included in the process of production:
a) Fixed factors
b) Variable factors
c) Both (a) and (b)
d) None of these

Answer: c

Question: Which is true?
a) Fixed cost is fixed only in short run
b) Fixed in long run also
c) Varies with change in output
d) Avoidable in Short Run

Answer: b

Question: Which Factor of production in short-run is variable?
a) Land
b) Labour
c) Capital
d) Enterprenuer

Answer: b

Question: Which of these can be described as implicit cost of production?
a) National rent of own office building
b) Payment of wages to workmen’s
c) Normal profit on capital employed
d) Interest on loan

Answer: d