Economics primarily studies how individuals and societies
A Accumulate unlimited wealth
B Use scarce resources to satisfy unlimited wants
C Eliminate human wants entirely
D Produce luxury goods only
Explanation: Economics deals with scarcity and choice. Resources are limited, while wants are unlimited. Economics studies how people use limited means to fulfil unlimited needs efficiently.
“What to produce?” is a basic economic question because
A Every society always produces all possible goods
B Human wants are limited
C Resources are limited and require prioritisation
D Markets cannot decide production
Explanation: Since resources are scarce, societies must choose which goods to produce. This selection is essential to avoid misuse of scarce resources.
Economics is considered a social science because
A It studies only government activities
B It deals with controlled laboratory experiments
C It studies human behaviour in economic situations
D It has no connection with society
Explanation: Economics analyses how people make choices in real life. Human behaviour changes, so economics is classified as a social rather than natural science.
Microeconomics is concerned with
A National-level employment
B Behaviour of an individual consumer or firm
C Price level of the whole economy
D International trade patterns
Explanation: Microeconomics studies individual units like households and firms, their choices, prices, and market behaviour.
Which of the following falls under the scope of “consumption” in economics?
A How income is distributed among factors
B How individuals use goods to satisfy wants
C How factories produce goods
D How governments borrow money
Explanation: Consumption focuses on using goods and services to fulfil wants, including preferences, buying behaviour, and spending patterns.
Distribution in economics studies how
A Goods are transported from one place to another
B Goods are advertised to consumers
C Income is shared among factors of production
D Prices rise or fall in the market
Explanation: Distribution focuses on how output’s earnings are divided into rent, wages, interest, and profit.
Which element is included under “Production” in economics?
A How much to consume
B Allocation of scarce resources for creating goods
C How to distribute income
D How to improve welfare only
Explanation: Production involves decisions about what and how much to produce, methods, and the use of inputs like land, labour, and capital.
Welfare economics primarily studies
A Government profits
B Consumer satisfaction and standard of living
C Machine efficiency
D Only national GDP
Explanation: Welfare economics measures whether economic activities improve human well-being, focusing on fairness, equity, and quality of life.
Positive economics deals with
A What should be done
B Moral opinions
C Statements that can be tested and verified
D Only government policies
Explanation: Positive economics explains facts and cause-effect relationships that are objectively measurable.
Normative economics involves statements that are
A Free from value judgments
B Only based on statistics
C Suggestive and opinion-based
D Always incorrect
Explanation: Normative economics expresses value judgments about what ought to be, influenced by beliefs.
Economics deals with scarcity because
A Resources are unlimited
B Human wants are fixed
C Resources are limited relative to wants
D Markets always fail
Explanation: The central reason for economic problems is limited resources and unlimited wants, forcing choice-making.
Which method begins with real-world data and builds theories?
A Deductive method
B Inductive method
C Inferential method
D Assumption-based method
Explanation: The inductive method uses observed data to develop general principles, common in statistical economics.
“Other things remaining constant” refers to the assumption of
A Perfect competition
B Rational behaviour
C Ceteris paribus
D Marginal analysis
Explanation: Ceteris paribus isolates one variable at a time by assuming all others remain constant.
Economics is both a science and an art because
A It has no theories
B It only uses imagination
C It uses scientific methods and provides practical solutions
D It ignores real-life situations
Explanation: Economics uses scientific analysis (science) and also gives practical policy guidance (art).
The deductive method starts with
A Data collection
B Broad principles or assumptions
C Conclusions only
D Laboratory experiments
Explanation: Deductive reasoning moves from general principles to specific cases, forming theories.