ECO401 Lecture-wise Quiz

Virtual University Of Pakistan · Semester Fall 2023 · LECTURE WISE NOTES: · Short Questions File & MCQ’s File · COURSE: ECO401 · MCQ’s File For Midterm · LECTURE # 01 · Economics is primarily concerned with the study of:

a) Physical world phenomena

b) Human behavior in society

c) Natural sciences d) Laboratory experiments

Normative economics is concerned with:

a) Describing how an economy works

b) Making value judgments about the economy

c) Analyzing facts and behavior in an economy d) Providing instructions for economic policies

Positive economics focuses on:

a) Describing how an economy works

b) Making value judgments about the economy c) Analyzing facts and behavior in an economy d) Providing instructions for economic policies

Scarcity in economics exists because:

a) Goods are rare and difficult to produce

b) Society has unlimited wants and needs, but limited resources

c) Economic resources can supply all the goods demanded d) Rationing is not needed in the economy

Rationing in economics is a process used to:

a) Increase the supply of scarce resources

b) Allocate a limited commodity based on a standard or criterion

c) Eliminate scarcity in the economy d) Determine the optimal mix of resources

Which economic system is characterized by government directive in determining economic functions?

1. Dictatorship
2. Free market/capitalist economy
3. Islamic economic system
4. Command or planned economy

Correct answer: Command or planned economy

Which economic system primarily relies on the demand and supply interactions in the market?

1. Dictatorship
2. Free market/capitalist economy
3. Islamic economic system
4. Command or planned economy

Correct answer: Free market/capitalist economy

What is the primary distinction between microeconomics and macroeconomics?

1. Microeconomics studies the entire economy, while macroeconomics studies parts of the economy.
2. Microeconomics focuses on aggregate production, while macroeconomics focuses on markets.
3. Microeconomics studies the economic trees, while macroeconomics studies the economic forest.
4. Microeconomics examines supply and demand, while macroeconomics analyzes business cycles.

Correct answer: Microeconomics studies the economic trees, while macroeconomics studies the economic forest.

Lecture # 02

What is the concept of rational choice based on?

1. Emotions and whims
2. Pure reason and logic
3. Nepotism and favors
4. Barter trade and non-monetary systems

Correct answer: Pure reason and logic

What is the goal of consumers in making rational decisions?

1. Maximizing costs
2. Minimizing benefits
3. Maximizing satisfaction relative to cost
4. Maximizing emotions and whims

Correct answer: Maximizing satisfaction relative to cost

What is the opportunity cost of a particular choice?

1. The satisfaction derived from the next best alternative foregone
2. The total cost of producing an additional unit of a good or service
3. The total benefit derived from consuming an additional unit of a good or service
4. The curve showing the maximum amount of goods a country can produce

Correct answer: The satisfaction derived from the next best alternative foregone

What does the production possibility frontier (PPF) represent?

1. The efficient utilization of resources
2. The inefficient use of resources
3. The maximum production possible given existing resources and technology
4. The boundary between cost and benefit analysis

Correct answer: The maximum production possible given existing resources and technology

What is economic growth?

1. The increase in total output of a country over time
2. The decrease in total output of a country over time
3. The optimal choice for producers
4. The concept of equity in economics

Correct answer: The increase in total output of a country over time

Can production and consumption take place without money?

1. No, money is essential for production and consumption
2. Yes, people can produce things for their own consumption or engage in barter trade
3. Yes, people can produce things only for their own consumption
4. No, money is necessary for barter trade

Correct answer: Yes, people can produce things for their own consumption or engage in barter trade

What does the saying "There is no such thing as a free lunch" mean?

1. Everything is free if you look hard enough
2. There is always an opportunity cost associated with consumption
3. Lunches are expensive and should be avoided
4. Free lunches are only available to certain individuals

Correct answer: There is always an opportunity cost associated with consumption

Under what circumstances would the production possibility curve be bowed in toward the origin?

1. When there are constant opportunity costs
2. When there are decreasing opportunity costs
3. When there are increasing opportunity costs
4. When there are no opportunity costs

Correct answer: When there are decreasing opportunity costs

What is the difference between positive and normative statements?

1. Positive statements are based on facts, while normative statements are value judgments