Question-Answer (3).csv

"Question","Answer" "1. Consider the following statements about opportunity cost: 1. It applies only when operating on the PPC 2. Free goods have zero opportunity cost 3. Government-provided healthcare has opportunity cost Which are correct? a) 1 & 2 only b) 2 & 3 only c) 1 & 3 only d) All three","b...

"Question","Answer" "1. Consider the following statements about opportunity cost: 1. It applies only when operating on the PPC 2. Free goods have zero opportunity cost 3. Government-provided healthcare has opportunity cost Which are correct? a) 1 & 2 only b) 2 & 3 only c) 1 & 3 only d) All three","b) 2 & 3 only Explanation:Opportunity cost exists for economic goods (including govt services) even inside PPC. Free goods like sunlight have zero OC \[Scarcity & OC, p.7-8\]." "2. Match the economic systems with their features: A. Free market B. Planned economy C. Mixed economy 1. Dominance of price rationing 2. Public sector healthcare 3. Central production quotas Codes: a) A-1, B-3, C-2 b) A-2, B-1, C-3 c) A-3, B-2, C-1 d) A-1, B-2, C-3","a) A-1, B-3, C-2 Explanation:Free markets use price signals, planned economies set quotas, mixed systems combine both \[Rationing Systems, p.12\]." "3. A village economy producing only rice and wheat operates inside its PPC. This implies: a) Full employment exists b) Resources are underutilized c) Technology is outdated d) Both goods are necessities","b) Resources are underutilized Explanation:Points inside PPC indicate unemployment/inefficiency \[PPC Conditions, p.17\]." "4. Which factor would NOT cause an outward shift of PPC? a) Discovery of shale gas reserves b) Skill development mission for workers c) Strict environmental regulations d) Adoption of AI in manufacturing","c) Strict environmental regulations Explanation:Environmental norms may reduce productive capacity \[PPC Shift Factors, p.20\]." "5. In a drought-affected region, the government provides free drinking water. This is: a) Free good b) Public good c) Merit good d) Economic good provided free","d) Economic good provided free Explanation:Water provision has OC (treatment/pumping costs) borne by taxpayers \[Free vs Economic Goods, p.8\]." "6. Assertion (A): Luxury cars have demand curves sloping upwards Reason (R): They serve as status symbols a) Both A & R correct, R explains A b) Both correct but unrelated c) A wrong, R correct d) A correct, R wrong","a) Both A & R correct, R explains A Explanation:Veblen goods defy normal demand patterns \[Exceptional Demand, p.30\]." "7. Which pairs are correctly matched? 1. Tea & Coffee : Substitute goods 2. Cars & Petrol : Complementary goods 3. Butter & Ghee : Unrelated goods Codes: a) 1 & 2 only b) 2 & 3 only c) 1 & 3 only d) All three","a) 1 & 2 only Explanation:Butter & ghee are substitutes \[Goods Classification, p.28-29\]." "8. If income elasticity of demand for millets is -0.7, it indicates: a) Normal necessity b) Luxury good c) Inferior good d) Giffen good","c) Inferior good Explanation:Negative YED = inferior good \[Income Elasticity, p.39\]." "9. A subsidy on electric vehicles will: a) Shift demand curve left b) Shift supply curve right c) Cause movement along supply curve d) Increase equilibrium price","b) Shift supply curve right Explanation:Subsidies reduce production costs \[Non-price Determinants of Supply, p.44\]." "10. Which is NOT a characteristic of public goods? a) Non-excludability b) Rivalry c) Free-rider problem d) Government provision","b) Rivalry Explanation:Public goods are non-rivalrous \[Public Goods, p.31\]." "11. In the short run, a firm's supply is inelastic mainly due to: a) Variable inputs b) Fixed capital c) Government regulations d) Consumer preferences","b) Fixed capital Explanation:Law of diminishing returns applies \[Short Run Production, p.47\]." "12. The Engel curve for rice in a developing economy would show: a) Steep upward slope b) Gentle upward slope c) Downward slope d) Horizontal line","b) Gentle upward slope Explanation:Staples have low YED; demand rises slowly with income \[Engel Curve, p.39\]." "13. Which factor increases price elasticity of supply? a) Perishable goods b) Complex production c) Inventory stockpiles d) Specialized machinery","c) Inventory stockpiles Explanation:Stored stock allows quick supply response \[PES Determinants, p.51\]." "14. A tax on cigarettes aims to address: a) Positive externality b) Merit good provision c) Negative externality d) Public good shortage","c) Negative externality Explanation:Demerit goods have harmful effects \[Merit/Demerit Goods, p.31\]." "15. In a mixed economy, resource allocation occurs through: a) Only price signals b) Government commands c) Both market and planning d) Barter system","c) Both market and planning Explanation:Blends market and command approaches \[Modern Economies, p.13\]." "16. Which statement about potential GDP is correct? a) Always higher than actual GDP b) Achieved at full employment c) Independent of technology d) Same as nominal GDP","b) Achieved at full employment Explanation:Potential GDP = PPC output \[Potential GDP, p.19\]." "17. A straight-line PPC implies: a) Increasing opportunity cost b) Specialized resources c) Constant opportunity cost d) Technological progress","c) Constant opportunity cost Explanation:Resources equally suited for both goods \[PPC Shape, p.18\]." "18. The 'free rider problem' is most associated with: a) Private colleges b) National defense c) E-commerce platforms d) Organic food markets","b) National defense Explanation:Classic public good example \[Public Goods, p.31\]." "19. If PED = 0.8 for petrol, a 25% price rise leads to: a) 20% demand drop b) 25% demand drop c) 31.25% demand drop d) No change","a) 20% demand drop Explanation:PED = %ΔQd/%ΔP → 0.8 = x/25 → x=20% \[PED Calculation, p.35\]." "20. Which is a factor of production? a) Corporate bonds b) Irrigation canal c) Share certificates d) Bank loans","b) Irrigation canal Explanation:Physical capital \[Factors of Production, p.15\]."