PPSC Economics Chapter 1 Basic Economics With Answers

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PPSC Economics Chapter 1 Basic Economics

Sr. # Questions Answers Choice
1 When internal economics of scale occur Total costs fall Marginal costs increase Average costs fall Revenue falls
2 The law of diminishing returns assumes. There are not fixed factors of production There are no variable factors of production Utility is maximized when marginal product falls. Some factors of production are fixed
3 Which of the following is true. If the marginal cost is greater than the average cost the average cost fallls. If the marginal cost is greater than the average cost the average cost increases. If the marginal cost is positive total costs are maximized If the marginal cost is negatives total costs increase at a decreasing rate if output increases
4 If a maximum price is set below equilibrium there will be. A price fall A price increase Excess supply Excess demand
5 Nationalization occurs when The government bans a product The government takes control of an industry the government taxes a product to a raise the price. The government taxes a product to a raise its price.
6 A public good Is provided by the government Is free Has the properties of being non excludable and non diminishable Has external costs
7 With a positive externality There is under consumption in the free market There is over consumption in the free market The government may tax to decrease production Society could be made off if less was produced
8 Which of the following is the government most likely to subsidies. Negative externalities Positive externalities Monopolies O ligopojies
9 When supply increases in an agricultural market famer's earnings might fall because. Supply is price elastic Demand is price inelastic the government buys up all the excess production All output must be sold at a maximum price
10 The demand for a product would be more inelastic. The greater is the time under consideration The greater is the number of substitutes available to buyers The less expensive is the product in relation to incomes all of the above.
11 If the price in a market is fixed by the government above equilibrium. There is excess equilibrium There is excess supply There is excess demand There is equilibrium
12 If the fprice in a market is fixed by the government below equilibrium. There is excess equilibrium There is excess supply There is excess demand There is equilibrium
13 A public good will Be underprovided in the free market Be overprovided in the free market Not be provided in the free market Has no opportunity cost
14 "Income inequality can be high in the free market and should be reduce ".This is an example of what.? Judicial economic statement. Positive economic statement Formative economic statement Normative economic statement
15 An increase in demand for a product should. Increase equilibrium price and quantity. Decrease equilibrium price and quantity. Increase equilibrium price and decrease quantity. Decrease equilibrium price and increase quantity.
16 The law of demand states that. As the quantity demanded rises, the price rises. As the price rises the quantity demanded rises As the price rises, the quantity demanded falls. As supply rises, the demand rises.
17 The price mechanism does not act as a Signal Incentive Rationing device Indicator of income
18 The best describes consumer surplus. The price consumers are willing to pay for a unit The cost of providing a unit. The profits made by a firm The difference the price a consumer pays for an item and the price he is willing to pay.
19 The price mechanism cannot. Act as a signal Act as an incentive Act as a rationing device Shift the demand curve
20 A movement along the supply curve may be caused by A change in technology A change in the number of producers A shift in demand A change in costs
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