MCQ on Introduction to Microeconomics CA Foundation are covered in this Article. Introduction to Microeconomics MCQ Test contains 40 questions. Answers to MCQ on Introduction to Microeconomics CA Foundation Economics are available at the end of the last question. These MCQs have been made for CA Foundation students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge. For more MCQ’s, subscribe to our email list.
1. When we are studying how consumers decide what to buy, we are studying
a) Macroeconomics
b) Microeconomics
c) Both of the above
d) None of the above
2. “Economics is a study of mankind in the ordinary business of life” as per Economics as a science of
a) wealth
b) material well being
c) choice making
d) dynamic growth and development
3. Which of the following has been ignored under the definition of Economics as a Science of Wealth?
a) Problems of poverty
b) Problems of production
c) Distribution and exchange of wealth
d) Social Welfare
4. Lionel Robbins popularized Economics as
a) Science of choice
b) Science of material and non-material
c) Science of growth and development
d) None of the above
5. While studying a particular region, Microeconomics does not study
a) Location of a industry
b) Economic condition of a section of the people
c) National income and output
d) Consumer Behaviour
6. While considering a country, Macroeconomics does not deal with
a) Aggregate demand of the nation
b) Per capita income of a particular state
c) National income
d) External value of money
7. A family has some money with which they can either buy a car or take a one week trip to Europe and what they do is entirely their decision. If their decision is studied without any judgement from economic perspective, then Economics is a
a) Normative Science
b) Positive Science
c) Applied Science
d) None of the above
8. Economics as a Normative Science is about
a) Value Judgements
b) Welfare propositions
c) Policy amendments
d) All of the above
9. When you perceive a problem, develop a hypothesis, test it and come to a particular conclusion logically, it is called
a) Deductive method
b) Inductive method
c) General Method
d) None of the above
10. The Inductive method emphasizes on
a) Establishing relationships through statistical analysis
b) Finding out reasons for the relationships established
c) Importance of relativity of economic laws
d) All of the above
MCQ on Introduction to Microeconomics
11. Which of the following exactly determines the economic problem?
a) How to produce maximum goods possible?
b) Who should consume the maximum goods and how?
c) How to use scarce resources to attain maximum satisfaction?
d) When and what to produce?
12. A game of pool costs 100 rupees and a movie costs 200 rupees. If you decide to watch the movie, the opportunity cost of watching a movie is
a) 0.5 game of pool
b) 2 games of pool
c) 1 game of pool
d) None of the above
13. Opportunity Cost is
a) Cost of the forgone products after making a choice
b) Basic relationship between scarcity and choice
c) Not restricted to financial or monetary cost only
d) All of the above
14. Which of the following determine the economic problems with respect to production?
a) What, how, for whom
b) Why, when, where
c) Who, what, who
d) Who, when, what
15. A mandatory condition to determine the production of two goods on a production possibility curve is
a) Creation of unlimited productive resources
b) Availability of limited and fixed productive resources
c) Continuous investment in technology
d) Reducing the usage of productive resources
MCQ on Introduction to Microeconomics – Q. 16 to Q. 20
A 100 employee company ABC plans to make a CD player and a DVD player. To make a 1 DVD player, ABC has to employ 2 employees and only 1 employee to make a CD player. The role of technology in making bother the players is equal.
16. How many CD and DVD players ABC has to make from the options mentioned below to be the production possibilities curve (PPC)?
a) 20 DVD players and 30 CD players
b) 40 DVD players and 30 CD players
c) 30 DVD players and 40 CD players
d) 30 DVD and CD players
17. In which of the following cases can the point be inside the PPC?
a) ABC decides to make 20 DVD and 60 CD players
b) ABC decides to make 10 DVD and 50 CD players
c) ABC decides to make 40 DVD and 40 CD players
d) ABC decides to make 100 CD players
18. Which of the following points towards a point outside the PPC?
a) ABC decides to produce 45 DVD and 30 CD players
b) ABC decides to produce 35 DVD and 30 CD players
c) ABC decides to produce 20 DVD and 20 CD players
d) None of the above
19. What is the opportunity cost or producing 10 extra CD players?
a) 10 DVD players
b) 5 DVD players
c) 15 DVD players
d) 2 DVD players
20. ABC invests in technology and now only one employee is required to produce one DVD player. Which of the following statements is/are correct?
a) If ABC is to produce 40 DVD and 40 CD players, then it indicates towards a point outside the PPC
b) If ABC is to produce 80 DVD and 30 CD players, then it indicates towards a point inside the PPC
c) The opportunity cost is equal for both the DVD and CD player and the PPC would be a straight line
d) If ABC adds 50 more employees and produces 80 CD and 80 DVD players, it indicates a point on the PPC
MCQ on Introduction to Microeconomics
21. The movement of the one PPC to another PPC on the right indicates
a) Improvement in demand for the product
b) Improvement in the production capacity
c) Both a and b
d) None of the above
22. Profit motive is the driving force for a
a) Mixed economy
b) Socialist economy
c) Capitalist economy
d) Growing economy
23. Laissez-faire economy means
a) Free market economy
b) Closed market economy
c) Private economy
d) Public economy
24. The driving forces in a capitalist economy are
a) Equal allocation of goods to be produced
b) Utilization of same kind of technology and resources for production
c) Market demand and supply and price mechanism
d) To maximize the profits for each participant in production
25. Under a capitalist economy, the consumers
a) can expect newer and finer variety of products
b) can exercise freedom of choice
c) can determine their savings based on the interest rates prevailing in the market
d) all of the above
26. The main feature of a Socialist economy is
a) Private ownership of production facilities
b) Central planning and distribution authority
c) Dominance by monopolies
d) Maximum amount of liberty and freedom
27. India is a
a) Social economy
b) Capitalist economy
c) Mixed economy
d) Developed economy
28. In a socialist economy, the consumer
a) has no choice at all
b) has complete freedom of choice
c) has limited choice within a defined range
d) can deny to consume what is being produced by the state
29. A dual system of pricing exists because of
a) Free play of market forces of demand and supply
b) Determination of prices of various products by the state
c) Both a and b
d) None of the above
30. Which of the following is/are tools used to solve basic economic problems?
a) Central planning
b) Market Mechanism
c) Price Mechanism
d) All of the above
MCQ on Introduction to Microeconomics
31. The production possibilities curve is a way to show
a) the opportunity cost while making a choice between two goods
b) your second best choice about what you would do with your time and money
c) that with limited resources, you cannot produce anything that indicates beyond the PPC
d) all of the above
32. Which of the following is a normative statement?
a) More than half of India’s power plants are fuelled by coal
b) If fuel costs are passed on to customers, power producers would be able to use existing capacity and build new plants
c) Many road and highway projects are entangled in red tape
d) In the last quarter, only 100 km of roads were constructed
33. According to Robbins,
a) Economists should condemn or appreciate a policy measure
b) Economics should be neutral between ends
c) Economists should judge the choices made by an individual and suggest optimum solutions
d) Economist should study facts but should not generalise them
34. Which of the following can lead to an inward shift in a company’s PPC?
a) A strike by employee’s union
b) An introduction of new technology
c) Setting up a new plant to meet the demand
d) Infusion of fresh capital in the company
35. The concept of opportunity cost is best explained by
a) Demand curve
b) Transformation curve
c) Supply curve
d) Indifference curve
36. In a capitalist economy,
a) The goods are produced directly for use
b) The goods are produced for profits
c) The production is co-ordinated
d) The management and control is commonly owned
37. In a mixed economy,
a) Means of production are mainly under the private ownership
b) Accumulation of capital is not the driving force of economic activity
c) Profit is the primary motive of state owned enterprises
d) Reflects characteristics of only market economies
38. The economic problem would not arise if
a) The resources are not scarce
b) Each resource has a single use only
c) Man had limited wants
d) All of the above
39. Economics as a science of choice making is criticized because
a) It focuses too much on macroeconomic factors
b) It emphasizes on economic growth and development
c) It has a very wide scope
d) It excludes normative aspects completely
40. “Macroeconomics examines the forests and not the trees”. This means that
a) We determine the price of a product independent of other products
b) We analyse a particular firm or industry
c) It analyses and establishes the functional relationship between large aggregates
d) We study how a company decides which factory to set up at which location
MCQ on Introduction to Microeconomics – Answers
1. b) Microeconomics
2. b) material well being
3. d) Social Welfare
4. a) Science of choice
5. c) National income and output
6. b) Per capita income of a particular state
7. b) Positive Science
8. d) All of the above
9. a) Deductive method
10. d) All of the above
11. c) How to use scarce resources to attain maximum satisfaction?
12. a) 0.5 game of pool
13. d) All of the above
14. a) What, how, for whom
15. b) Availability of limited and fixed productive resources
16. c) 30 DVD players and 40 CD players
17. b) ABC decides to make 10 DVD and 50 CD players
18. a) ABC decides to produce 45 DVD and 30 CD players
19. b) 5 DVD players
20. c) The opportunity cost is equal for both the DVD and CD player and the PPC would be a straight line
21. b) Improvement in the production capacity
22. c) Capitalist economy
23. a) Free market economy
24. c) Market demand and supply and price mechanism
25. d) all of the above
26. b) Central planning and distribution authority
27. c) Mixed economy
28. c) has limited choice within a defined range
29. c) Both a and b
30. d) All of the above
31. d) all of the above
32. b) If fuel costs are passed on to customers, power producers would be able to use existing capacity and build new plants
33. b) Economics should be neutral between ends
34. a) A strike by employee’s union
35. b) Transformation curve
36. b) The goods are produced for profits
37. a) Means of production are mainly under the private ownership
38. d) All of the above
39. d) It excludes normative aspects completely
40. c) It analyses and establishes the functional relationship between large aggregates