2. CENTRAL PROBLEM OF ECONOMY

1. Economic problem arises due to:

• (a) limited wants   

• (b) alternative uses   

• (c) scarce means

• both (b) and (c)

2. Slope of production possibility curve is:

• a straight line 

• convex to the point of origin

• concave to the point of origin

• none of these

3. The problem of 'what to produce' relates to:

• the choice of technique

• distribution of income

• market value of the goods and services

• the choice of goods and services

4. Which of the following is related to the problem 'how to produce'?

• Factoral distribution of income

• The choice of technique

• The choice of product  

• None of these

5. 5. In the diagram alongside (Fig. 16), inefficient use of resources is shown by:

• points 'A' and 'B'

• point 'D'

• point 'C'

• points 'C' and 'D'

6. When an economy is operating on the PPC, it indicates:

• potential output > actual output

• potential output = actual output

• potential output < actual output

• none of these

7. In Fig. 16, the unattainable combination of output is shown by:

• point 'A' and 'C

• point 'B' and 'C'

• point 'A', 'B' and 'C'

• point 'D

8. Increase (growth) of resources implies that production possibility curve:

• shifts to the right

• shifts to the left

• rotates to the right

• none of these

9. The opportunity cost of 100 kg of rice produced on a land which can also produce 80 tonnes of wheat is:

• 100 kg of wheat

• 80 tonnes of wheat

• 8,000 tonnes of wheat

• none of these

10. The following table shows the production possibility of cricket bats and sarees of an imaginary economy:

If the production of cricket bats is increased from 3 thousand to 4 thousand, what is the opportunity cost that the economy has to bear?

• Zero  

• 8 lakh sarees

• 30 lakh sarees

• 20 lakh sarees