Economics · General Awareness

Economics Concepts and Theories

1,657 Questions

Review fundamental and advanced economics concepts through this structured question bank. The topics include macroeconomics, fiscal policy, international trade theories, and economic regulation. These questions are ideal for candidates preparing for civil services and other administrative competitive examinations.

Macroeconomics fundamentalsInternational trade theoriesFiscal policy debatesEconomic regulationLabor theory of value

Economics Concepts and Theories Questions

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

By consumer surplus economists mean _________

  1. the area inside the budget line

  2. the difference between the maximum amount a person is willing to pay for a good and its market price

  3. the area between the average revenue and marginal revenue curves

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The consumer surplus for various helps us understand its value in the market. The consumer surplus for necessities is the highest and the prices of these goods are generally low and since they are essential for survival consumers would be willing to pay a high amount for these goods. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Which of the following is the best general definition of the study of Economics?

  1. Inflation and unemployment in a growing economy.

  2. Business decision making under foreign competition.

  3. Individual and social choice in the face of scarcity.

  4. The best way to invest in the stock market.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In economics, relationship between unlimited wants and scarce resources are established in such a way that both social as well as individual maximisation is achieved. The study majorly focuses on how personal gain as well as social welfare is achieved with utilization of scarce resources in an effective manner. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Economic activities are those activities that are done with a view to earn a reward.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Economic activities are those that are related to the production and consumption of goods and services with an aim to earn money. These activities are undertaken to earn monetary awards in cash or kind. The two objectives of economic activities are the proper allocation of resources and optimum use of resources. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Scarcity means producing less goods and services in a given time period.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Scarcity refers to the limited supply of resources which are demanded in the economy. It does not mean producing less goods and services in a given time period. Scarcity of resources is the central problem of the economy. Because the human wants are unlimited and these resources are limited and have alternative uses. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The most important economic problem is that the resources used to satisfy our wants are limited in supply.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The most important economic problem is the scarcity of resources. The resources that are used to satisfy our wants are limited in supply. Due to this problem all the wants and desires of a man cannot be fulfilled as the wants are never-ending. This requires the efficient use of resources.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Which of the following is a central problem of every economy?

  1. Abundance of resources

  2. Scarcity of economic resources

  3. Moral and ethical values

  4. Illiteracy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

‘Scarcity of economics’ is the central problem of economics. It means that the resources in the world are limited whereas the wants of a man are unlimited and never ending. Due to this, the resources are always insufficient to satisfy all human wants and needs. Apart of being scarce, the resources have alternative uses as well. Thus, it becomes extremely important to use the resources in the most effective and efficient manner.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The three fundamental questions of economics are  ______.

  1. when, for whom, and how

  2. how, what, and for whom

  3. who, how, and when

  4. what, who, and why
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The three fundamental questions of economics are:

1.      How to produce: it talks about the techniques that should be used to produce goods and services that are required by the people.

2.      What to produce: it talks about the things that should be produced with the limited resources that are available in the economy.

3.      For whom to produce: it talks about the selection of the category of people for whom the goods are to be produced. More for the rich, less for the poor or less for the rich and more for the poor. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The problem of economics arises from which of the following reasons?

  1. Unlimited wants

  2. Scarcity of resources

  3. Resources having alternative uses

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

D.All of the above 

Economic Problem - The problem of choice, like an individual, also applies to the society as a whole. Thus, for an economy, economic problem is the problem of resource allocation. An economic problem exists whenever scarce means are used to satisfy alternative ends.

Causes of Economic Problem - Unlimited Wants, Limited or scarcity of Resources, Alternative use of resources.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Which of the following refers directly to the concept of scarcity?

  1. population explosion

  2. unlimited human wants

  3. limited resources

  4. human greed
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

‘Scarce means’ is the fundamental problem of economics. It means that the resources in the world are limited whereas the wants of a man are unlimited and never-ending. Due to this, the resources are always insufficient to satisfy all human wants and needs. Apart from being scarce, the resources have alternative uses as well. Thus, it becomes extremely important to use the resources in the most effective and efficient manner.  

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The basic economic questions that every society must address include which of the following?

  1. what, how, and for whom

  2. where, when, and why

  3. which, why, and what

  4. when, how, and which
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The three fundamental questions of economics are:

1.      How to produce: it talks about the techniques that should be used to produce goods and services that are required by the people.

2.      What to produce: it talks about the things that should be produced with the limited resources that are available in the economy.

3.      For whom to produce: it talks about the selection of the category of people for whom the goods are to be produced. More for the rich, less for the poor or less for the rich and more for the poor. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The central problem of an economy of 'what to produce' is an alternative problem of ________________.

  1. allocation of resources

  2. what to consume and what not to consume

  3. selection of factor of production

  4. resource planning
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

What to produce is an alternative problem of allocation of resources. It talks about the things that should be produced with the limited resources that are available in the economy. Thus it is important that you allocate these resources to various uses in an efficient manner. So that the maximum output can be achieved.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The three basic economic questions do not include ______.

  1. what?

  2. for whom?

  3. where?

  4. how?
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The three fundamental questions of economics are:

1.      How to produce: it talks about the techniques that should be used to produce goods and services that are required by the people.

2.      What to produce: it talks about the things that should be produced with the limited resources that are available in the economy.

3.      For whom to produce: it talks about the selection of the category of people for whom the goods are to be produced. More for the rich, less for the poor or less for the rich and more for the poor. 

So where to produce is not a central problem.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Every economy is characterized by _____________.

  1. unlimited wants and needs

  2. no energy resources

  3. unlimited material resources

  4. abundant productive labour
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

It is a very well known fact that human wants are unlimited as if on need is satisfied then there are generations of many other needs which are to be satisfied. Therefore, every economy is characterized by humans which refers to unlimited wants and needs. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

The problem of what goods and services are produced and how much, is covered by the general term ________.

  1. resource allocation

  2. choice of technique of production

  3. distribution

  4. macroeconomics
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The problem of what goods and services are produced and how much, is covered by the general term Resource Allocation. Allocation of resources refers to the problem of assigning the scarce resources in such a manner so that the maximum wants of the society are fulfilled. As the resources are limited in relation to the unlimited wants, it is important to economize their use and utilize them in the most efficient manner.