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QUESTION 1 : MULTIPLE CHOICE ANSWERS
1 Scarcity exists
A. only in poor nations.
B. only among poor families.
C. in all countries of the world.
D. when people consume beyond their needs.
2 A review of the performance of the Indian steel industry during the 1990s is primarily the concern of
C. both macroeconomics and microeconomics.
D. neither macroeconomics nor microeconomics.
3. Which of the following sets of decisions must be made by all economies?
A. What to produce? How to produce it? For whom to produce it
B. What is the price? Who will produce it? Who will consume it?
C. How much to produce? When to produce? How much does it cost?
D. None of the above.
4. Abolition of child labour in developing countries is likely to
A. increase wages of unskilled adult workers.
B. make school places scarcer.
C. shift the production possibility frontier towards the origin in the short term.
D. shift the production possibility frontier away from the origin in the long term.
E. All of the above
5 Assuming diamonds and pearls are substitutes, a decrease in the price of diamonds, other things being equal, results in
A. a downward movement along the demand curve for pearls.
B. a leftward shift in the demand curve for pearls.
C. an upward movement along the demand curve for pearls.
D. a rightward shift in the demand curve for pearls.
6. Assuming noodles and oyster sauce are complements, a decrease in the price of noodles will
A. decrease the demand for noodles.
B. increase the demand for noodles.
C. increase the demand for oyster sauce.
D. decrease the demand for oyster sauce.
7. Minimum wages are an example of
A. a price ceiling.
B. an equilibrium price.
C. a price floor.
D. a public good.
8. Typically, a good that provides external benefits to society has
A. too few resources devoted to its production.
B. too many resources devoted to its production.
C. optimal resources devoted to its production.
D. allowed the producers of the good to earn very handsome profits.
9. If an increase in train fares in Singapore raises total revenue of the operators, this is evidence that demand is
A. unitary elastic.
B. price elastic.
C. price inelastic.
D. perfectly elastic.
10. The income elasticity of demand for tattoos is estimated to be –0.27. We can conclude that tattoos
A. have a relatively steep demand curve.
B have a relatively flat demand curve.
C are a normal good.
D are an inferior good.
The Production Possibility Frontier (PPF) in the above diagram shows the PPF with no immigration in the country. PPF is the locus of efficient combination of resources which gives optimum output. Point A has the combination of labor, L1 and capital, K1 and point B has combination of labor, L2, and capital, K2.
2 Nation’s Production Possibility Frontier (PPF) under a new policy for promoting Immigration
When the government promotes immigration with new policy then in increases the population of the country which in turn increases the labor force of the economy, thus leads to increase in the production and shift the PPF curve outward (Layton et al.,2016).