High School

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**PART I: TRUE/FALSE QUESTIONS**
Read the following statements carefully and write "TRUE" if the statement is correct or "FALSE" if the statement is incorrect (1 point each).

1. An indifference curve only tells about consumer preferences for any two goods.
2. Microeconomics' central problem is the determination of the level of income and employment.
3. A change in price can cause a shift of a demand curve.
4. Total utility increases as long as marginal utility is negative.
5. A resource is scarce if supply exceeds demand at zero prices.
6. The cardinal utility approach is explained with the help of the indifference curve.
7. The demand curve for a firm under perfect competition is downward sloping.
8. The main goal of a consumer is profit maximization.
9. During inflation, the prices of all goods and services rise together.
10. When total product (TP) increases at an increasing rate, marginal product (MP) increases.

**PART II: MULTIPLE CHOICE QUESTIONS**
INSTRUCTION: Choose the best answer among the given alternatives provided under each question and write the letter of your choice on the space provided (1.5 points each).

1. What is the universal economic problem faced by any society?
A. Limited resources and unlimited wants
B. Unlimited resources and limited wants
C. Limited resources and limited wants
D. Unlimited resources and unlimited wants

2. When a change in the price of goods X affects the demand of goods Y, this elasticity of demand is called:
A. Price elasticity demand
B. Income elasticity demand
C. Cross elasticity demand
D. Cross elasticity supply

3. The three basic economic questions everyone must answer are:
A. When to produce, What to produce, Where to produce
B. How much money to make, How to produce, Where to sell
C. What to produce, How to produce, For whom to produce
D. How to produce, How much to produce, Where to sell

4. Demand for one item goes down when the price of another item goes up. These items must be:
A. Complements
B. Normal goods
C. Substitutes
D. Inferior goods

5. A consumer has $200 to spend on two goods X and Y with prices $10 and $20 respectively. The equation of the budget line is:
A. Y = 30 - 0.5x
B. Y = 10 - 0.5x
C. Y = 20 - 0.5x
D. Y = 5 - 0.5x

6. An Apple manufacturer pays the same amount to produce each iPhone no matter how many are produced in total. Which term describes the type of cost for producing iPhones?
A. Total cost
B. Variable cost
C. Fixed cost
D. Marginal cost

7. A decrease in input price and advancement of technology:
A. Will shift the demand curve inward
B. Will shift the supply curve to the right
C. Will shift the supply curve to the left
D. Will shift the demand curve outward

8. A change in demand is said to take place when there is a:
A. Price change
B. Shift of the demand curve

Answer :

Part I: TRUE or FALSE

  1. Indifference curve only tells about consumer preferences for any two goods.

    TRUE. An indifference curve maps out combinations of two goods that provide equal satisfaction to the consumer, reflecting preferences without considering income or prices.

  2. Microeconomics central problem is determination of level of income and employment.

    FALSE. The central problem of microeconomics is resource allocation and price determination under scarcity, while macroeconomics deals with income and employment levels.

  3. A change in price can cause a shift of a demand curve.

    FALSE. A change in price causes movement along the demand curve, not a shift. A shift is caused by changes in other factors like income, tastes, or prices of related goods.

  4. Total utility increases as long as marginal utility is negative.

    FALSE. Total utility increases only when marginal utility is positive. If marginal utility is negative, total utility decreases.

  5. A resource is scarce if supply exceeds demand at zero prices.

    FALSE. A resource is considered scarce if demand exceeds supply at zero prices, implying that it is limited relative to its desired use.

  6. Cardinal utility approach is explained with the help of indifference curve.

    FALSE. The cardinal utility approach uses numerical values to measure utility, whereas the indifference curve is part of the ordinal utility approach, describing preferences qualitatively.

  7. The demand curve for a firm under perfect competition is downward sloping.

    FALSE. The demand curve for a firm in perfect competition is perfectly elastic, meaning it is horizontal, not downward sloping.

  8. The main goal of consumer is profit maximization.

    FALSE. Consumers typically aim to maximize utility or satisfaction, not profit.

  9. During inflation the prices of all goods and services rise together.

    FALSE. Inflation generally leads to rising prices, but not all prices rise proportionally or simultaneously due to various factors.

  10. When TP increases at an increasing rate, MP increases.

    TRUE. When total product (TP) increases at an increasing rate, it indicates increasing marginal product (MP).

Part II: MULTIPLE CHOICE ITEMS

  1. What is the universal economic problem faced by any society?

    A. limited resources and unlimited wants

    This is known as the economic problem of scarcity, where society has limited resources but unlimited wants.

  2. When a change in the price of goods-X affects the demand of goods-Y, this elasticity of demand is called

    C. Cross elasticity demand

    Cross elasticity of demand measures how the quantity demanded of one good is affected by the price change in another good.

  3. The three basic economic questions everyone must answer are

    C. What to produce, How to produce, for whom to produce

    These questions address the fundamental concerns of production, resource allocation, and distribution in economics.

  4. Demand for one item goes down when the price of another item goes up. These items must be:

    A. Complements.

    Complementary goods are those for which demand decreases when the price of a related good increases.

  5. A consumer has $200 to spend on two goods X and Y with prices $10 and $20 respectively. The equation of the budget line is

    A. [tex]Y = 10 - 0.5x[/tex]

    This equation represents the consumer's budget constraint, calculated as 200 divided by the price of good Y (20), minus the price of good X (10) times the number of units of X.

  6. An Apple manufacturer pays the same amount to produce each iPhone no matter how many are produced in total. Which term describes the type of cost for producing iPhones?

    C. fixed cost

    Fixed costs remain constant regardless of the level of output, such as lease or contract payments.

  7. Decrease in input price and advancement of technology:

    B. Will shift the supply curve to the right

    This indicates that at each price, more can be produced or supplied due to lower input costs and improved technology.

  8. A change in demand is said to take place when there is a

    C. Shift of the demand curve

    A shift in the demand curve occurs when factors other than price, such as preferences or income, change the demand for a product.

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