1. Economics as a Science (2010, Q1)
Question: Economics is the study of human behaviour as it relates to the
- A. efficient allocation of resources
- B. production of goods
- C. operation of companies
- D. generation of income
Correct Answer: A. efficient allocation of resources
Explanation: Economics focuses on how individuals and societies allocate scarce resources to satisfy unlimited wants.
2. Methods and Tools of Economic Analysis (2010, Q3)
Question: The standard deviation of a set of data is
- A. always measured from the mode
- B. the most representative of averages
- C. always measured from the median
- D. a measure of dispersion
Correct Answer: D. a measure of dispersion
Explanation: Standard deviation measures the dispersion or variability within a set of data.
3. The Theory of Demand (2010, Q7)
Question: If the price of a commodity with elastic demand increases, the revenue accruing to the producer will
- A. double
- B. increase
- C. be constant
- D. decrease
Correct Answer: D. decrease
Explanation: For a commodity with elastic demand, an increase in price leads to a proportionally larger decrease in quantity demanded, resulting in a decrease in total revenue.
4. The Theory of Consumer Behaviour (2010, Q9)
Question: One of the assumptions of ordinal utility theory is that
- A. choice is not consistent
- B. utility can be ranked
- C. total utility is a function of price
- D. satisfaction is measurable
Correct Answer: B. utility can be ranked
Explanation: Ordinal utility theory assumes that consumers can rank their preferences in order of satisfaction but do not assign specific numerical values to them.
5. The Theory of Supply (2010, Q6)
Question: If the demand for a good is more elastic than its supply, the tax burden is borne
- A. equally by consumers and producers
- B. more by producers
- C. more by consumers
- D. more by retailers and producers
Correct Answer: B. more by producers
Explanation: When demand is more elastic than supply, producers are less able to pass the tax onto consumers without losing significant sales, so they bear a larger share of the tax burden.
6. The Theory of Price Determination (2010, Q10)
Question: The law of diminishing marginal utility explains why
- A. the slope of a normal demand curve is negative
- B. an abnormal demand curve slopes upwards
- C. the slope of a normal demand curve is positive
- D. the consumption of inferior goods increases with income
Correct Answer: A. the slope of a normal demand curve is negative
Explanation: The law of diminishing marginal utility states that as a person consumes more units of a good, the additional satisfaction from each extra unit decreases. This leads to a downward-sloping demand curve, as consumers are willing to pay less for additional units.
7. Economic Systems (2011, Q4)
Question: A mixed economy is best described as a system in which
- A. private individuals and the government own and control resources
- B. only the government owns and controls resources
- C. only private individuals own and control resources
- D. the government allocates resources based on need
Correct Answer: A. private individuals and the government own and control resources
Explanation: A mixed economy combines features of both capitalism and socialism, with resources controlled by both private individuals and the government.
8. Methods and Tools of Economic Analysis (2011, Q9)
Question: Which of the following is a tool used for economic analysis?
- A. Budget
- B. Pie chart
- C. Questionnaire
- D. Ledger
Correct Answer: B. Pie chart
Explanation: A pie chart is a visual tool that economists use to represent and analyze data, often to show proportions of economic variables like market shares or expenditures.
9. The Theory of Demand (2012, Q2)
Question: A leftward shift in the demand curve indicates that
- A. more of the commodity is demanded
- B. less of the commodity is demanded
- C. the commodity is inelastic
- D. the commodity is inferior
Correct Answer: B. less of the commodity is demanded
Explanation: A leftward shift in the demand curve represents a decrease in demand, which can occur due to factors like lower income, changes in consumer preferences, or an increase in the price of a complementary good.
10. The Theory of Consumer Behaviour (2012, Q5)
Question: Marginal utility is defined as
- A. total satisfaction derived from consuming goods and services
- B. the satisfaction derived from consuming an additional unit of a good
- C. the cost of purchasing a unit of a good
- D. the change in income due to price fluctuations
Correct Answer: B. the satisfaction derived from consuming an additional unit of a good
Explanation: Marginal utility measures the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.