Bihar Board Class 12 Arts Economics · Ch 1: Introduction

Topics in this test

Difficulty: 3 easy · 9 medium · 18 hard

Sample questions with answers

The first 5 questions of this free test.

1. Q1. Match the central problem in List-I with its correct meaning in List-II: List-I: (a) What to produce (b) How to produce (c) For whom to produce List-II: (i) Choice of technique of production (ii) Distribution of the national product (iii) Choice of goods and their quantities

   • A. (a)-(ii), (b)-(iii), (c)-(i)
   • B. (a)-(iii), (b)-(ii), (c)-(i)
   • C. (a)-(i), (b)-(ii), (c)-(iii)
   • D. (a)-(iii), (b)-(i), (c)-(ii)
   Solution

   What to produce is the choice of goods (iii), how to produce is the choice of technique (i), and for whom to produce deals with distribution (ii).

2. Q2. Consider the following statements about a centrally planned economy: 1. The central problems are solved mainly by the government/planning authority. 2. The forces of market demand and supply decide the allocation of resources. 3. The motive of the planning authority is social welfare rather than private profit. Which statements are correct?

   • A. 1 and 3 only
   • B. 1, 2 and 3
   • C. 2 and 3 only
   • D. 1 and 2 only
   Solution

   In a centrally planned economy the government decides for social welfare; statement 2 describes a market economy, so it is wrong.

3. Q3. Assertion (A): The production possibility curve slopes downward from left to right. Reason (R): With fully and efficiently employed resources, more of one good can be produced only by sacrificing some units of the other good.

   • A. A is false but R is true
   • B. Both A and R are true but R is not the correct explanation of A
   • C. Both A and R are true and R is the correct explanation of A
   • D. A is true but R is false
   Solution

   Both statements are true, and the trade-off caused by fully-used scarce resources is exactly why the curve slopes downward.

4. Q4. Which of the following is NOT one of the central problems of an economy? (Odd one out)

   • A. How to produce
   • B. What to produce
   • C. When to produce
   • D. For whom to produce
   Solution

   The three central problems are what to produce, how to produce and for whom to produce; 'when to produce' is not a central problem.

5. Q5. The production possibility curve is concave to the origin (bowed outward) mainly because:

   • A. the marginal opportunity cost goes on decreasing
   • B. the marginal opportunity cost goes on increasing
   • C. the marginal opportunity cost remains constant
   • D. resources are equally efficient in producing both goods
   Solution

   As more of one good is produced, increasing amounts of the other must be sacrificed, so the marginal rate of transformation (opportunity cost) keeps rising.

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