Bihar Board Class 12 Commerce 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. India is usually described as a mixed economy. The best reason, based on the chapter, is that in India the three central problems are solved:

   • A. Only by a central authority such as the government
   • B. Only by prices through demand and supply in the market
   • C. By foreign countries that trade with India
   • D. By both the market and the government together
   Solution

   A mixed economy uses both the market (prices through demand and supply) and the government together, and India is cited as the example.

2. Q2. Three of the following are studied under microeconomics. Pick the odd one out (the one that belongs to macroeconomics):

   • A. Price in a single market
   • B. Output decision of a single firm
   • C. The general price level of the whole economy
   • D. Behaviour of an individual consumer
   Solution

   Households, individual firms and individual market prices are micro topics; the general price level of the whole economy is a macroeconomic topic.

3. Q3. Assertion (A): The Production Possibility Frontier is concave to the origin. Reason (R): To produce each additional unit of one good, increasing amounts of the other good must be sacrificed. Choose the correct option:

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

   The PPF is concave because of increasing marginal opportunity cost — more and more of the other good is given up for each extra unit, so R correctly explains A.

4. Q4. Match List-I with List-II: List-I: (A) National income (B) Individual firm's price (C) 'What ought to be' (D) Decisions guided by demand and supply List-II: (1) Microeconomics (2) Market economy (3) Macroeconomics (4) Normative economics Choose the correct matching:

   • A. A-4, B-1, C-3, D-2
   • B. A-3, B-1, C-4, D-2
   • C. A-3, B-1, C-2, D-4
   • D. A-1, B-3, C-4, D-2
   Solution

   National income is a macro topic, an individual firm's price is micro, 'what ought to be' is normative, and decisions guided by demand and supply describe a market economy.

5. Q5. Which of the following statements about the Production Possibility Frontier are correct? (i) It slopes downward. (ii) It is concave to the origin. (iii) Points on the curve show unemployment of resources. (iv) It is drawn for given resources and technology.

   • A. (ii), (iii) and (iv) only
   • B. (i), (ii) and (iii) only
   • C. (i), (ii) and (iv) only
   • D. All of (i), (ii), (iii) and (iv)
   Solution

   The PPF slopes downward, is concave (rising marginal opportunity cost) and is drawn for given resources and technology; points on the curve show full and efficient use, not unemployment.

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