Q.1 What does microeconomics primarily study?
Behavior of individual units
National income
Inflation
International trade
Explanation - Microeconomics focuses on the decision-making of individuals, households, and firms rather than the economy as a whole.
Correct answer is: Behavior of individual units
Q.2 Which of the following is NOT a topic under microeconomics?
Consumer behavior
Demand and supply
Fiscal policy
Price determination
Explanation - Fiscal policy is a macroeconomic concept related to government spending and taxation, not microeconomics.
Correct answer is: Fiscal policy
Q.3 The central problem of economics is:
Unlimited wants and limited resources
Full employment
Inflation
International trade
Explanation - Economics arises from scarcity — resources are limited but human wants are unlimited.
Correct answer is: Unlimited wants and limited resources
Q.4 Which term refers to the satisfaction derived from consumption?
Supply
Utility
Scarcity
Demand
Explanation - Utility measures the satisfaction or pleasure a consumer gains from consuming goods or services.
Correct answer is: Utility
Q.5 Opportunity cost is best defined as:
Money spent on goods
The next best alternative forgone
Total benefit received
Resources available
Explanation - Opportunity cost represents the benefit of the alternative you give up when making a choice.
Correct answer is: The next best alternative forgone
Q.6 Microeconomics is also called:
Aggregate economics
Individual economics
Descriptive economics
Normative economics
Explanation - Microeconomics studies individual economic agents like households and firms, hence called individual economics.
Correct answer is: Individual economics
Q.7 The law of demand states that, other things being equal:
When price rises, demand falls
When price rises, demand rises
When income rises, demand falls
Supply creates demand
Explanation - Law of demand states an inverse relationship between price and quantity demanded, assuming other factors remain constant.
Correct answer is: When price rises, demand falls
Q.8 Which of the following is an example of a microeconomic issue?
Inflation rate in India
Unemployment in the economy
Pricing of milk in a city
National income growth
Explanation - Microeconomics looks at specific markets and individual goods, such as the price of milk.
Correct answer is: Pricing of milk in a city
Q.9 Scarcity in economics means:
Goods are rare
Resources are limited compared to wants
Goods are expensive
Demand is high
Explanation - Scarcity arises when resources are limited but human wants are unlimited.
Correct answer is: Resources are limited compared to wants
Q.10 Which branch of economics studies national income?
Microeconomics
Macroeconomics
International economics
Public economics
Explanation - Macroeconomics deals with aggregate concepts such as national income, employment, and inflation.
Correct answer is: Macroeconomics
Q.11 In microeconomics, the term 'firm' refers to:
The government
A single production unit
All industries together
National companies
Explanation - A firm is a single economic unit that produces goods or services.
Correct answer is: A single production unit
Q.12 Positive economics deals with:
What ought to be
Value judgments
What is
Ethical decisions
Explanation - Positive economics describes facts and relationships as they are, without judgments.
Correct answer is: What is
Q.13 Normative economics deals with:
What is
What ought to be
Only statistics
Laws of demand and supply
Explanation - Normative economics makes value judgments and suggests policies for improvement.
Correct answer is: What ought to be
Q.14 Which one of these is NOT a microeconomic concept?
Elasticity of demand
Market equilibrium
Consumer surplus
Gross Domestic Product
Explanation - GDP is a macroeconomic measure of a country’s total output.
Correct answer is: Gross Domestic Product
Q.15 The study of how consumers allocate income to maximize satisfaction belongs to:
Macroeconomics
Microeconomics
International economics
Public finance
Explanation - Consumer behavior, including utility maximization, is part of microeconomics.
Correct answer is: Microeconomics
Q.16 The demand curve generally slopes:
Upward
Downward
Horizontally
Vertically
Explanation - Due to the inverse relationship between price and demand, the demand curve typically slopes downward.
Correct answer is: Downward
Q.17 Which of these is an assumption of microeconomics?
Aggregate demand is stable
Resources are unlimited
Ceteris paribus condition
National policies are fixed
Explanation - Microeconomic laws like demand and supply are based on the assumption 'other things remain constant' (ceteris paribus).
Correct answer is: Ceteris paribus condition
Q.18 Which type of economics answers questions like 'How should resources be allocated?'
Positive economics
Normative economics
Descriptive economics
Applied economics
Explanation - Normative economics involves value-based recommendations about resource allocation.
Correct answer is: Normative economics
Q.19 Which of the following is a characteristic of microeconomics?
It studies overall price level
It deals with aggregates
It studies individual units
It deals with national income
Explanation - Microeconomics focuses on individuals and firms, unlike macroeconomics.
Correct answer is: It studies individual units
Q.20 An economy faces the problem of 'What to produce' because:
Resources are unlimited
Wants are limited
Resources are scarce
Markets are closed
Explanation - Since resources are scarce, choices must be made about what goods to produce.
Correct answer is: Resources are scarce
Q.21 Which of the following is considered a microeconomic decision?
Setting a nation’s interest rate
Government budget allocation
A firm deciding production levels
Measuring GDP growth
Explanation - Production decisions of a firm fall under microeconomics.
Correct answer is: A firm deciding production levels
Q.22 In economics, the term 'scarcity' applies to:
Only poor countries
Only developing nations
All economies
Only capitalist economies
Explanation - Scarcity is a universal problem faced by all economies, regardless of development level.
Correct answer is: All economies
Q.23 The concept of 'marginal utility' means:
Total satisfaction from all goods
Satisfaction from the last unit consumed
Opportunity cost
Average satisfaction
Explanation - Marginal utility is the extra satisfaction obtained from consuming one more unit of a good.
Correct answer is: Satisfaction from the last unit consumed
Q.24 Which of these is an example of opportunity cost?
Buying a book instead of going for a movie
Government spending on defense
Increase in GDP
Unemployment rise
Explanation - The opportunity cost of buying a book is the enjoyment of the movie forgone.
Correct answer is: Buying a book instead of going for a movie
Q.25 Microeconomics helps in understanding:
Inflation in the country
How households make choices
Unemployment rate
Balance of payments
Explanation - Microeconomics examines individual decision-making, such as how households allocate income.
Correct answer is: How households make choices