Section: PRC-

Total marks: 40
Subject: Economics
Time allowed: 30 Minutes.
Teacher: Mr. HM Hasnan
Test- : CH-01 Date:

Name: _________________________________ Rise ID:______________

Note: Each question carries TWO marks:

(1) In a market economy, what does the entrepreneur decide?

a) the combination of resources used b) the demand for the product
c) the equilibrium price of the product d) the level of profits

(2) What is an example of the factor of production enterprise?

a) a shop assistant b) a shop’s profits
c) a shop owner d) a shopping centre

(3) A farmer pays a landowner for the use of a field. What is the income to the landowner
called?
a) Interest b) Profit
c) Rent d) wages

(4) A hospital cannot treat all the people that need treatment. This is an example of

a) excess supply b) limited wants

c) scarcity d) unlimited resources

(5) The table shows the various combinations of food and clothing which a village can produce
using all its resources.
food units clothing units
0 500
100 400
200 250
300 50
400 0

What is the opportunity cost to the village of increasing the production of food from 100
to 300 units?
a) 400 units of clothing b) 350 units of clothing
c) 200 units of clothing d) 50 units of clothing

(6) What is the basic economic problem facing all societies?

a) how to achieve price stability
b) how to keep employment levels high
c) the extent to which incomes should be redistributed
d) what will be produced, how and for whom?

1| BY: HM Hasnan MA (Economics)

(7) The diagram shows two production possibility curves for an economy. What could have
caused the change in the economy’s production possibility curve from XX to YY?

a) a decrease in the price level b) a large number of industrial disputes

c) a major earthquake d) an increase in unemployment

(8) The opportunity cost of something is the nominal price paid for the product.
a) True b) False

(9) Tradeoffs involve an exchange of one thing for another because resources are limited and
can be used in different ways.
a) True b) False

(10) Positive economics question, "What ought to be?" Normative economics predicts the
consequences of alternative actions, answering the questions, "What is?" or "What will be?"
a) True b) False

(11) One of the key economic questions is "where should products be produced?"
a) True b) False

(12) Which of the following is not an economic good?

a) a) Land b) b) Today's newspaper
c) c) Sun-Shine d) d) Mobile set

(13) Which of the following is NOT the characteristic of Sharia Law.

a) Making money from money is permitted
b) Wealth should only be generated through legitimate investment
c) Investment in companies involved with gambling, tobacco, and alcohol is prohibited
d) Short selling and non-asset backed derivatives are not permitted

(14) Which of the following statements relate to normative aspect of economics?

a) Government should provide basic health care to all citizens
b) Government-provided health care increases public expenditures
c) Economists are paid more than the accountants
d) Technology has great impact on productivity

(15) Which of the following is NOT associated with macroeconomics?

a) Study of collective decisions by households or producers.
b) The role of the State Bank in regulating the money supply.
c) The economic behaviour of buyers and sellers in particular markets.
d) Study of issues such as unemployment, inflation, economic growth, etc.

2| BY: HM Hasnan MA (Economics)

(16) Which one of the following good is non-rival but excludable?

a) Private goods b) Public good

c) Club good d) All of the above

(17) The role of state in a mixed economy is:

a) To regulate private sector through economic policies.
b) To provide public and merit goods to its people.
c) To make and execute plans.
d) All of the above.

(18) Which one of the following does not exist in free market economy?
a) Profit motive b) Incentive to work.
c) Optimum allocation of resources d) Protection of labour

(19) Islamic mode of financing includes an arrangement in which a person participates with
his money and another with his effort/ expertise. This mode of financing is known as:
a) Ijara b) Mudaraba
c) Musharaka d) Murabaha

(20) In which one of the following Islamic financial model, bank buys an asset and then sells
to the customer on deferred basis?
a) Ijara b) Mudaraba
c) Musharaka d) Murabaha

3| BY: HM Hasnan MA (Economics)