BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI
SECOND SEMESTER – 2016-17
COURSE NO.:ECON F211 Marks 15 (0.75*20), Weightage 5%
COURSE TITLE: Principles of Economics Date: 4thFebruary 2017
Tutorial Test - 1 Weight-age 5% (15 Marks)
ID. No: NAME: Tutorial Sec. No.
Read ALL instructions carefully.
All questions are compulsory.
For multiple choice questions, pick the most appropriate answer only.
All questions carry 0.75 Marks. 0.25 Marks will be deducted for every INCORRECT answer.
Write the answers in the Table given below. Ambiguous/Overwritten answers will NOT be evaluated.
Write your answers in the table given below. Answers written elsewhere will NOT be evaluated.
1 5 9 13 17
2 6 10 14 18
3 7 11 15 19
4 8 12 16 20
Please Write your Answer A for True and B for False for following statements.
1) It is possible to measure the economic growth by measuring the change in the total output of the economy. True
2) A Production Possibility Curve is a curve that shows the possible combinations of goods and services available to an
economy, given that all productive resources are fully employed and efficiently used. True
3) One of the three basic questions that must be answered to understand the functioning of the economic system is how
society utilizes available resources of production to produce the goods and services. True
4) There has been a major fire at your only supplier for a key component in your manufacturing process. There would be no
increase in the marginal cost as a result of this incident. False
5) Suppose Australia produces more toothbrushes per hour and fewer envelopes per hour than Indonesia. These countries
only produce these two goods. Thus, Australia will have a comparative advantage in producing toothbrushes. True
6) If the United States can produce baseball for $0.87 per unit and the Dominican Republic can produce the same product for
$0.69 per unit, then which country has a comparative advantage in producing baseball?
A) The United States B) The Dominican Republic
C) Neither D) It is impossible to tell from the data provided
7) Rinku consumes two goods: A and B. Which of the following observations imply that the good A is an inferior good for
Rinku?
A) Rinku’s demand for good A falls as his income falls.
B) Rinku’s demand for good A falls as his income increases.
C) Rinku’s demand for good A rises as the price of good B falls.
D) Rinku’s quantity demanded of good A falls as the price of good A falls.
E) none of the above
8) A fall in the price of a normal good, ceteris paribus, will cause:
A) positive change in demand.
B) negative change in demand.
C) positive change in quantity demanded.
D) negative change in quantity demanded.
E) both A & C.
9) An economic theory is:
A) a generalization that summarizes what we understand about the economic choices made by the societies.
B) a positive statement that cannot use the ceteris paribus clause.
C) usually more complex than the real world.
D) always a mathematical, or nonverbal, model.
E) A & B both.
10) During the time when Jane took this quiz, she could have instead practiced her violin lessons or done her homework. Also,
she agrees that that if she hadn't taken this quiz, she would have preferred doing her homework. Therefore, it is appropriate
to say that Jane's opportunity cost of taking this quiz is:
A) practicing her violin lessons. B) doing her homework.
C) practicing her violin and doing her homework both. D) the time spent on taking this quiz.
11) If the price of a normal good A increases, then, ceteris paribus, it is most likely that:
A) the demand for the complementary goods will increase.
B) the demand for good A will increase.
C) the demand for the substitute good will increase.
D) none of the above.
E) A but not B.
12) The term that emphasizes the concept that; 'making choices in the face of scarcity involves a cost' -is most appropriately
referred to as the:
A) manufacturing cost. B) opportunity cost.
C) marginal cost. D) substitution cost.
13) Which of the following is a macroeconomic concern?
A) the impact of the federal government's budget deficit on the interest rates.
B) the cause of a decline in the price of peanut butter.
C) the number of aircrafts that Boeing will produce in a given year.
D) a rise in the price of sugar affects the demand for carbonated water.
14) Which one of the following falls under the domain of microeconomics?
A) how a tax rate increase will impact total production.
B) comparing changes in annual inflation rates (wholesale price index) across countries.
C) how a trade agreement between the United States and Mexico affects both nations' unemployment rates.
D) how ceilings imposed on rental amount impact the supply of apartments.
15) If an individual believes that an event E occurs only because it follows event F then it is most likely that the individual:
A) suffers from the fallacy of composition. B) suffers from post-hoc ergo propter hoc fallacy.
C) believes that E and F are negatively correlated. D) believes that there is a causal relationship between event E and F.
E) A & B both.
16) A nation can produce at a point outside its PPF
A) when all its resources are optimally utilized. B) when its PPF is bowed out.
C) when it produces efficiently. D) when it trades with other nations.
E) none of the above.
17) Which of the following would be classified as a sunk cost?
A) scrap value of the investment at the end of the investment period.
B) market research costs for decision on whether to launch a new product or not.
C) cost of alternative investment.
D) proceeds from sale of machine to be replaced.
18) The Production Possibility Curve is concave because:
A) opportunity costs are always positive.
B) producing more of one good comes at a sacrifice of another good.
C) factors of production are scarce.
D) not all resources are equally suited for the production of all goods.
E) A & C both.
19) Which one of the following is an example of a normative statement:
A) since this is a hazardous commodity, it must not be consumed.
B) this commodity is hazardous for you.
C) consuming this commodity will make you sick.
D) this commodity has a history of making people sick who consumed it.
20) Economists point out that scarcity confronts
A) the rich but not the poor. B) the poor but not the rich.
C) both the poor and the rich. D) neither the poor nor the rich.
