Topic 1: Scarcity, Choice and Opportunity Cost
1. A student has enough money to buy either a reference book or a pair of headphones. If the student chooses the book, the headphones represent the opportunity cost of that decision.
True / False
2. Scarcity means that a resource is completely unavailable to everyone.
True / False
3. If a family has unlimited income but still has limited time, it may face scarcity because time is a limited resource.
True / False
4. When resources are scarce, making a choice means accepting that some alternative cannot be selected at the same time.
True / False
5. Opportunity cost always means the total money spent on the chosen option.
True / False
Topic 2: What Do Economists Do?
6. An economist studying rising vegetable prices may examine demand, supply, production costs and other market conditions rather than simply blaming sellers.
True / False
7. Economists only study money, banking and financial markets.
True / False
8. If a government wants to decide how a limited budget should be used, economic analysis can help compare alternative uses of the resources.
True / False
9. An economist can use evidence and data to understand economic behaviour, but economic analysis cannot help in making policy decisions.
True / False
10. Studying how people respond to changes in prices is one way economists analyse economic behaviour.
True / False
Topic 3: Production, Distribution and Consumption
11. A farmer growing wheat, a transport company carrying it and a household buying flour are involved in different stages of economic activity.
True / False
12. Consumption refers only to purchasing a product; using the product is not part of consumption.
True / False
13. If a factory produces goods but the goods cannot reach consumers because of poor distribution, production alone may not satisfy consumer needs effectively.
True / False
14. Distribution in economics is concerned only with dividing profits among business owners.
True / False
15. Production, distribution and consumption are interconnected because what is produced and distributed affects what consumers can use.
True / False
Topic 4: Economics and Policy-Making
16. If the government has a limited budget, economic reasoning can help it compare the benefits and costs of spending on different public services.
True / False
17. A policy can produce benefits for one group while creating costs or difficulties for another group.
True / False
18. Economic policy decisions can always satisfy every person’s wants because governments can create unlimited resources.
True / False
19. Before introducing a policy, policymakers may consider how people and businesses are likely to respond to it.
True / False
20. Economic analysis is useful in policy-making because policies often involve choices under conditions of limited resources.
True / False
Topic 5: Economics and Real-World Problems
21. A rise in the price of fuel can affect transportation costs and may indirectly influence the prices of other goods.
True / False
22. Real-world economic problems can be understood by looking at only one factor in every situation.
True / False
23. Unemployment can affect not only an individual’s income but also the overall use of available human resources.
True / False
24. Economic problems are always caused by a shortage of money and never by scarcity of other resources.
True / False
25. Economics can help analyse problems such as unemployment, inflation, poverty and resource allocation.
True / False
Topic 6: Three Central Problems of an Economy
26. If a country has limited resources, it must decide which goods and services should receive greater priority. This is related to the problem of “what to produce.”
True / False
27. Choosing a production method that uses resources efficiently is related to the problem of “how to produce.”
True / False
28. The question “for whom to produce” is concerned with how the benefits of produced goods and services are distributed among people.
True / False
29. Once an economy decides what to produce, the other two central problems automatically disappear.
True / False
30. The three central problems arise because resources are limited while human wants are numerous.
True / False
Topic 7: Planned Economy
31. In a planned economy, major economic decisions are largely made by a central authority rather than being determined entirely by individual buyers and sellers.
True / False
32. A planned economy necessarily means that households have no economic choices at all.
True / False
33. If a government decides to give priority to producing essential goods instead of luxury goods, this can reflect planning based on social priorities.
True / False
34. In a planned economy, resource allocation may be guided by government plans and priorities.
True / False
35. The existence of government planning means that scarcity no longer exists.
True / False
Topic 8: Free-Market Economy
36. In a free-market economy, prices can provide signals to producers and consumers about relative scarcity and demand.
True / False
37. A free-market economy means that the government has absolutely no role in the economy under any circumstances.
True / False
38. If demand for a product rises while its supply remains limited, the resulting price signal may encourage producers to increase production.
True / False
39. In a free-market economy, every consumer will necessarily have equal access to every good.
True / False
40. Market decisions are influenced by the interaction of buyers and sellers in a free-market system.
True / False
Topic 9: Mixed Economy
41. A mixed economy combines elements of market-based decision-making with government involvement.
True / False
42. In a mixed economy, the government can intervene in some areas while markets operate in others.
True / False
43. A mixed economy necessarily eliminates all problems related to scarcity.
True / False
44. Government provision of certain public services can exist alongside privately produced goods and services in a mixed economy.
True / False
45. The presence of private businesses means that an economy cannot be called a mixed economy.
True / False
Topic 10: Comparison of Economic Systems
46. The major difference between planned and free-market systems includes how important economic decisions are made and how resources are allocated.
True / False
47. A free-market economy and a planned economy use exactly the same mechanism for deciding what to produce.
True / False
48. Comparing economic systems requires examining both their decision-making mechanisms and their possible advantages and limitations.
True / False
49. A mixed economy can combine market mechanisms with government intervention, so it cannot be placed completely at either extreme.
True / False
50. One economic system can automatically solve every economic problem regardless of circumstances.
True / False
Topic 11: Welfare Economy
51. An economy concerned with welfare may consider people’s well-being in addition to the production of goods and services.
True / False
52. Economic welfare is concerned only with increasing the quantity of goods produced, regardless of their effect on people’s lives.
True / False
53. Better access to essential services can contribute to people’s welfare even if it does not directly increase their income.
True / False
54. A rise in national output automatically guarantees that every person experiences an improvement in well-being.
True / False
55. Welfare-oriented economic thinking may give importance to factors such as basic needs, opportunities and social well-being.
True / False
Topic 12: Economic Growth vs. Economic Welfare
56. Economic growth generally refers to an increase in the production or income of an economy, while economic welfare is a broader idea related to people’s well-being.
True / False
57. If a country’s output increases but serious inequalities and lack of essential services remain, economic growth alone may not show the complete picture of welfare.
True / False
58. Economic growth and economic welfare are exactly the same concept because both measure only the amount of goods produced.
True / False
59. A country can experience economic growth while some sections of its population continue to face poor living conditions.
True / False
60. Improving people’s welfare may require attention to factors beyond increases in national production.
True / False
Topic 13: Social Safety Nets
61. A social safety net can provide support to vulnerable people when they face economic difficulties.
True / False
62. Social safety nets are designed only for people who are already financially secure.
True / False
63. If a poor family receives support that helps it meet basic needs during a difficult period, that support can function as a social safety net.
True / False
64. Social safety nets can reduce the impact of economic shocks on vulnerable sections of society.
True / False
65. The existence of a social safety net means that people no longer need to work or make economic decisions.
True / False
Topic 14: Importance of Social Safety Nets
66. Social safety nets can help protect vulnerable households from falling below a minimum level of living during difficult economic conditions.
True / False
67. A social safety net can be important during events such as loss of employment or sudden economic hardship.
True / False
68. Social safety nets are unnecessary because every household has enough resources to deal with unexpected economic problems.
True / False
69. By supporting basic needs, social safety nets can contribute to social stability and human well-being.
True / False
70. The effectiveness of a social safety net depends partly on whether support reaches the people who actually need it.
True / False
Topic 15: Application of Economics in Real Life
71. A family comparing different uses of its monthly income is applying the economic idea of choice under scarcity.
True / False
72. A student deciding whether to spend an evening studying or attending a social event faces no economic problem because no money is involved.
True / False
73. Comparing the benefits and costs of different alternatives can help people make more informed economic decisions.
True / False
74. Economic principles are relevant only to governments and large companies, not to ordinary households.
True / False
75. Choosing between saving money for a future goal and spending it today can involve opportunity cost and economic decision-making.
True / False
Detailed Answer Key with Explanations
Topic 1: Scarcity, Choice and Opportunity Cost
1. True. Opportunity cost is the value of the next best alternative given up when a choice is made. If the headphones were the next best alternative, they represent the opportunity cost.
2. False. Scarcity does not mean that a resource is completely unavailable. It means resources are limited relative to people’s wants.
3. True. Time is limited. Even when money is available, a person cannot use the same hour for two activities simultaneously.
4. True. Because resources are limited, choosing one alternative often means giving up another alternative.
5. False. Opportunity cost is not necessarily the money spent on the chosen option. It is the value of the next best alternative forgone.
Topic 2: What Do Economists Do?
6. True. Economists examine several factors that may influence prices, including demand, supply and production conditions.
7. False. Economics studies much more than money and banking. It also examines choices, production, consumption, resource allocation, markets and economic policies.
8. True. Economic analysis can help compare alternative uses of scarce public resources.
9. False. Economic analysis can provide evidence and reasoning that assist policymakers in designing and evaluating policies.
10. True. Understanding how consumers and producers respond to prices is an important part of economic analysis.
Topic 3: Production, Distribution and Consumption
11. True. These activities represent different parts of the process through which goods move from production toward final use.
12. False. Consumption includes the use of goods and services to satisfy human wants; it is not limited to the act of purchasing.
13. True. Goods need to reach consumers effectively. Poor distribution can prevent available production from meeting consumer needs.
14. False. Distribution in the economic sense is broader than dividing profits. It concerns how goods and services reach consumers and, in another context, how income or resources are distributed.
15. True. These activities are interconnected: production creates goods and services, distribution helps make them available, and consumption uses them to satisfy wants.
Topic 4: Economics and Policy-Making
16. True. A limited government budget requires choices among competing uses, so comparing costs and benefits can support better decisions.
17. True. Policies can have different effects on different groups. Therefore, policymakers may need to consider both benefits and costs.
18. False. Governments also face scarcity. Public resources such as money, time, labour and infrastructure are limited.
19. True. People’s responses can affect the outcome of a policy, so policymakers may consider likely behavioural responses.
20. True. Policy-making often involves allocating scarce resources among competing objectives.
Topic 5: Economics and Real-World Problems
21. True. Fuel is an input into transportation, so higher fuel costs can increase transportation costs and potentially affect other prices.
22. False. Many economic problems have several interconnected causes. Looking at only one factor may give an incomplete explanation.
23. True. Unemployment means available labour is not being fully used and can also reduce the income of affected individuals.
24. False. Scarcity can involve many resources, including time, labour, natural resources and capital, not merely money.
25. True. Economic analysis can be applied to issues such as unemployment, inflation, poverty and allocation of resources.
Topic 6: Three Central Problems of an Economy
26. True. Limited resources require an economy to decide which goods and services should be produced.
27. True. “How to produce” concerns the choice of production methods and combinations of resources.
28. True. “For whom to produce” concerns how goods and services are distributed among different people or groups.
29. False. Deciding what to produce does not automatically answer how production should take place or who should receive the resulting goods and services.
30. True. These central problems arise from the basic economic problem of scarce resources and numerous wants.
Topic 7: Planned Economy
31. True. In a planned economy, major economic decisions are substantially influenced or made by a central authority.
32. False. Planning does not logically mean that households have absolutely no choices. The degree of individual choice can vary.
33. True. Giving priority to essential goods can reflect a central authority’s social or economic objectives.
34. True. Government plans and priorities can influence the allocation of resources in a planned economy.
35. False. Planning does not eliminate scarcity. Resources remain limited even when their allocation is centrally guided.
Topic 8: Free-Market Economy
36. True. Prices can communicate information about demand and supply conditions and therefore influence economic decisions.
37. False. “Free market” refers primarily to the role of market forces in economic decisions. It does not logically mean that government has absolutely no role.
38. True. Higher demand combined with limited supply can create price signals that may encourage producers to supply more.
39. False. Market outcomes do not guarantee equal access to every good for every consumer.
40. True. Buyers and sellers interact through markets, influencing prices and quantities exchanged.
Topic 9: Mixed Economy
41. True. A mixed economy combines market mechanisms with government involvement.
42. True. Markets may determine many decisions while the government intervenes in selected areas.
43. False. A mixed economy still faces scarcity because resources remain limited.
44. True. Public services and private economic activity can coexist in a mixed economy.
45. False. Private businesses can operate in a mixed economy. In fact, the coexistence of market activity and government involvement is a defining feature.
Topic 10: Comparison of Economic Systems
46. True. One major difference is who or what plays the dominant role in making economic decisions and allocating resources.
47. False. Free-market systems rely substantially on market interactions, while planned systems rely substantially on central planning.
48. True. Meaningful comparison requires considering both how each system operates and the possible advantages and limitations.
49. True. A mixed economy combines elements of market mechanisms and government intervention.
50. False. No economic system automatically solves every economic problem under every circumstance. Each system can have advantages and limitations.
Topic 11: Welfare Economy
51. True. Welfare-oriented thinking considers people’s broader well-being rather than focusing only on production.
52. False. Welfare involves more than the quantity of output. People’s access to basic needs and overall living conditions can also matter.
53. True. Services such as education or healthcare can improve well-being even when they do not directly raise a person’s income.
54. False. Higher output does not automatically ensure that everyone experiences better living conditions.
55. True. Welfare-oriented approaches can consider basic needs, opportunities and social well-being.
Topic 12: Economic Growth vs. Economic Welfare
56. True. Economic growth concerns increases in economic output or income, whereas welfare has a broader focus on people’s well-being.
57. True. Growth alone may not reveal how benefits are distributed or whether important social needs are being met.
58. False. Growth and welfare are related but distinct concepts.
59. True. An economy can grow while some groups continue to experience poverty or inadequate living conditions.
60. True. Welfare may require consideration of health, education, basic needs, opportunities and other factors beyond output.
Topic 13: Social Safety Nets
61. True. Social safety nets are intended to provide support to people who are vulnerable to economic hardship.
62. False. Their purpose is generally to support vulnerable or disadvantaged people rather than those who are already financially secure.
63. True. Assistance that helps a vulnerable household meet basic needs during hardship can act as a safety net.
64. True. Such support can reduce the effects of sudden income loss or other economic shocks.
65. False. Safety nets provide support; they do not eliminate the need for work, responsibility or economic decision-making.
Topic 14: Importance of Social Safety Nets
66. True. Safety nets can help vulnerable households maintain basic living conditions during difficult periods.
67. True. Loss of employment or sudden economic hardship can create situations in which safety-net support becomes important.
68. False. Households can face unexpected shocks, and not every household has sufficient resources to manage them independently.
69. True. Protecting basic needs can contribute to human well-being and social stability.
70. True. A safety-net programme is more effective when assistance reaches the people who need it.
Topic 15: Application of Economics in Real Life
71. True. A family with limited income must choose among competing uses of its resources, which is a basic economic problem.
72. False. Economic decisions do not require money to be involved. Time is also scarce, so choosing one activity can mean giving up another.
73. True. Comparing expected benefits and costs can help people make more rational and informed choices.
74. False. Economics applies to households and individuals as well as governments and businesses.
75. True. Spending today means giving up the opportunity to use that money for a future purpose, while saving also has an opportunity cost because current consumption may be forgone.
Final Tabular Answer Key
| Q. No. | Answer | Q. No. | Answer | Q. No. | Answer |
| 1 | True | 26 | True | 51 | True |
| 2 | False | 27 | True | 52 | False |
| 3 | True | 28 | True | 53 | True |
| 4 | True | 29 | False | 54 | False |
| 5 | False | 30 | True | 55 | True |
| 6 | True | 31 | True | 56 | True |
| 7 | False | 32 | False | 57 | True |
| 8 | True | 33 | True | 58 | False |
| 9 | False | 34 | True | 59 | True |
| 10 | True | 35 | False | 60 | True |
| 11 | True | 36 | True | 61 | True |
| 12 | False | 37 | False | 62 | False |
| 13 | True | 38 | True | 63 | True |
| 14 | False | 39 | False | 64 | True |
| 15 | True | 40 | True | 65 | False |
| 16 | True | 41 | True | 66 | True |
| 17 | True | 42 | True | 67 | True |
| 18 | False | 43 | False | 68 | False |
| 19 | True | 44 | True | 69 | True |
| 20 | True | 45 | False | 70 | True |
| 21 | True | 46 | True | 71 | True |
| 22 | False | 47 | False | 72 | False |
| 23 | True | 48 | True | 73 | True |
| 24 | False | 49 | True | 74 | False |
| 25 | True | 50 | False | 75 | True |