UNIT-1 ECONOMICS CATEGORIZED-PYQ -

📚

UNIT-1 ECONOMICS CATEGORIZED-PYQ

Economics

⏱️ 30 Minutes

❓ 15 Questions

📅 2022, 2023 & 2024

✍️ Long Answers

📌 Answers are locked once submitted — results and explanations appear at the end.

UNIT-1 ECONOMICS CATEGORIZED-PYQ

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QUESTION 1 OF 15

The Central problems of an economy that relate to the question 'what to produce and in what quantities does not deal in : (PYQ 2022)

Answer Review

1 The Central problems of an economy that relate to the question 'what to produce and in what quantities does not deal in : (PYQ 2022)

A Technique of production

B Distribution of resources between different goods produced

C Quantities of different goods

D Combination of goods to be produced in the economy

💡 Short Explanation

�� "What to produce" deals with the choice of goods and quantities. �� It asks which goods should be produced in the economy. �� Technique of production belongs to the question "how to produce."

✅ Correct Answer Explanation

(Detailed) → The central problem "what to produce and in what quantities" deals with the allocation of scarce resources among different goods and services. → It decides the combination of goods to be produced and the exact quantity of each good. → Technique of production does not come under "what to produce." → Technique of production is related to another central problem: "how to produce." → Hence, Option A is the correct answer.

❓ Why Other Options Are Incorrect

B) Distribution of resources between different goods produced → This is related to the central problem of what to produce because resources must be allocated among different goods to manufacture them.
C) Quantities of different goods → This is directly included in the question "what to produce and in what quantities."
D) Combination of goods to be produced in the economy → This is directly related to the problem of what goods should be produced.

🎯 Strategy

Used

�� Option A → Correct because technique of production belongs to "how to produce."
�� Option B → Incorrect because resource distribution among goods is part of "what to produce."
�� Option C → Incorrect because quantities of goods are directly included.
�� Option D → Incorrect because combination of goods is directly included.
�� Final Answer → Option A.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

2 Which of the main factor is responsible to create economic problems in society? (PYQ 2023)

A Resources are costly

B Unlimited wants and surplus resources

C Unlimited wants and scarce resources

D High density of population

💡 Short Explanation

�� Economic problems arise due to scarcity. �� Human wants are unlimited. �� Resources have alternative uses and are limited in nature.

✅ Correct Answer Explanation

(Detailed) → The central economic problem arises because human wants are unlimited but the resources to fulfill them are scarce. → Since scarce resources cannot satisfy all wants simultaneously, society must make choices. → This scarcity leads to fundamental problems such as what to produce, how to produce, and for whom to produce. → Hence, Option C is the correct answer.

❓ Why Other Options Are Incorrect

A) Resources are costly → Costliness alone is not the main cause; the fundamental issue is scarcity relative to demand.
B) Unlimited wants and surplus resources → If resources are in surplus, the economic problem of choice will not arise in the same pressing way.
D) High density of population → Population density can increase pressure on resources, but the fundamental economic problem is always scarcity combined with unlimited wants.

🎯 Strategy

Used

�� Option A → Incorrect because cost is not the basic root cause.
�� Option B → Incorrect because surplus resources reduce scarcity.
�� Option C → Correct because scarcity and unlimited wants create economic problems.
�� Option D → Incorrect because population density is not the fundamental cause.
�� Final Answer → Option C.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

3 Which of the following is not a central problem of an economy? (PYQ 2023)

A What to produce more?

B How much of which resource to be used?

C How to increase resources?

D Distribution of final produce among the individuals

💡 Short Explanation

�� Central problems arise due to resource scarcity. �� The main problems are what to produce, how to produce, and for whom to produce. �� Increasing resources is a long-term growth goal, not a standard central allocation problem.

✅ Correct Answer Explanation

(Detailed) → The fundamental central problems of an economy revolve around the allocation of scarce resources. → These core problems are: what to produce and in what quantities, how to produce using which technique, and for whom to produce. → "How to increase resources?" is related to economic growth over time. → It is not the basic central problem of allocation at a given point in time. → Hence, Option C is the correct answer.

❓ Why Other Options Are Incorrect

A) What to produce more? → This is an inherent part of the central problem of what to produce.
B) How much of which resource to be used? → This is directly related to the problem of how to produce.
D) Distribution of final produce among the individuals → This relates to the problem of for whom to produce.

🎯 Strategy

Used

�� Option A → Incorrect because it is a core central problem.
�� Option B → Incorrect because it is a core central problem.
�� Option C → Correct because it deals with growth, not a standard central allocation problem.
�� Option D → Incorrect because it is a core central problem.
�� Final Answer → Option C.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

4 Which of the following is studied under micro economics? (PYQ 2023)

A National Income of a country

B Condition of unemployment

C Textile industry

D Revenue deficit of the country

💡 Short Explanation

�� Microeconomics studies individual economic units. �� It includes the behaviour of specific firms, industries, and consumers. �� Macroeconomics studies economy-wide aggregates.

✅ Correct Answer Explanation

(Detailed) → Microeconomics studies the economic behaviour of individual economic units such as a consumer, a firm, a specific industry, or a market. → The textile industry represents a particular industry within the economy. → Therefore, analyzing the textile industry comes under microeconomics. → National income, unemployment, and revenue deficit are broad economy-wide aggregates studied in macroeconomics. → Hence, Option C is the correct answer.

❓ Why Other Options Are Incorrect

A) National Income of a country → National income is an aggregate macroeconomic concept.
B) Condition of unemployment → Overall unemployment at the economy level is studied under macroeconomics.
D) Revenue deficit of the country → Revenue deficit is a government budget concept and falls under macroeconomics.

🎯 Strategy

Used

�� Option A → Incorrect because it is macroeconomics.
�� Option B → Incorrect because it is macroeconomics.
�� Option C → Correct because it focuses on a single industry.
�� Option D → Incorrect because it is macroeconomics.
�� Final Answer → Option C.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

5 Which statement is not related to Normative Economics? (PYQ 2023)

A It prescribes norms of welfare of the society

B It regulates in order to achieve idealised norms

C It explains ideal situation and gives policy prescriptions explicitly

D It explains actual behavior of economic agents

💡 Short Explanation

�� Normative economics deals with "what ought to be" or ideal situations. �� It involves value judgments and policy prescriptions. �� Actual factual behaviour is studied under positive economics.

✅ Correct Answer Explanation

(Detailed) → Normative economics is concerned with value judgments, social welfare, and policy prescriptions. → It explains what should happen or what ought to be done. → The statement "It explains actual behavior of economic agents" is an objective and factual statement. → Factual and cause-effect observations belong to positive economics, not normative economics. → Hence, Option D is the correct answer.

❓ Why Other Options Are Incorrect

A) It prescribes norms of welfare of the society → This is related to normative economics because it deals with welfare norms.
B) It regulates in order to achieve idealised norms → This is normative in nature because it focuses on achieving ideals.
C) It explains ideal situation and gives policy prescriptions explicitly → This directly describes normative economics.

🎯 Strategy

Used

�� Option A → Incorrect because it is related to normative economics.
�� Option B → Incorrect because it is related to normative economics.
�� Option C → Incorrect because it is related to normative economics.
�� Option D → Correct because explaining actual behavior is positive economics.
�� Final Answer → Option D.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

6 Which of the following does not constitute the central problems of an economy ? (PYQ 2023)

A Whether to have more agricultural goods or to have more industrial products

B Whether to use more labour or more machines

C Whether to consume more of leisure or more of work related activity

D Who gets how much of the goods that are produced in the economy

💡 Short Explanation

�� Central problems deal with what, how, and for whom to produce. �� "What to produce" involves choosing between agricultural or industrial goods. �� Leisure vs work is an individual choice, not a central problem of an economy.

✅ Correct Answer Explanation

(Detailed) → The three core central problems of an economy are: what to produce, how to produce, and for whom to produce. → Option A relates to the problem of what to produce. → Option B relates to the problem of how to produce. → Option D relates to the problem of for whom to produce. → Option C represents an individual choice between leisure and work-related activity. → It is not a standard central problem of an economy. → Hence, Option C is the correct answer.

❓ Why Other Options Are Incorrect

A) Whether to have more agricultural goods or to have more industrial products → This constitutes the problem of what to produce.
B) Whether to use more labour or more machines → This constitutes the problem of how to produce.
D) Who gets how much of the goods that are produced in the economy → This constitutes the problem of for whom to produce.

🎯 Strategy

Used

�� Option A → Incorrect because it is a central problem.
�� Option B → Incorrect because it is a central problem.
�� Option C → Correct because it is an individual choice, not a standard central problem.
�� Option D → Incorrect because it is a central problem.
�� Final Answer → Option C.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

7 The problem of choice arises from : (PYQ 2023)

A Abundance

B Scarcity

C Competing usages

D Economic activities

💡 Short Explanation

�� Human wants are unlimited. �� Resources available to satisfy wants are limited. �� This limitation is called scarcity, which forces people to choose.

✅ Correct Answer Explanation

(Detailed) → The fundamental economic problem arises because resources are scarce in relation to unlimited human wants. → Since all wants cannot be satisfied simultaneously, individuals and societies are forced to make choices. → These choices are about how to best allocate available resources. → Therefore, scarcity is the root cause of the problem of choice. → Hence, Option B is the correct answer.

❓ Why Other Options Are Incorrect

A) Abundance → Abundance means resources are plentiful. If there is abundance, the need for choice is eliminated.
C) Competing usages → Alternative uses make choices complex, but the primary reason choice is required is scarcity.
D) Economic activities → Economic activities are actions taken to deal with the problem, not the root cause.

🎯 Strategy

Used

�� Option A → Incorrect because abundance removes choice pressure.
�� Option B → Correct because scarcity fundamentally forces choice.
�� Option C → Incorrect because scarcity is the main driver.
�� Option D → Incorrect because economic activities are outcomes.
�� Final Answer → Option B.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

8 The Book "All Enquiry into the nature and causes of the Wealth of Nations" written by : (PYQ 2023)

A John Maynard Keynes

B Adam Smith

C Marshall

D Pigan

💡 Short Explanation

�� The Wealth of Nations was published in 1776. �� It was written by Scottish economist Adam Smith. �� Adam Smith is widely considered the father of modern economics.

✅ Correct Answer Explanation

(Detailed) → The book "An Enquiry into the Nature and Causes of the Wealth of Nations" is a foundational text in classical economics. → It was written by Adam Smith. → Adam Smith introduced core concepts like the invisible hand, free markets, and division of labour. → This book marks the birth of modern economics as a distinct discipline. → Hence, Option B is the correct answer.

❓ Why Other Options Are Incorrect

A) John Maynard Keynes → Keynes wrote "The General Theory of Employment, Interest and Money."
C) Marshall → Alfred Marshall wrote "Principles of Economics."
D) Pigan → This refers to A.C. Pigou, who is known for welfare economics, not this book.

🎯 Strategy

Used

�� Option A → Incorrect author.
�� Option B → Correct author of Wealth of Nations.
�� Option C → Incorrect author.
�� Option D → Incorrect author.
�� Final Answer → Option B.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

9 Which of the following definition is correct answer of the production possibility set of the economy ? (PYQ 2023)

A The collection of all possible combination of the goods and services that can not be produced a fixed amount

B The collection of all possible combinations of goods and services that can be produced from a given amount of resources and a given stock of technological knowledge

C The combination of different type of goods and its utilisation are related with each other

D The combination of all goods and its resources creates the production possibility curve

💡 Short Explanation

�� A production possibility set shows all feasible combinations. �� It depends on the available resources in the economy. �� It assumes a given state of technology.

✅ Correct Answer Explanation

(Detailed) → The production possibility set of an economy refers to all possible combinations of goods and services that can be produced. → These combinations are limited by the given amount of resources. → They are also limited by the given stock of technological knowledge. → It represents the productive capacity of the economy. → Hence, Option B is the correct answer.

❓ Why Other Options Are Incorrect

A) The collection of all possible combination of the goods and services that can not be produced a fixed amount → This is incorrect because the set describes what can be produced, not what cannot be produced.
C) The combination of different type of goods and its utilisation are related with each other → This is vague and not the formal definition.
D) The combination of all goods and its resources creates the production possibility curve → This does not correctly define the production possibility set.

🎯 Strategy

Used

�� Option A → Incorrect because it focuses on what cannot be produced.
�� Option B → Correct because it matches the definition.
�� Option C → Incorrect because it is vague.
�� Option D → Incorrect because it loosely describes the curve, not the set.
�� Final Answer → Option B.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

10 What is the other name of the central problem of economy-For whom to produce ? (PYQ 2023)

A Problem of distribution

B Problem of allocation of resources

C Problem of quantities of production

D Problem of choice of techniques

💡 Short Explanation

�� "For whom to produce" determines who receives the final goods. �� It focuses on sharing output among individuals. �� Thus, it is mainly a problem of distribution.

✅ Correct Answer Explanation

(Detailed) → The central problem "For whom to produce?" deals with the distribution of produced goods and services. → It asks who will receive the goods and services produced in the economy. → It is linked with the distribution of income and output among individuals. → Therefore, it is also known as the problem of distribution. → Hence, Option A is the correct answer.

❓ Why Other Options Are Incorrect

B) Problem of allocation of resources → This refers more broadly to what to produce and how resources are assigned.
C) Problem of quantities of production → This relates to "what to produce and in what quantities."
D) Problem of choice of techniques → This is related to "how to produce."

🎯 Strategy

Used

�� Option A → Correct because "for whom" directly implies distribution of output.
�� Option B → Incorrect because it relates more to allocation.
�� Option C → Incorrect because it relates to what and how much to produce.
�� Option D → Incorrect because it relates to how to produce.
�� Final Answer → Option A.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

11 Production possibility curve shifts rightward, when: (PYQ 2023)

A Population of the country increases

B Technology becomes obsolete

C There are massive unemployment

D Resources increase or technology is upgraded

💡 Short Explanation

�� A rightward shift means productive capacity has increased. �� This happens when resources increase. �� It also happens when technology improves.

✅ Correct Answer Explanation

(Detailed) → A Production Possibility Curve represents the maximum possible combinations of two goods that an economy can produce. → It is based on given resources and technology. → When resources increase, the economy can produce more goods. → When technology is upgraded, productivity improves. → Both these situations increase productive capacity. → This is shown by a rightward or outward shift of the PPC. → Hence, Option D is the correct answer.

❓ Why Other Options Are Incorrect

A) Population of the country increases → Population growth alone does not guarantee a rightward shift unless it increases productive labour.
B) Technology becomes obsolete → Obsolete technology reduces efficiency and may shift the PPC leftward.
C) There are massive unemployment → Unemployment means resources are underutilized; the economy operates inside the PPC, but the curve does not shift.

🎯 Strategy

Used

�� Option A → Incorrect because population increase alone is not enough.
�� Option B → Incorrect because obsolete technology reduces productive capacity.
�� Option C → Incorrect because unemployment shows underutilisation, not a shift.
�� Option D → Correct because more resources or better technology increases capacity.
�� Final Answer → Option D.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

12 Opportunity cost refers to: (PYQ 2023)

A Loss of opportunity

B Gain of opportunity

C Next best alternative forgone

D Net worst alternative forgone

💡 Short Explanation

�� Resources are scarce and have alternative uses. �� Choosing one option requires sacrificing another. �� The value of the next best sacrificed alternative is opportunity cost.

✅ Correct Answer Explanation

(Detailed) → Opportunity cost is the value of the next best alternative that is given up when a choice is made. → Because resources are limited, every economic decision involves a trade-off. → The true cost of any decision is what must be sacrificed to achieve it. → The sacrificed option must be the next best alternative, not any random option. → Hence, Option C is the correct answer.

❓ Why Other Options Are Incorrect

A) Loss of opportunity → This is vague and not the precise economic definition.
B) Gain of opportunity → Opportunity cost refers to what is sacrificed, not what is gained.
D) Net worst alternative forgone → Opportunity cost refers to the best alternative sacrificed, not the worst.

🎯 Strategy

Used

�� Option A → Incorrect because it is not precise.
�� Option B → Incorrect because it contradicts the concept of cost.
�� Option C → Correct because it is the formal definition.
�� Option D → Incorrect because the worst alternative is not relevant.
�� Final Answer → Option C.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

13 Which of the following is an example of positive economic analysis: (PYQ 2023)

A The government must provide for the basic needs of the poor.

B A vast majority of the poor are not able to meet their basic nutritional needs.

C Poverty should be alleviated with the help of wage generation programmes.

D Housing schemes must be accompanied with poverty alleviation programmes.

💡 Short Explanation

�� Positive economics is based on facts. �� It describes "what is" without value judgment. �� Normative economics uses words like "should" or "must."

✅ Correct Answer Explanation

(Detailed) → Positive economic analysis is objective and based on facts or testable data. → It describes economic reality as it exists. → Option B states a factual condition regarding poverty and nutrition. → This statement can be verified through data. → It does not prescribe a policy or pass a moral judgment. → Hence, Option B is the correct answer.

❓ Why Other Options Are Incorrect

A) The government must provide for the basic needs of the poor. → The word "must" makes it a normative policy recommendation.
C) Poverty should be alleviated with the help of wage generation programmes. → The word "should" indicates a normative value judgment.
D) Housing schemes must be accompanied with poverty alleviation programmes. → The word "must" makes it a normative prescription.

🎯 Strategy

Used

�� Option A → Incorrect because of "must."
�� Option B → Correct because it is a verifiable fact.
�� Option C → Incorrect because of "should."
�� Option D → Incorrect because of "must."
�� Final Answer → Option B.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

14 ___________ is a market where economic agents can freely exchange their endowments with each other. (PYQ 2024)

A Market economy

B Centrally planned economy

C Aggregate demand based economy

D Aggregate supply based economy

💡 Short Explanation

�� It involves buyers and sellers interacting freely. �� There is no central authority dictating exchanges. �� Prices are determined by demand and supply.

✅ Correct Answer Explanation

(Detailed) → A market economy is an economic system where economic decisions are guided by individual citizens and businesses. → In this system, economic agents such as households and firms can freely exchange their endowments. → Endowments may include resources, labour, goods, or services. → These exchanges happen through markets based on mutually agreed prices. → Hence, Option A is the correct answer.

❓ Why Other Options Are Incorrect

B) Centrally planned economy → In this system, a central authority makes major economic decisions and restricts free exchange.
C) Aggregate demand based economy → This is a macroeconomic concept, not a classification of an economic system.
D) Aggregate supply based economy → This is a macroeconomic concept, not a system of free exchange.

🎯 Strategy

Used

�� Option A → Correct because free exchange is the hallmark of a market economy.
�� Option B → Incorrect because planned economies lack complete free exchange.
�� Option C → Incorrect because it is a macroeconomic variable.
�� Option D → Incorrect because it is a macroeconomic variable.
�� Final Answer → Option A.

🧠 Memory Trick

📚 → Class XI, Introductory Microeconomics, Chapter: Introduction

15 Rearrange the given statements in proper chronological sequence in an ascending order (earliest to latest) : (PYQ 2024)
Statements:
(A) General theory of Employment, Interest and Money by Keynes.
(B) Mahalanobis was made a fellow of Britain's Royal Society.
(C) An Inquiry into the Nature and Cause of the Wealth of Nations by Adam Smith.
(D) The Economic Consequences of the Peace by Keynes.
Choose the correct answer from the options given below :

A (C), (D), (A), (B)

B (A), (B), (C), (D)

C (A), (C), (B), (D)

D (D), (A), (C), (B)

💡 Short Explanation

�� Adam Smith's work is the oldest, published in 1776. �� Keynes' "The Economic Consequences of the Peace" came in 1919. �� Keynes' "General Theory" came in 1936. �� Mahalanobis's recognition came later in 1945.

✅ Correct Answer Explanation

(Detailed) → The chronological timeline is as follows: → (C) Adam Smith published "An Inquiry into the Nature and Causes of the Wealth of Nations" in 1776. → (D) John Maynard Keynes published "The Economic Consequences of the Peace" in 1919. → (A) Keynes published "The General Theory of Employment, Interest and Money" in 1936. → (B) P.C. Mahalanobis was made a Fellow of the Royal Society in 1945. → Therefore, the correct ascending order is (C), (D), (A), (B). → Hence, Option A is the correct answer.

❓ Why Other Options Are Incorrect

B) (A), (B), (C), (D) → This is incorrect because it places Adam Smith's 18th-century work after 20th-century events.
C) (A), (C), (B), (D) → This is incorrect because Keynes' General Theory cannot come before Adam Smith's foundational text.
D) (D), (A), (C), (B) → This is incorrect because Adam Smith's Wealth of Nations is placed after Keynes' works.

🎯 Strategy

Used

�� Option A → Correct because the timeline follows 1776 → 1919 → 1936 → 1945.
�� Option B → Incorrect due to historical mismatch.
�� Option C → Incorrect because it reverses Keynes and Smith.
�� Option D → Incorrect because Smith is placed too late.
�� Final Answer → Option A.

🧠 Memory Trick

📚 → Class XII, Introductory Macroeconomics, Chapter: Introduction to Macroeconomics

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