MCQs on Central Problems of an Economy

The basic economic activities of life are production, distribution and disposition of goods and services. A society will be facing scarcity of resources during the time of fulfillment of these activities.

As such scarcity is evident, due to the availability of limited resources, and human needs having no limit. Therefore, this variation between the supply and demand leads to the formation of central problems of an economy.

The central problems of an economy revolve around these factors.

  1. What to produce?
  2. How to produce?
  3. For whom to produce?

Given below are important MCQs on Central Problems Of An Economy to analyze your understanding of the topic. The answers are also given for your reference.

Central Problems Of An Economy MCQs

Question 1

The law of scarcity

A) States that the want of a consumer will never be satisfied completely

B) Indicates that the want of consumer will be satisfied in a socialistic system

C) Is only for underdeveloped countries

D) Is not for rich and developed countries

Answer A

Question 2

To make a rational decision a person needs

A) Choices that don’t have trade-offs

B) Choices that never change

C) Choices that are consistent with a similar goal every time

D) Logical choices without error.

Answer C

Question 3

The central problem of an economy is

A) Assigning limited resources in a way that unlimited desires and needs of the society are satisfied

B) Ensuring a minimum income for each citizen.

C) Assuring that production happens in the most effective way.

D) Analyzing the demand with market economies.

Answer A

Question 4

An economy succeeds in producing resources efficiently when

A) Goods and services are produced without resources being wasted.

B) The total number of goods manufactured is high.

C) The resources employe are the best

D) The resources employed for highly valued uses.

Answer A

Question 5

Which option is a disadvantage for allocating resources utilizing a market system?

A) Profits will be less

B) Impossible to stop the wastage of scarce resources

C) Notable unemployment may take place

D) Uneven distribution of income

Answer D

Question 6

Which branch of economic theory is associated with the difficulty of resources allocation

A) Econometrics.

B) Micro-economic theory

C) Macro-economic theory

D) None of the above

Answer B

Question 7

The creation of choice is done by

A) Scarcity of resources

B) Less choice option

C) The urgency of needs

D) Abundance of resources

Answer A

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