The basic economic activities of life are production, distribution, and disposition of goods and services. A society faces scarcity of resources during the time of fulfillment of these activities.
Such scarcity is evident due to the availability of only limited resources and increasing human needs. 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 the following factors:
- What to produce?
- How to produce?
- For whom to produce?
Given are some important MCQs on Central Problems Of an Economy to analyse your understanding of the topic. The answers are also given for your reference.
MCQs on Central Problems of an Economy
Which of the following is true regarding the law of scarcity?
A) It states that the wants of a consumer will never be satisfied completely.
B) It indicates that the wants of a consumer will be satisfied in a socialistic system.
C) It is only for underdeveloped countries.
D) It is not for rich and developed countries.
Which of the following does a person need to make a rational decision?
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 errors
Which of the following is the central problem of an economy?
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) Analysing the demand with market economies
When does an economy succeed in producing resources efficiently?
A) When goods and services are produced without resources being wasted
B) When the total number of goods manufactured is high
C) When the resources employed are the best
D) When the resources are employed for highly valued uses
Which option is a disadvantage for allocating resources that are utilising 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
Which branch of economic theory is associated with the difficulty of resources allocation?
B) Microeconomic theory
C) Macroeconomic theory
D) None of the above
The creation of choice is done by _________ .
A) Scarcity of resources
B) Less choices
C) The urgency of needs
D) Abundance of resources
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