Sample Questions for Practice

1. / Introduction
  1. What is economics? Who is considered as the father of economics? Why?
  2. Distinguish between microeconomics and macroeconomics.Economic goods vs free goods. Identify which of the following are the economic goods: Rain water, Mango, Air, Gold, Gas, Sunshine, Park, mineral water.
  3. What are the three basic questions to be solved in an economy? What are alternative economic systems? How the basic economic questions are solved in alternative economic systems. What kind of economic system exists in Bangladesh?
  4. What are the Twin-themes of economics?
  5. What are the factors of production? Define wage, rent, interest and profit. Define input and output.
  6. Distinguish between positive and normative economics. Examples of positive and normative statements.
  7. What is Production Possibility Frontier (PPF)? Define the concept of opportunity cost Show the idea of opportunity cost by PPF. Where we get the efficient output combination on a PPF space? 3 points around PPF/PPC. Mention the cases when PPF shifts outward and inward. Suppose, a coal mine has been discovered recently in Bangladesh and coal exploration has already been started there. How this increase in resources will bring changes to the PPF?
  8. With a fixed amount of resources, 20 units of computers or 30 units of food can be produced. Also, the combinations of computer and food can be produced. Combinations are 25 units of food and 4 units of computers, 20 units of food and 7 units of computers, 15 units of food and 10 units of computers, etc. Draw the PPF. If new technology in computer production is invented and adopted, what will happen to the PPF? Find the opportunity cost of first 4 units of computer? If the total resources of the country increase, what will happen to the PPF?
  9. Why does PPF become a straight line? When it becomes a curve?
  10. When the PPF shifts parallelly? When it shifts clockwise or anti-clockwise?
  11. Define managerial economics. What are the roles of managerial economics in solving decision problems?How does the study of managerial economics help a manager?
  12. Case study: Related to PPF

2. / Theory of Demand
  1. What is demand? How it is different from want and need? Mention the determinants of demand.
  2. Law of demand. Formulate a hypothetical demand schedule. Draw a demand curve based on the demand schedule.
  3. Distinguish between Demand and Quantity demanded. Explain movement along vs. shift of the demand curve. Show graphically the effect of the following changes on the position of the demand curve for Pepsi: i) Decrease in the price of Coca-Cola, ii) Increase in the consumer’s income, iii) Increase in the advertisement cost.
  4. What is demand function? Write the demand equation.
  5. What is market demand? How the market demand curve is derived?
  6. Define consumer surplus? “The more the competition among the sellers, the more the consumer surplus gained by the consumers” – do you agree with the statement. Justify your answer. Suppose, a consumer is willing to pay Tk.28/Kg for 10Kg potato and Tk.24/Kg for 15Kg potato. If the market price of potato is Tk.25/Kg, what will be the total consumer surplus of the consumer if he/she buys 10Kg potato?

3. / Theory of supply
  1. What is supply? Describe the determinants of supply. “The amount of a commodity produced may not be equal to the quantity supplied of the commodity” – do you agree with the statement. Justify your answer.
  2. Explain the law of supply. Formulate a hypothetical supply schedule. Draw a supply curve based on the supply schedule.
  3. Distinguish between Supply and Quantity supplied.
  4. Distinguish between the movement along the supply curve and shift of the curve. What will happen to the supply curve of potato if: (i) The price of potato increases (ii) Weather during the winter season goes very bad and (iii) Price of the inputs has been lowered.
  5. What is supply function? Write down the supply equation.
  6. What is market supply? How the market supply curve is derived?
  7. What is producer surplus? “The more the competition among the sellers, the less the producer surplus enjoyed by the producers” – do you agree with the statement. Justify your answer. Suppose, a producer is willing to sell 50Kg potato at price Tk.18/Kg. If the market price of potato is Tk.24/Kg, what will be the total producer surplus of the producer if he/she sells 50Kg potato?