I85PREP
⌘ K
Assam ASSEB HS Class 11-12 Economics study materials
Assam ASSEB HS Class 11-12 Economics study resources

Assam ASSEB HS Class 11-12 Economics practice questions

One question at a time. Build your Assam ASSEB HS Class 11-12 Economics understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Introduction to Economics and Basic Concepts (Class 11)

In economics, the central problem of scarcity arises because:

  1. Human wants are limited while resources are unlimited
  2. Money supply grows faster than the population
  3. Resources are limited relative to unlimited human wants Correct answer.
  4. Governments restrict the production of goods and services

Explanation

Scarcity is the fundamental economic problem that exists because resources are finite while human wants are unlimited and recurring. Because wants exceed the means available to satisfy them, every society must choose how to allocate resources. Scarcity is not the same as a shortage, which is a temporary market condition.

Question 2Introduction to Economics and Basic Concepts (Class 11)

The branch of economics that studies individual units such as a single consumer, a firm, or a particular market is called:

  1. Public finance
  2. Development economics
  3. Microeconomics Correct answer.
  4. Macroeconomics

Explanation

Microeconomics analyses the behaviour of individual decision-making units such as households and firms, and how prices are determined in single markets. Macroeconomics, by contrast, deals with economy-wide aggregates like national income and general price level. Development economics and public finance are specialised fields rather than the individual-unit approach.

Question 3Introduction to Economics and Basic Concepts (Class 11)

Opportunity cost of choosing an activity is best defined as:

  1. The cost incurred in the past that cannot be recovered
  2. The money actually paid for the activity
  3. The total cost of all alternatives available
  4. The value of the next best alternative forgone Correct answer.

Explanation

Opportunity cost measures the value of the next best alternative that must be sacrificed when a choice is made. It is a forward-looking concept based on the best forgone option, not on money paid or on past spending. Costs already incurred and unrecoverable are sunk costs and are irrelevant to the current decision.

Question 4Introduction to Economics and Basic Concepts (Class 11)

A production possibility frontier that is concave to the origin (bowed outward) reflects:

  1. Decreasing opportunity cost as output expands
  2. Constant opportunity cost of producing either good
  3. Increasing opportunity cost as more of one good is produced Correct answer.
  4. Zero opportunity cost of production

Explanation

A bowed-out PPF shows that producing successive extra units of one good requires giving up ever larger amounts of the other good. This happens because resources are not equally suited to both uses. A straight-line PPF would instead indicate constant opportunity cost.

Question 5Introduction to Economics and Basic Concepts (Class 11)

A point lying inside the production possibility frontier indicates that the economy:

  1. Is producing at full and efficient use of resources
  2. Faces zero opportunity cost between the two goods
  3. Is using resources inefficiently or has unemployed resources Correct answer.
  4. Has achieved a level of output that is unattainable

Explanation

Points on the frontier represent full and efficient use of available resources, while points inside it show that the economy could produce more of at least one good without giving up the other. Such a position therefore signals inefficiency or idle resources. Points outside the frontier are unattainable with current resources and technology.

Question 6Introduction to Economics and Basic Concepts (Class 11)

In a market economy, the three central economic questions of what, how and for whom to produce are answered mainly by:

  1. The price mechanism operating through demand and supply Correct answer.
  2. International organisations
  3. Custom and tradition alone
  4. Central planning authorities

Explanation

In a market economy, prices emerging from the interaction of demand and supply guide producers about what to produce, which technique to use, and how output is distributed. Profit signals allocate resources without any central direction. Central planning characterises a command economy, while custom dominates a traditional economy.

Question 7Introduction to Economics and Basic Concepts (Class 11)

The law of demand states that, other things remaining constant, when the price of a good rises:

  1. Quantity demanded falls Correct answer.
  2. Quantity supplied falls
  3. Quantity demanded rises
  4. Demand curve shifts to the right

Explanation

The law of demand describes an inverse relationship between price and quantity demanded, holding other factors constant. A rise in price therefore reduces quantity demanded, shown as an upward movement along the demand curve. A shift of the curve would require a change in a non-price determinant such as income or tastes.

Question 8Introduction to Economics and Basic Concepts (Class 11)

A movement along a demand curve for tea is caused by a change in:

  1. The price of tea Correct answer.
  2. Consumer income
  3. The price of coffee
  4. Consumer preferences

Explanation

A change in the good's own price causes a movement along its demand curve, changing quantity demanded while the curve stays fixed. Changes in income, prices of related goods, or tastes shift the whole demand curve. This distinction between movement along and shift of the curve is a core tool of demand analysis.

Question 9Introduction to Economics and Basic Concepts (Class 11)

If the demand for a good rises while its supply remains unchanged, the likely effect is:

  1. Equilibrium price rises and quantity falls
  2. Equilibrium price and quantity both fall
  3. Equilibrium price falls and quantity falls
  4. Equilibrium price rises and quantity rises Correct answer.

Explanation

A rightward shift of the demand curve along an unchanged supply curve raises the equilibrium price and the equilibrium quantity. Buyers are willing to purchase more at each price, so competition among them pushes price up and producers respond with more output. This is the standard comparative-static result for a demand increase.

Question 10Introduction to Economics and Basic Concepts (Class 11)

The price elasticity of demand measured by the percentage-change method is calculated as:

  1. Change in quantity divided by change in price
  2. Change in price divided by initial quantity
  3. Percentage change in quantity demanded divided by percentage change in price Correct answer.
  4. Percentage change in price divided by percentage change in quantity demanded

Explanation

Price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price. Using percentage changes makes the measure unit-free and comparable across goods. The inverse ratio would instead describe price flexibility, not elasticity of demand.

Question 11Introduction to Economics and Basic Concepts (Class 11)

A consumer's total expenditure on a good rises when its price falls. This indicates that demand for the good is:

  1. Inelastic
  2. Elastic Correct answer.
  3. Unitary elastic
  4. Perfectly inelastic

Explanation

When price falls and total expenditure rises, the percentage increase in quantity demanded exceeds the percentage fall in price, which is the definition of elastic demand. Under inelastic demand, a price fall would reduce total expenditure. Unitary elasticity would leave total expenditure unchanged.

Question 12Introduction to Economics and Basic Concepts (Class 11)

The supply curve of a firm typically slopes upward because:

  1. Firms always earn normal profit
  2. Producers must be offered higher prices to cover rising marginal costs Correct answer.
  3. Technology improves as output expands
  4. Consumers buy less at higher prices

Explanation

An upward-sloping supply curve reflects the law of supply: as output expands, marginal costs generally rise, so producers require a higher price to supply additional units. The curve is thus a marginal cost relationship for a competitive firm. Consumer behaviour explains demand, not supply.

Question 13Introduction to Economics and Basic Concepts (Class 11)

In the circular flow of income for a two-sector economy, households supply factor services to firms and in return receive:

  1. Factor incomes such as wages, rent, interest and profit Correct answer.
  2. Transfer payments from abroad
  3. Subsidies from the government
  4. Taxes

Explanation

In the two-sector model, households own the factors of production and sell their services to firms in the factor market. Firms pay wages, rent, interest and profit in return, which become household income used to buy goods in the product market. Taxes and subsidies involve the government, which is absent from this two-sector model.

Question 14Introduction to Economics and Basic Concepts (Class 11)

Which of the following is classified as a factor of production rather than a factor income?

  1. Profit
  2. Capital Correct answer.
  3. Rent
  4. Wages

Explanation

Factors of production are the inputs used to produce goods and services: land, labour, capital and entrepreneurship. Wages, rent and profit are the incomes earned by the owners of these factors. Capital is therefore an input, while the other three are rewards for supplying inputs.

Question 15Introduction to Economics and Basic Concepts (Class 11)

A country's production possibility frontier shifts outward when:

  1. There is a fall in the working population
  2. Unemployment of existing resources increases
  3. Consumers prefer the second good more strongly
  4. New technology raises productivity in both goods Correct answer.

Explanation

An outward shift of the PPF represents economic growth, that is, an increase in the economy's productive capacity. Improved technology, more or better resources, or capital accumulation shift the frontier outward. Changes in consumer preference merely move the chosen point along the existing frontier.

Question 16Introduction to Economics and Basic Concepts (Class 11)

Two goods X and Y are substitutes. If the price of X rises, then in the market for Y:

  1. Neither demand nor price of Y changes
  2. Demand for Y rises and its price tends to rise Correct answer.
  3. Supply of Y falls and its price tends to rise
  4. Demand for Y falls and its price tends to fall

Explanation

When the price of a substitute rises, consumers switch towards the relatively cheaper good, shifting the demand curve for Y to the right. With supply unchanged, this raises both the equilibrium price and quantity of Y. Cross-price elasticity between substitutes is positive, confirming the direction of the shift.

Question 17Consumer Behaviour and Demand (Class 11)

In consumer theory, utility refers to which of the following?

  1. The physical weight of goods consumed by a household
  2. The money price paid for a good in the market
  3. The total quantity of a good available for purchase
  4. The satisfaction a consumer derives from consuming a good or service Correct answer.

Explanation

Utility is the want-satisfying power of a commodity, that is, the satisfaction a consumer obtains from consuming it. It is subjective and is measured in imaginary units called utils, not in rupees or kilograms. Price and physical quantity are separate concepts from satisfaction.

Question 18Consumer Behaviour and Demand (Class 11)

A consumer eats four samosas. Total utility rises from 30 utils to 36 utils when the fourth samosa is eaten. What is the marginal utility of the fourth samosa?

  1. 4 utils
  2. 36 utils
  3. 9 utils
  4. 6 utils Correct answer.

Explanation

Marginal utility is the change in total utility resulting from consuming one additional unit. Here the change is 36 minus 30, which equals 6 utils. Dividing total utility by units consumed would give average utility, not marginal utility.

Question 19Consumer Behaviour and Demand (Class 11)

The law of diminishing marginal utility states that as a consumer consumes more units of a commodity in a given period, other things remaining constant, marginal utility:

  1. Becomes negative from the very first unit
  2. Remains constant at every level of consumption
  3. Falls with each successive unit consumed Correct answer.
  4. Rises with each successive unit consumed

Explanation

The law holds that successive units of the same commodity yield smaller and smaller additions to satisfaction when consumption occurs in the same time period. This is why the marginal utility curve slopes downward. It does not say utility turns negative immediately, only that it eventually may.

Question 20Consumer Behaviour and Demand (Class 11)

Total utility is at its maximum at the point where marginal utility is:

  1. Positive and rising
  2. Zero Correct answer.
  3. Equal to total utility
  4. Negative

Explanation

Total utility increases as long as marginal utility is positive and stops rising when marginal utility becomes zero. Beyond that point marginal utility is negative and total utility declines. Hence total utility is maximised where marginal utility equals zero.

Question 21Consumer Behaviour and Demand (Class 11)

A consumer is in equilibrium with a single commodity under the utility approach when:

  1. Marginal utility of the commodity is zero
  2. Total utility of the commodity equals its price
  3. Marginal utility of the commodity equals its price Correct answer.
  4. Price of the commodity equals the consumer's income

Explanation

For one commodity the equilibrium condition is that marginal utility in money terms equals the price paid, so that the satisfaction from the last rupee spent is the same as its cost. If marginal utility exceeded price the consumer would buy more, and if it fell short he would buy less. Equality therefore signals equilibrium.

Question 22Consumer Behaviour and Demand (Class 11)

In the indifference curve approach, an indifference curve shows:

  1. The maximum output attainable from given inputs
  2. Combinations of two goods that yield the same level of satisfaction Correct answer.
  3. The quantity of one good demanded at each price
  4. Combinations of two goods that cost the same amount of money

Explanation

An indifference curve is the locus of all bundles of two goods among which the consumer is indifferent because each gives equal total satisfaction. The consumer does not prefer one point on the curve to another. It is therefore a satisfaction-based, not a cost-based, construct.

Question 23Consumer Behaviour and Demand (Class 11)

The marginal rate of substitution of good X for good Y measures:

  1. The units of Y the consumer will give up for one more unit of X while staying on the same indifference curve Correct answer.
  2. The units of X the consumer can buy with one unit of money income
  3. The total units of X and Y available in the economy
  4. The ratio of the price of X to the price of Y in the market

Explanation

MRS measures the rate at which a consumer trades one good for another without any change in total satisfaction, so the bundle stays on the same indifference curve. It is the absolute slope of the indifference curve. It is a psychological rate of substitution, not a market price ratio.

Question 24Consumer Behaviour and Demand (Class 11)

Indifference curves are convex to the origin because of:

  1. The assumption that both goods are free goods
  2. A diminishing marginal rate of substitution between the two goods Correct answer.
  3. An increasing marginal rate of substitution between the two goods
  4. A constant marginal rate of substitution between the two goods

Explanation

As the consumer gets more of X and less of Y, X becomes relatively less scarce to him, so he is willing to surrender fewer units of Y for each extra unit of X. This diminishing MRS makes the indifference curve flatter to the right and hence convex to the origin.

Question 25Consumer Behaviour and Demand (Class 11)

The slope of a budget line is determined by:

  1. The marginal utility of money
  2. The consumer's tastes and preferences
  3. The ratio of the prices of the two goods Correct answer.
  4. The consumer's income alone

Explanation

The budget line is written as PxX plus PyY equals income, and its slope equals the negative of Px divided by Py. Income determines the line's position or intercepts, while the price ratio fixes its steepness. Tastes affect preferences, not the budget constraint.

Question 26Consumer Behaviour and Demand (Class 11)

A consumer's income is Rs 200. Good X is priced at Rs 20 and good Y at Rs 10. If the consumer spends the entire income on X, how many units of X can be bought?

  1. 5 units
  2. 20 units Correct answer.
  3. 200 units
  4. 10 units

Explanation

The maximum quantity of X is income divided by the price of X, that is 200 divided by 20, which equals 10 units. This value is the horizontal intercept of the budget line. Dividing by the price of Y would give the vertical intercept instead.

Question 27Consumer Behaviour and Demand (Class 11)

Consumer equilibrium under the indifference curve approach occurs where the budget line is:

  1. Parallel to the highest indifference curve
  2. Tangent to the lowest indifference curve in the map
  3. Cut by an indifference curve at two points
  4. Tangent to the highest attainable indifference curve Correct answer.

Explanation

Equilibrium lies at the point where the budget line touches the highest indifference curve it can reach. At that tangency the marginal rate of substitution equals the price ratio, so the consumer has no incentive to rearrange spending. Higher curves are unaffordable and lower ones leave satisfaction unexploited.

Question 28Consumer Behaviour and Demand (Class 11)

At the equilibrium point of the indifference curve analysis, which condition holds?

  1. MRS of X for Y is zero
  2. MRS of X for Y exceeds the ratio of the price of X to the price of Y
  3. MRS of X for Y equals the ratio of the price of X to the price of Y Correct answer.
  4. MRS of X for Y equals the consumer's total income

Explanation

Tangency of the budget line and an indifference curve means their slopes are equal, so MRS equals Px divided by Py. This is the same condition, in ordinal terms, as the equality of marginal utility per rupee across goods. If MRS exceeded the price ratio, the consumer would gain by buying more X.

Question 29Consumer Behaviour and Demand (Class 11)

Which of the following is an assumption of the law of demand?

  1. The price of the commodity itself changes along with all other prices
  2. Income of the consumer, prices of related goods and tastes remain unchanged Correct answer.
  3. The commodity is a Giffen good
  4. Consumers always prefer inferior goods to normal goods

Explanation

The law of demand states an inverse price-quantity relationship only when the other determinants of demand are held constant. Income, prices of related goods, tastes and expectations must therefore not change. If they do change, the demand curve itself shifts and the simple law no longer applies directly.

Question 30Consumer Behaviour and Demand (Class 11)

The demand curve for a normal good slopes downward from left to right because:

  1. Consumers' incomes fall as price falls
  2. Price and quantity demanded move in opposite directions, other things equal Correct answer.
  3. Supply falls as price rises
  4. Price and quantity demanded move in the same direction

Explanation

A downward-sloping demand curve depicts the inverse relationship between own price and quantity demanded. When price falls the good becomes cheaper relative to substitutes, so consumers buy more. A rise in price produces the opposite movement along the same curve.

Question 31Consumer Behaviour and Demand (Class 11)

When the price of tea rises and the demand for coffee increases, tea and coffee are:

  1. Substitute goods Correct answer.
  2. Independent goods
  3. Complementary goods
  4. Inferior goods

Explanation

Two goods are substitutes when a rise in the price of one increases demand for the other, because consumers switch towards the cheaper alternative. The positive cross-price relationship is the defining test. Complementary goods would show the opposite movement.

Question 32Consumer Behaviour and Demand (Class 11)

A rise in a consumer's income reduces her demand for a good. Such a good is called:

  1. A luxury good
  2. An inferior good Correct answer.
  3. A substitute good
  4. A normal good

Explanation

A good is inferior when demand moves inversely with income, because consumers switch to better alternatives as their purchasing power grows. Normal and luxury goods show a positive income effect. Substitution concerns cross-price effects between goods, not income effects.

Question 33Consumer Behaviour and Demand (Class 11)

A movement along a given demand curve is caused by a change in:

  1. Consumer income
  2. Consumer tastes and preferences
  3. The price of the commodity itself Correct answer.
  4. The price of a related good

Explanation

Changes in the good's own price produce movements along the existing demand curve, called expansions or contractions of demand. Changes in income, related prices or tastes shift the whole curve, which is a change in demand rather than a movement along it.

Question 34Consumer Behaviour and Demand (Class 11)

The demand for salt is generally inelastic because:

  1. Salt is a luxury good with many substitutes
  2. Salt has few close substitutes and forms a small part of the consumer's budget Correct answer.
  3. Salt absorbs a very large share of household income
  4. Consumers buy large quantities of salt at every price

Explanation

Price elasticity is low when a good has no close substitutes and accounts for only a small fraction of spending, so consumers do not adjust quantity much when price changes. Salt fits both conditions. Necessity also reinforces the inelasticity.

Question 35Consumer Behaviour and Demand (Class 11)

A 10 per cent fall in the price of a good raises its quantity demanded by 20 per cent. The price elasticity of demand, using the percentage method, is:

  1. 0.2
  2. 0.5
  3. 10.0
  4. 2.0 Correct answer.

Explanation

Price elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price, ignoring sign. Here 20 divided by 10 gives 2, so demand is elastic. The value 0.5 would result if the ratio were inverted.

Question 36Consumer Behaviour and Demand (Class 11)

When the price of a good falls, the total expenditure of consumers on it rises. This indicates that demand for the good is:

  1. Elastic Correct answer.
  2. Inelastic
  3. Unitary elastic
  4. Perfectly inelastic

Explanation

If a price cut raises total outlay, the percentage increase in quantity exceeds the percentage fall in price, which is the definition of elastic demand. With inelastic demand a price cut would reduce total expenditure. Under unitary elasticity, expenditure stays unchanged.

Question 37Producer Behaviour and Supply (Class 11)

In the short run, which factor of production is typically fixed for a firm?

  1. Casual labour
  2. Electricity used in production
  3. Raw materials
  4. Plant and machinery Correct answer.

Explanation

The short run is defined as a period in which at least one factor of production cannot be varied. Capital equipment such as plant and machinery is treated as the fixed factor, while materials, casual labour and power can be adjusted with output.

Question 38Producer Behaviour and Supply (Class 11)

The law of variable proportions is studied in the context of which time period?

  1. The long run, where all factors are variable
  2. Both the short run and the long run
  3. The market period, where supply is fixed
  4. The short run, where at least one factor is fixed Correct answer.

Explanation

The law of variable proportions describes how output changes when one variable factor is increased against fixed factors. That situation exists only in the short run, because in the long run every factor can be varied.

Question 39Producer Behaviour and Supply (Class 11)

When total product is rising at an increasing rate, marginal product is:

  1. rising Correct answer.
  2. falling
  3. negative
  4. zero

Explanation

Marginal product is the addition to total product from one more unit of the variable factor. If total product increases at an increasing rate, each successive unit is adding more than the previous one, so marginal product must be rising.

Question 40Producer Behaviour and Supply (Class 11)

Total product is maximised at the point where marginal product:

  1. is negative
  2. becomes zero Correct answer.
  3. is at its maximum
  4. equals average product

Explanation

Total product increases as long as marginal product is positive and begins to fall once marginal product turns negative. Therefore total product reaches its peak exactly where marginal product equals zero.

Question 41Producer Behaviour and Supply (Class 11)

Average product of labour is calculated as:

  1. total product divided by units of labour Correct answer.
  2. change in total product divided by change in labour
  3. total product multiplied by units of labour
  4. total revenue divided by units of labour

Explanation

Average product is output per unit of the variable input, so it equals total product divided by the quantity of labour employed. The change-based ratio describes marginal product instead.

Question 42Producer Behaviour and Supply (Class 11)

A firm's total fixed cost curve is:

  1. a rectangular hyperbola
  2. a U-shaped curve
  3. a horizontal straight line parallel to the output axis Correct answer.
  4. an upward-sloping straight line from the origin

Explanation

Fixed costs do not change with output in the short run, so their total remains the same at every level of output. Graphically this is a horizontal line at the fixed cost level.

Question 43Producer Behaviour and Supply (Class 11)

The vertical distance between the total cost curve and the total variable cost curve at any output level equals:

  1. total fixed cost Correct answer.
  2. average variable cost
  3. marginal cost
  4. average fixed cost

Explanation

Total cost is the sum of total variable cost and total fixed cost. Since fixed cost is constant, the gap between the total cost and total variable cost curves measures total fixed cost at every level of output.

Question 44Producer Behaviour and Supply (Class 11)

The average fixed cost curve:

  1. rises continuously as output increases
  2. is a horizontal line
  3. falls continuously as output increases Correct answer.
  4. is U-shaped

Explanation

Average fixed cost equals total fixed cost divided by output. Because the numerator is constant while the denominator grows, average fixed cost keeps falling as output expands and approaches the axes asymptotically.

Question 45Producer Behaviour and Supply (Class 11)

Marginal cost intersects average variable cost:

  1. at the maximum point of marginal cost
  2. at the minimum point of average variable cost Correct answer.
  3. where average variable cost is zero
  4. where average variable cost is rising

Explanation

Whenever marginal cost lies below average variable cost, the average is pulled down; when it lies above, the average is pulled up. Hence the two curves meet at the lowest point of average variable cost.

Question 46Producer Behaviour and Supply (Class 11)

Which statement about the relationship between average cost and marginal cost is correct?

  1. Marginal cost is always below average cost
  2. Average cost rises when marginal cost is below it
  3. Average cost and marginal cost are always equal
  4. Average cost falls when marginal cost is below it Correct answer.

Explanation

The marginal value acts as a pull on the average: if the addition is smaller than the average, the average declines. So average cost falls whenever marginal cost lies below it, and rises when marginal cost exceeds it.

Question 47Producer Behaviour and Supply (Class 11)

In the long run, a firm's total cost of producing zero output consists of:

  1. both fixed and variable cost
  2. no cost at all, since all factors can be varied Correct answer.
  3. only fixed cost
  4. only variable cost

Explanation

In the long run every factor is variable, so there are no fixed commitments and a firm producing nothing incurs no cost. Fixed cost is a short-run phenomenon arising from indivisible fixed factors.

Question 48Producer Behaviour and Supply (Class 11)

A firm's total revenue is ₹5,000 when it sells 100 units and ₹5,600 when it sells 120 units. Its marginal revenue is:

  1. ₹600
  2. ₹30 Correct answer.
  3. ₹46.67
  4. ₹50

Explanation

Marginal revenue is the change in total revenue divided by the change in quantity sold. Here the change in revenue is ₹600 and the change in output is 20 units, giving ₹30 per unit.

Question 49Producer Behaviour and Supply (Class 11)

Under perfect competition, the demand curve facing an individual firm is:

  1. a horizontal line at the market price Correct answer.
  2. U-shaped
  3. downward sloping
  4. vertical

Explanation

A perfectly competitive firm is a price taker, so it can sell any quantity at the prevailing market price. Its own demand curve is therefore perfectly elastic, drawn as a horizontal line at that price.

Question 50Producer Behaviour and Supply (Class 11)

For a firm facing a downward-sloping demand curve, marginal revenue is less than price because:

  1. the firm produces at zero marginal cost
  2. the firm is a price taker in the market
  3. average revenue is always falling
  4. selling an extra unit requires lowering the price on all units sold Correct answer.

Explanation

To sell one more unit, a firm with market power must reduce the price, and under a single price this reduction applies to every unit. The gain from the extra unit is therefore offset by the revenue lost on the units that would have sold at the higher price.