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CBSE · Class 12 · Social Science

Introduction to Microeconomics

Standard difficulty · 20 questions · 40 marks · Time: 37 minutes

Name: Date: Score: ____ / 40

Write full answers in Sections B and C. Answers are on the last page — try every question first!

Section A — Choose the correct answer8 × 1 = 8 marks
1.
The basic reason every economy must make choices is:
  1. too much money
  2. too many firms
  3. plenty of resources
  4. scarcity of resources
2.
What is meant by “positive economics”?
  1. describing how economic mechanisms work
  2. markets and the government both play important roles
  3. a central authority decides what, how and for whom
  4. prices coordinate the decisions of buyers and sellers
3.
Which of these is a normative statement?
  1. Firms supply more at higher prices.
  2. An increase in rent raises the cost of a shop.
  3. When the price of tea rises, people buy less tea.
  4. Prices of school books ought to be lower.
4.
Which of these is studied in macroeconomics?
  1. total investment in the country
  2. a consumer’s choice between tea and coffee
  3. the price of a pair of shoes
  4. the demand for apples
5.
An economy’s production possibilities (phones, laptops) are A(0, 46), B(1, 42), C(2, 34), D(3, 20), E(4, 0). What is the opportunity cost of producing unit 3 of phones?
  1. 20 units of laptops
  2. 4 units of laptops
  3. 8 units of laptops
  4. 14 units of laptops
6.
Meera can earn by growing mustard (₹550), growing vegetables (₹800) or renting out the land (₹650) in the same evening, and chooses growing vegetables. What is the opportunity cost of this choice?
  1. ₹800
  2. ₹550
  3. ₹650
  4. ₹1,200
7.
An economy’s production possibilities (rice, sugarcane) are A(0, 125), B(1, 110), C(2, 85), D(3, 55), E(4, 15). Where does the point (3, 27) lie?
  1. inside the PPF: some resources unused or wasted
  2. on the PPF: resources fully and efficiently used
  3. outside the PPF: not attainable with present resources
  4. it cannot be placed without knowing prices
8.
What happens to the production possibility frontier if a new machine is invented only for producing cloth?
  1. the economy moves to a point inside the PPF
  2. the PPF shifts outward
  3. the PPF swings out along the cloth axis only
  4. the PPF becomes a straight line
Section B — Short answer8 × 2 = 16 marks
9.
What are the three central problems of an economy?
10.
Explain each term: (a) market economy (b) opportunity cost
11.
Which central problem of an economy does each choice answer? (a) who gets the scarce medicines (b) hand looms or power looms for cloth
12.
An economy’s production possibilities (phones, laptops) are A(0, 38), B(1, 34), C(2, 28), D(3, 18), E(4, 6). Find the opportunity cost of each extra unit of phones. What happens to it, and why?
13.
Positive or normative? (a) Prices of school books ought to be lower. (b) People should save a larger share of their income.
14.
Is each studied in microeconomics or macroeconomics? (a) the wage in the textile industry (b) unemployment in the economy
15.
Zoya has three options for an evening: repairing phones (₹6,000), selling fruit (₹4,500), driving an auto-rickshaw (₹5,000). Which should be chosen to earn the most, and what is the opportunity cost?
16.
An economy’s production possibilities (tractors, trucks) are A(0, 30), B(1, 28), C(2, 24), D(3, 18), E(4, 6). Moving from B to E, how many units of trucks are given up, and what is the average opportunity cost per unit of tractors?
Section C — Longer answers4 × 4 = 16 marks
17.
Explain the three central problems of an economy with an example of each.
18.
Match each with its meaning: (a) positive economics (b) normative economics (c) centrally planned economy. Choose from: describing how economic mechanisms work; a central authority decides what, how and for whom; judging whether economic outcomes are desirable.
19.
An economy’s production possibilities (cloth, food) are A(0, 29), B(1, 27), C(2, 22), D(3, 14), E(4, 3). (a) What is the opportunity cost of each unit of cloth? (b) Where does the point (2, 18) lie, and what does it show? (c) What would shift the whole frontier outward?
20.
Explain, with reasons, what happens to an economy’s production possibility frontier if (a) a better technology for both goods (b) many workers lose their jobs. How does each affect the central problem of what to produce?
AmbifulWorksheets
Practice that never repeats
CBSE · Class 12 · Social Science

Answer key

Introduction to Microeconomics · AW-12SS-IMI-2026-V1 · For parents — fold back or tear off before handing the sheet to your child.

QAnswerWorking
1(d) scarcity of resources—
2(a) describing how economic mechanisms work—
3(d) Prices of school books ought to be lower.—
4(a) total investment in the country—
5(d) 14 units of laptops34 − 20
6(c) ₹650the value of the next best alternative
7(a) inside the PPF: some resources unused or wastedat 3 units of rice the most sugarcane is 55
8(c) the PPF swings out along the cloth axis only—
9What to produce and in what quantities, how to produce, and for whom to produce.—
10(a) prices coordinate the decisions of buyers and sellers (b) the value of the next best alternative given up—
11(a) for whom to produce (b) how to produce—
124, 6, 10, 12 units of laptops; it rises, because resources less suited to phones have to be used.38 − 34 = 4; 34 − 28 = 6; 28 − 18 = 10; 18 − 6 = 12
13(a) normative (b) normative—
14(a) micro (b) macro—
15repairing phones; opportunity cost ₹5,000 (driving an auto-rickshaw)opportunity cost = value of the next best alternative
1622 units; 7.33 units of trucks per unit of tractors28 − 6 = 22; 22 ÷ 3
17What to produce: more food or more cloth; how to produce: labour-intensive or machine-intensive methods; for whom: how output is shared among households.—
18(a) describing how economic mechanisms work (b) judging whether economic outcomes are desirable (c) a central authority decides what, how and for whom—
19(a) 2, 5, 8, 11 units of food (rising) (b) inside the PPF: resources are unemployed or wasted (c) more resources or better technology29 − 27 = 2; 27 − 22 = 5; 22 − 14 = 8; 14 − 3 = 11
20(a) the PPF shifts outward (b) the economy moves to a point inside the PPF. More (or fewer) combinations become possible, so the choice of what to produce changes.—