Question

1. This question is based on the following table.

Household Income                              Average number of car per household

       $0 --- $29,999                                                      1.4

30,000 ---   49,999                                                      1.8

50,000 ---   74,999                                                      2.1

75,000 ---   99,999                                                      2.3

          100,000 --- 149,999                                                      2.7

           150,000 and over                                                         3.0

            The relationship between household income and average number of car per household is:

           

1. Positive (direct).
2. Negative (inverse).
3. Terminal.
4. Fluctuating.
5. Nonexistent.

2. This question is based on the following table which shows the output combinations of food and clothing available to an isolated city:

Possibilities                 Clothing (tons)            Food (tons)

                             A                                        0                            600

                             B                                    150                            500

                             C                                    300                            400

                             D                                    450                            300

                             E                                     600                            200

                             F                                     750                            100

                             G                                    900                                0

            From the given information, the opportunity cost of 150 tons of clothing is:

1. 50 tons of food.
2. 100 tons of food.
3. 200 tons of food.
4. 300 tons of foo
5. 400 tons of food.

3. The U.S. economy may be best characterized as an example of

1. Market socialism.
2. Pure capitalism.
3. Mixed capitalism.
4. Militaristic capitalism.
5. Laissez faire capitalism.

Answer 1

Answer —

I........ a. Positive

Both the variables move in the same direction so the relationship between them is positive, ( as income rises average number of cars being used also rises).

II..........b ( 100 tons of food )

Explanation:- opportunity cost of clothing is the lost of opportunity of producing food. If the society decides to produce 150 tons of clothing , it has to sacrifice (opportunity cost) 100 tons of food.

III....... c ( Mixed capitalism)

The US economy is a mixed economy, which has only a limited features of socialism and it has dominance of capitalism, means most of the decisions are as per the market forces. So we better characterize the US economy as mixed capitalism.