Which of the following is not correct statement ?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Production possibility curve does not explain the opportunity cost of production of x for y
The production possibility curve shows the combinations of two goods that an economy can produce with its given resources. It is also called the production possibility frontier.
Option (1) Production possibility curve does not explain the opportunity cost of production of x for y — False. To produce more of x, some y must be given up. The amount of y given up is the opportunity cost of the extra x, and the curve shows it.
Option (2) In a market economy all goods come with a price — True. In a market system, goods and services are exchanged at a price agreed by buyers and sellers. The price tells producers what society wants more of.
Option (3) Microeconomics does not analyse the problem of unemployment — True. Microeconomics studies individual markets for goods and services. Whether the resources of the whole economy are fully employed, and why some remain unemployed, is studied in macroeconomics.
Option (4) Positive economics studies how the different mechanisms function — True. Positive economic analysis studies how a mechanism works. Normative economics asks whether the mechanism is desirable.
NCERT (2026-27): “Production Possibility Frontier …If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity costa of an additional unit of the goods.… …In a market system, all goods or services come with a price (which is mutually agreed upon by the buyers and sellers) at which the exchanges take place.… 1.4 Positive and Normative Economics …In positive economic analysis, we study how the different mechanisms function, and in normative economics, we try to understand whether these mechanisms are desirable or not.… 1.5 Microeconomics and Macroeconomics …In microeconomics, we study the behaviour of individual economic agents in the markets for different goods and services and try to figure out how prices and quantities of goods and services are determined through the interaction of individuals in these markets. In macroeconomics, on the other hand, we try to get an understanding of the economy as a whole by focusing our attention on aggregate measures such as total output, employment and aggregate price level.… Are the resources of the economy (eg labour) fully employed? What are the reasons behind the unemployment of resources?…” |