Reference no: EM133197118
Assignment:
1. An individual making a rational choice:
A weighs up the costs of an activity
B weighs up the benefits of an activity
C works as many hours as possible
D weighs up the costs and benefits of an activity
2. Human wants are:
A always fixed
B limited
C likely to decrease over time
D unlimited
3. The cost of one good measured in terms of what we: must sacrifice is called:
A average cost
B marginal cost
C opportunity cost
D fixed cost
4. The free market involves:
A provision of free products by the state
B the use of unlimited resources
C market forces determining the supply of products
D government involvement in determining the supply of products
5. Macroeconomics is the branch of economics that deals with:
A the economy as a whole
B perfectly competitive markets
C the long-run
D the behaviour of firms and households
6. I am eating a box of chocolates. If I gain 25 units of satisfaction (utils) from consuming 5 chocolates and 31 units of satisfaction from consuming 6 chocolates, then my marginal utility from the 6th chocolate is:
A 6 units and increasing
B - 6 units
C 31 units
D 6 units and decreasing
7. Diminishing marginal utility implies that total utility:
A increases at a decreasing rate
B increases at a constant rate
C is constant
D is decreasing
8. A point inside the Production Possibility Curve indicates:
A some under-utilisation of factors of production
B some over-utilisation of factors of production
C inefficiency
D A and C
9. Which ONE of the following would lead directly to an inwardshift of a country's production possibility curve:
A a decrease in the population of working age
B a reduction in the level of unemployment in the economy
C an increase in the level of unemployment in the economy
D an increase in the level of investment
10. Actual economic growth is shown by:
A a rightward movement within the Production Possibility Curve
B a movement along the Production Possibility Curve
C a shift to the left of the Production Possibility Curve
D a shift to the right of the Production Possibility Curve
11. The main economic objective of firms in a market economy is most likely to be:
A to create employment
B maximisation of consumer satisfaction
C production
D maximisation of profit
12. Regarding the market mechanism, if demand increases, ceteris paribus:
A a shortage occurs which results in price decreasing
B a surplus occurs, which results in price increasing
C a shortage occurs which results in price increasing
D a surplus occurs, which results in price decreasing
13. Which of the following is a determinant of both demand and supply?
A production costs
B household income
C expectations of future price changes
D consumer tastes
14. Which one of the following would cause a movement downward along the demand curve for bananas:
A a decrease in the price of apples
B an increase in the price of bananas
C a decrease in the price of bananas
D a decrease in consumer incomes.
15. The "law of demand" states that:
A as price rises, quantity demanded increases
B as income rises, demand increases
C as price falls, quantity demanded increases
D as income rises, demand decreases
16. A ‘decrease in the quantity demanded' means that:
A price has increased and consumers purchase less of the good
B the supply curve has shifted to the right
C the demand curve has shifted to the left
D the price of the good is expected to fall
17. All the following will cause the demand curve to shift to the left except:
A a reduction in income if the good is normal
B an increase in the price of a complementary good
C an increase in the price of a substitute good
D an increase in income if the good is inferior
18. Which one of the following would cause a contraction of demand for tablet computers:
A an increase in the price of tablet computers
B a decrease in the price of tablet computers
C an increase in the expected future price of tablet computers
D a decrease in consumer incomes
19. On a supply and demand diagram, other things, ceteris paribus, an increase in production costs will normally shift:
A the demand curve to the right
B the supply curve to the right
C the demand curve to the left
D the supply curve to the left
20. Which of the following will shift the supply curve for a good to the right?
A an increase in price of the good
B an increase in demand for the good
C a decrease in the cost of production
D a decrease in the supply of a good in joint supply
21. A decrease in the costs of production will:
A shift the demand curve outwards
B shift the demand curve inwards
C shift the supply curve outwards
D shift the supply curve inwards
22. A contraction in supply occurs when:
A the demand curve shifts outwards
B the supply curve shifts inwards
C the quantity supplied falls when the price falls
D the supply curve shifts outwards
23. A shift in supply will have a larger effect on price than output if demand is:
A income elastic
B income inelastic
C price elastic
D price inelastic
24. With regard to the demand for petrol. What effect will a fall in the price of cars have?
A Movement up along the demand curve for petrol
B Leftward shift of the demand curve for petrol
C Movement down along the demand curve for petrol
D Rightward shift of the demand curve
25. A change in the price of a product CANNOT:
A act as a signal
B act as an incentive
C increase the quantity supplied
D shift the supply curve for the product
26. Which of the following is NOT a determinant of supply?
A Price of the product
B Costs of production
C Profitability of alternative products
D Aims of producers
27. Milk is an ingredient used in the production of ice cream. What effect would a fall in the price of milk have on the supply curve of ice cream?
A Movement up along
B Leftward shift
C Movement down along
D Rightward shift
28. An increase in price from £25 to £30 leads to an increase in quantity from 40 to 44 units. The price elasticity of supply is:
A 2.0
B 0.5
C - 2.0
D - 0.5
29. The products X and Y are in joint supply when:
A a fall in output of X is accompanied by a decrease in output of Y
B an increase in demand for X reduces the supply of Y
C a rise in the QS of X reduces the supply of Y
D a fall in the price of X reduces the cost of supplying Y
30. If marginal revenue is less than marginal cost then a profit maximising firm should:
A reduce output
B increase output
C leave output unchanged
D increase output
31. Profit-maximising firms want to maximise the difference between
A marginal revenue and average cost.
B marginal revenue and marginal cost.
C total revenue and total cost.
D revenue and marginal cost.
32. Average revenue is
A. ATR / units sold.
B. BTR - TC
C. CPrice
D. A and C
33. The equilibrium price in a market is:
A is the market clearing price
B changes when demand equals supply
C is achieved only when either the demand or supply shift
D is the balance between excess demand and excess supply
34. The table below shows the demand and supply schedules for eggs.
Price per box Quantity of boxes demanded per week Quantity of boxes supplied per week
£1.50 180 240
£1.40 200 200
£1.30 220 160
£1.20 240 120
As a result of a fall in production costs, supply increases by 60 boxes at all prices. What would be the new equilibrium price?
A £1.50
B £1.40
C £1.30
D £1.20
35. Which one of the following measures of elasticity indicates two goods are substitutes?
A A negative cross elasticity of demand
B A positive price elasticity of demand
C A positive cross elasticity of demand
D A negative price elasticity of demand
36. A firm reduces the price of its product by 6%, and demand for it increases by 9%. The price elasticity of demand is
A - 3.0
B - 1.5
C - 0.66
D 1.5
37. If, when price changes, quantity demanded does not change at all then demand is:
A price elastic
B price inelastic
C perfectly price inelastic
D perfectly income
38. Price elastic demand for a good means:
A that the firm can sell as much as it wants at a particular price
B total revenue falls as the price of the good increases
C there are no close substitute for the good
D total revenue increases as the price of the good increases
39. The demand for a good is price elastic. Which of the following can we conclude?
A PED is less than -1
B PED is greater than -1
C PED is -1
D Ped is 0
40. Negative price elasticity of demand means that:
A demand is price elastic
B demand is price inelastic
C the demand curve is downward sloping
D an increase in income will increase quantity demanded
41. An increase in the price of good X results in a fall in demand for good Y. This result implies that the two goods:
A are in joint supply
B are complementary goods
C have elastic demand curves
D are produced by competing firms
42. A product has a price elasticity of demand of -0.5. If the price of this product increases by 10%, then total revenue will:
A rise by more than 10%
B rise by less than 10%
C fall by more than 10%
D fall by less than 10%
43. A ‘normal good':
A has a positive income elasticity of demand
B has a price inelastic demand
C has a price elastic demand
D has a negative income elasticity of demand
44. An increase in real income should:
A shift the demand curve for an inferior good to the right
B shift the demand curve for an inferior good to the left
C shift the supply curve of an inferior good to the right
D shift the supply curve of an inferior good to the left
45. If a good has an income elasticity of demand of 2.4 this means that it is:
A a normal good and demand is inelastic with respect to income
B an inferior good and demand is inelastic with respect to income
C a substitute good
D a normal good and demand is elastic with respect to income
46. The income elasticity of demand for a good is -3.0 Which one of the following statements is correct?
A A 20% increase in income leads to a 60% fall in demand
B A 10% increase in price leads to a 30% fall in demand
C The good is a normal good
D Demand for the good is income inelastic
47. The YED of bus travel is - 2.0. this means that:
A a 10% rise in fares will lead to a 20% decrease in passengers
B for most people bus travel is an inferior good
C buses are likely to have negative CED
D as unemployment falls more people will use buses
48. If cross-price elasticity of demand is - 2.5
A the goods are substitutes and demand is cross-price elastic
B the goods are substitutes and demand is cross-price inelastic
C the goods are complements and demand is cross-price elastic
D the goods are complements and demand is cross-price elastic
49. Price elasticity of supply measures the responsiveness of the quantity supplied to a change in:
A demand
B costs of production
C price
D the size of firms
50. If the government sets a maximum rent below the equilibrium rent the result is likely to be:
A an increase in the quality of rented property
B a surplus of rented property
C a transfer of welfare from tenants to landlords
D a shortage of rented property
51. A surplus occurs when:
A. Quantity demanded exceeds quantity supplied at the price ceiling
B. Quantity supplied exceeds quantity demanded at the price ceiling
C. Quantity demanded exceeds quantity supplied at the price floor
D. Quantity supplied exceeds quantity demanded at the price floor
52. The reason that government might impose a maximum (low) price for bread is to:
A encourage suppliers to supply more
B support the incomes of bread producers
C ensure the efficient allocation of resources
D increase fairness
Total cost increases from £5 to £7 when output increases from 0 to 1 unit.
53. Which of the following is correct?
A marginal cost is £7
B fixed cost is £2
C total variable cost increases by £5
D fixed cost is £5
54. Which of the following is defined as Total Cost (TC) divided by Quantity (Q)
A Marginal Cost (MC)
B Average Variable Cost (AVC)
C Average Cost (AC)
D Average Fixed Cost (AFC)
55. If marginal cost is above average cost:
A the average cost must be falling
B the marginal cost must be falling
C the average cost must be rising
D the marginal cost must be rising
56. A Fixed Cost
A is always low
B changes with the level of output
C is always high
D does not change with the level of output
57. The quantity of a fixed factor:
A can be changed in the short-run
B cannot be changed in the short-run
C cannot be changed in the long-run
D B and C only
58. Decreasing marginal returns implies
A increasing marginal costs
B decreasing average fixed costs
C decreasing marginal costs
D decreasing average variable costs
59. The law of diminishing marginal returns occurs with each additional unit of the variable factor input when:
A total output begins to decline
B marginal physical product becomes negative
C total output begins to rise
D marginal physical product is declining
60. Total cost increases from £5 to £7 when output increases from 0 to 1 unit. Which of the following is true?
A marginal cost is £7
B fixed cost is £2
C total variable cost increases by £5
D fixed cost is £5
61. The typical long-run average cost curve of a firm is:
A downward sloping
B determined by Diminishing Marginal Returns
C is a horizontal straight line
D determined by returns to scale
62. If there are increasing returns to scale then:
A marginal costs are constant
B the LRAC does not have a minimum
C total costs decrease as output rises
D none of the above
63. Marginal revenue is:
A total revenue divided by quantity
B more than total revenue
C the change in total revenue generated by the sale of
an additional unit of output
D always equal to average revenue
64. Which of the following is true for normal profit?
A it is included in the average cost curve
B it is surplus profit over and above normal profit
C it is equal to the opportunity cost of keeping a firm in business
D A & C only
65. In descending order (from most competitive to least competitive) the market structures are arranged in which order?
A Monopolistic competition, oligopoly, perfect competition, monopoly
B Perfect competition, monopolistic competition, oligopoly and monopoly
C Monopoly, oligopoly, monopolistic competition and perfect competition
D Perfect competition, oligopoly, monopolist competition and monopoly
66. In perfect competition the demand curve for the industry is:
A vertical
B the same as for a firm
C horizontal
D downward sloping
67. Under perfect competition the marginal revenue curve of afirm is horizontal because
A the firm is a price maker
B the industry demand curve is horizontal
C the output of the firm is too little to influence market price
D average cost is constant
68. Economists usually argue that the existence of a monopoly is likely to have undesirable effects on each of the following EXCEPT:
A prices
B competition
C choice
D economies of scale
69. The marginal revenue curve in monopoly:
A is the same as the demand curve
B is parallel with the demand curve
C lies below and to the left of the demand curve
D lies above and to the right of the demand curve
70. In monopoly which of the following is true?ANSWER:
A there are many buyers and sellers
B there is one buyer
C there is one seller
D there are weak barriers to entry
71. Which of the following is NOT found in monopolistic competition?
A many firms
B product differentiation
C branding
D homogeneous products
72. Firms in monopolistic competition:
A will produce at the output where MR = MC
B will make long-run supernormal profits
C enjoy the benefits of barriers to entry
D make homogeneous products
73. In monopolistic competition firms maximise profit where:
A marginal revenue equals average revenue
B marginal revenue equals marginal cost
C marginal revenue equals average cost
D marginal revenue equals total cost
74. Oligopoly is a market structure characterised by:
A a high degree of market concentration
B interdependence
C price taking
D A & B only
75. A 5-firm concentration ratio shows:
A The output of good X produced by the 5 largest firms as a proportion of their total output of all types of goods
B the sales of the 5 largest firms as a proportion of the total industry sales
C The size of the largest firm relative to the total size of the 5 largest firms
D The proportion of industries in the economy that have just 5 firms
76. The marginal revenue product of labour is
A) the extra revenue a firm earns by employing one additional unit of labour.
B) the marginal product of capital times the price of labour.
C) the extra revenue a firm makes by employing one additional unit of labour.
D) the extra profit a firm earns by employing one additional unit of labour.
77. In a perfectly competitive labour market:
A firms are wage setters
B workers are wage takers
C the wage rate is determined by the supply of and demand for labour
D B & C only
78. Economists call the sacrifice involved in working an extra hour the:
A marginal utility of leisure
B opportunity cost of consumption
C opportunity cost of leisure
D marginal disutility of work
79. The demand for taxi drivers is said to be an example of derived demand because it depends on:
A the productivity of taxi drivers
B the demand for taxi journeys
C the price of taxis
D the number people wishing to be taxi drivers
80. The backward sloping supply curve of labour occurs because:
A above a certain wage rate the substitution effect outweighs the income effect
B employers do not pay efficiency wages
C above a certain wage rate the income effect outweighs the substitution effect
D the marginal disutility of labour does not apply