education2012
12-13-2012, 04:18 PM
ECO401 Economics Mega Solve Mid Term Paper
MIDTERM EXAMINATION
ECO401- Economics (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
An individual whose attitude towards risk is known as:
► Risk averse.
► Risk loving.
► Risk neutral.
► None of the given options.
Question No: 2 ( Marks: 1 ) - Please choose one
The concept of a risk premium applies to a person that is:
► All of the given options.
► Risk averse.
► Risk neutral.
► Risk loving.
Question No: 3 ( Marks: 1 ) - Please choose one
A normative economic statement:
► Is a statement of fact.
► Is a hypothesis used to test economic theory.
► Is a statement of what ought to be, not what is.
► Is a statement of what will occur if certain assumptions are true.
Question No: 4 ( Marks: 1 ) - Please choose one
Economics is different from other social sciences because it is primarily concerned with the study of ________, it is similar to other social sciences because they are all concerned with the study of ________.
► Limited resources, market behavior.
► Scarcity, human behavior.
► Social behavior, limited resources.
► Biological behavior, scarcity.
Question No: 5 ( Marks: 1 ) - Please choose one
Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as:
► P = MR.
► P = AVC.
► AR = MR.
► P = MC.
Question No: 6 ( Marks: 1 ) - Please choose one
A welfare loss occurs in monopoly where:
► The price is greater than the marginal cost.
► The price is greater than the marginal benefit.
► The price is greater than the average revenue.
► The price is greater than the marginal revenue.
Question No: 7 ( Marks: 1 ) - Please choose one
The "perfect information" assumption of perfect competition includes all of the following EXCEPT:
► Consumers know their preferences.
► Consumers know their income levels.
► Consumers know the prices available.
► Consumers can anticipate price changes.
Question No: 8 ( Marks: 1 ) - Please choose one
Figure
In figure given above, the marginal utility of income is:
► Increasing as income increases.
► Constant for all levels of income.
► Diminishes as income increases.
► None of the given options.
Question No: 9 ( Marks: 1 ) - Please choose one
A consultant for Mattel (the producer of Barbie) reports that their long run average cost curve is decreasing. In other words, he is saying that:
► The firm has increasing returns to scale and the law of diminishing marginal productivity does not apply to this firm.
► The firm has decreasing returns to scale and the law of diminishing marginal productivity does not apply to this firm.
► The firm has increasing returns to scale but the law of diminishing marginal productivity may still apply to this firm.
► The firm has decreasing returns to scale but nonetheless the law of diminishing marginal productivity may still apply to this firm.
Question No: 10 ( Marks: 1 ) - Please choose one
If the cross price elasticity of demand between two goods X and Y is positive; it means that goods are:
► Independent.
► Complements.
► Substitutes.
► Inferior.
Question No: 11 ( Marks: 1 ) - Please choose one
A demand schedule is best described as:
► A numerical tabulation of the quantity demanded of a good at different prices, ceteris paribus.
► A graphical representation of the law of demand.
► A systematic listing of all the variables that might conceivably bring about a change in demand.
► A symbolic representation of the law of demand: P,Q and Q, P.
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following best expresses the law of demand?
► A higher price reduces demand.
► A lower price reduces demand.
► A higher price reduces quantity demanded.
► A lower price shifts the demand curve to the right.
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following would most likely shift the production possibilities curve for a nation outward?
► A reduction in unemployment.
► An increase in the production of capital goods.
► A reduction in discrimination.
► An increase in the production of consumer goods.
Question No: 14 ( Marks: 1 ) - Please choose one
The primary use of the kinked-demand curve is to explain price rigidity in:
► Oligopoly.
► Monopoly.
► Perfect competition.
► Monopolistic competition.
Question No: 15 ( Marks: 1 ) - Please choose one
A monopolistically competitive firm in short run equilibrium:
► Will make negative profit (lose money).
► Will make zero profit (break-even).
► Will make positive profit.
► Any of the given are possible.
Question No: 16 ( Marks: 1 ) - Please choose one
A market with few entry barriers and with many firms that sell differentiated products is:
► Purely competitive.
► A monopoly.
► Monopolistically competitive.
► Oligopolistic.
Question No: 17 ( Marks: 1 ) - Please choose one
The maximum price that a consumer is willing to pay for a good is called:
► The reservation price.
► The market price.
► The first-degree price.
► The block price.
Question No: 18 ( Marks: 1 ) - Please choose one
Third-degree price discrimination involves:
► Charging each consumer the same two part tariff.
► Charging lower prices the greater the quantity purchased.
► The use of increasing block rate pricing.
► Charging different prices to different groups based upon differences in elasticity of demand.
Question No: 19 ( Marks: 1 ) - Please choose one
A tennis pro charges $15 per hour for tennis lessons for children and $30 per hour for tennis lessons for adults. The tennis pro is practicing:
► First-degree price discrimination.
► Second-degree price discrimination.
► Third-degree price discrimination.
► All of the given options.
Question No: 20 ( Marks: 1 ) - Please choose one
An electric power company uses block pricing for electricity sales. Block pricing is an example of:
► First-degree price discrimination.
► Second-degree price discrimination.
► Third-degree price discrimination.
► Block pricing is not a type of price discrimination.
Question No: 21 ( Marks: 1 ) - Please choose one
A firm never operates:
► At the minimum of its average total cost curve.
► At the minimum of its average variable cost curve.
► On the downward-sloping portion of its average total cost curve.
► On the downward-sloping portion of its average variable cost curve.
Question No: 22 ( Marks: 1 ) - Please choose one
Marginal profit is equal to:
► Marginal revenue minus marginal cost.
► Marginal revenue plus marginal cost.
► Marginal cost minus marginal revenue.
► Marginal revenue times marginal cost.
Question No: 23 ( Marks: 1 ) - Please choose one
If current output is less than the profit-maximizing output then which of the following must be TRUE?
► Total revenue is less than total cost.
► Average revenue is less than average cost.
► Marginal revenue is less than marginal cost.
► Marginal revenue is greater than marginal cost.
Question No: 24 ( Marks: 1 ) - Please choose one
At the profit-maximizing level of output, what is TRUE of the total revenue (TR) and total cost (TC) curves?
► They must intersect with TC cutting TR from below.
► They must intersect with TC cutting TR from above.
► They must be tangent to each other.
► They must have the same slope.
Question No: 25 ( Marks: 1 ) - Please choose one
The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. What is the average total cost?
► 5Q.
► 5.
► 5 + (200/Q).
► None of the given options.
Question No: 26 ( Marks: 1 ) - Please choose one
In order for a taxicab to be operated in New York City, it must have a medallion on its hood. Medallions are expensive but can be resold and are therefore an example of:
► A fixed cost.
► A variable cost.
► An implicit cost.
► An opportunity cost.
Question No: 27 ( Marks: 1 ) - Please choose one
Costs determine all of the following EXCEPT:
► Demand for a product.
► Firm's behaviour.
► How firms should expand?
► Firm's profitability.
Question No: 28 ( Marks: 1 ) - Please choose one
The rate at which a firm can substitute capital for labour and hold output constant is the:
► Law of diminishing marginal returns.
► Marginal rate of substitution.
► Marginal rate of factor substitution.
► Marginal rate of production.
Question No: 29 ( Marks: 1 ) - Please choose one
If a simultaneous and equal percentage decrease in the use of all physical inputs leads to a larger percentage decrease in physical output, a firm’s production function is said to exhibit:
► Decreasing returns to scale.
► Constant returns to scale.
► Increasing returns to scale.
► Diseconomies of scale.
MIDTERM EXAMINATION
ECO401- Economics (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
An individual whose attitude towards risk is known as:
► Risk averse.
► Risk loving.
► Risk neutral.
► None of the given options.
Question No: 2 ( Marks: 1 ) - Please choose one
The concept of a risk premium applies to a person that is:
► All of the given options.
► Risk averse.
► Risk neutral.
► Risk loving.
Question No: 3 ( Marks: 1 ) - Please choose one
A normative economic statement:
► Is a statement of fact.
► Is a hypothesis used to test economic theory.
► Is a statement of what ought to be, not what is.
► Is a statement of what will occur if certain assumptions are true.
Question No: 4 ( Marks: 1 ) - Please choose one
Economics is different from other social sciences because it is primarily concerned with the study of ________, it is similar to other social sciences because they are all concerned with the study of ________.
► Limited resources, market behavior.
► Scarcity, human behavior.
► Social behavior, limited resources.
► Biological behavior, scarcity.
Question No: 5 ( Marks: 1 ) - Please choose one
Because of the relationship between a perfectly competitive firm's demand curve and its marginal revenue curve, the profit maximization condition for the firm can be written as:
► P = MR.
► P = AVC.
► AR = MR.
► P = MC.
Question No: 6 ( Marks: 1 ) - Please choose one
A welfare loss occurs in monopoly where:
► The price is greater than the marginal cost.
► The price is greater than the marginal benefit.
► The price is greater than the average revenue.
► The price is greater than the marginal revenue.
Question No: 7 ( Marks: 1 ) - Please choose one
The "perfect information" assumption of perfect competition includes all of the following EXCEPT:
► Consumers know their preferences.
► Consumers know their income levels.
► Consumers know the prices available.
► Consumers can anticipate price changes.
Question No: 8 ( Marks: 1 ) - Please choose one
Figure
In figure given above, the marginal utility of income is:
► Increasing as income increases.
► Constant for all levels of income.
► Diminishes as income increases.
► None of the given options.
Question No: 9 ( Marks: 1 ) - Please choose one
A consultant for Mattel (the producer of Barbie) reports that their long run average cost curve is decreasing. In other words, he is saying that:
► The firm has increasing returns to scale and the law of diminishing marginal productivity does not apply to this firm.
► The firm has decreasing returns to scale and the law of diminishing marginal productivity does not apply to this firm.
► The firm has increasing returns to scale but the law of diminishing marginal productivity may still apply to this firm.
► The firm has decreasing returns to scale but nonetheless the law of diminishing marginal productivity may still apply to this firm.
Question No: 10 ( Marks: 1 ) - Please choose one
If the cross price elasticity of demand between two goods X and Y is positive; it means that goods are:
► Independent.
► Complements.
► Substitutes.
► Inferior.
Question No: 11 ( Marks: 1 ) - Please choose one
A demand schedule is best described as:
► A numerical tabulation of the quantity demanded of a good at different prices, ceteris paribus.
► A graphical representation of the law of demand.
► A systematic listing of all the variables that might conceivably bring about a change in demand.
► A symbolic representation of the law of demand: P,Q and Q, P.
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following best expresses the law of demand?
► A higher price reduces demand.
► A lower price reduces demand.
► A higher price reduces quantity demanded.
► A lower price shifts the demand curve to the right.
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following would most likely shift the production possibilities curve for a nation outward?
► A reduction in unemployment.
► An increase in the production of capital goods.
► A reduction in discrimination.
► An increase in the production of consumer goods.
Question No: 14 ( Marks: 1 ) - Please choose one
The primary use of the kinked-demand curve is to explain price rigidity in:
► Oligopoly.
► Monopoly.
► Perfect competition.
► Monopolistic competition.
Question No: 15 ( Marks: 1 ) - Please choose one
A monopolistically competitive firm in short run equilibrium:
► Will make negative profit (lose money).
► Will make zero profit (break-even).
► Will make positive profit.
► Any of the given are possible.
Question No: 16 ( Marks: 1 ) - Please choose one
A market with few entry barriers and with many firms that sell differentiated products is:
► Purely competitive.
► A monopoly.
► Monopolistically competitive.
► Oligopolistic.
Question No: 17 ( Marks: 1 ) - Please choose one
The maximum price that a consumer is willing to pay for a good is called:
► The reservation price.
► The market price.
► The first-degree price.
► The block price.
Question No: 18 ( Marks: 1 ) - Please choose one
Third-degree price discrimination involves:
► Charging each consumer the same two part tariff.
► Charging lower prices the greater the quantity purchased.
► The use of increasing block rate pricing.
► Charging different prices to different groups based upon differences in elasticity of demand.
Question No: 19 ( Marks: 1 ) - Please choose one
A tennis pro charges $15 per hour for tennis lessons for children and $30 per hour for tennis lessons for adults. The tennis pro is practicing:
► First-degree price discrimination.
► Second-degree price discrimination.
► Third-degree price discrimination.
► All of the given options.
Question No: 20 ( Marks: 1 ) - Please choose one
An electric power company uses block pricing for electricity sales. Block pricing is an example of:
► First-degree price discrimination.
► Second-degree price discrimination.
► Third-degree price discrimination.
► Block pricing is not a type of price discrimination.
Question No: 21 ( Marks: 1 ) - Please choose one
A firm never operates:
► At the minimum of its average total cost curve.
► At the minimum of its average variable cost curve.
► On the downward-sloping portion of its average total cost curve.
► On the downward-sloping portion of its average variable cost curve.
Question No: 22 ( Marks: 1 ) - Please choose one
Marginal profit is equal to:
► Marginal revenue minus marginal cost.
► Marginal revenue plus marginal cost.
► Marginal cost minus marginal revenue.
► Marginal revenue times marginal cost.
Question No: 23 ( Marks: 1 ) - Please choose one
If current output is less than the profit-maximizing output then which of the following must be TRUE?
► Total revenue is less than total cost.
► Average revenue is less than average cost.
► Marginal revenue is less than marginal cost.
► Marginal revenue is greater than marginal cost.
Question No: 24 ( Marks: 1 ) - Please choose one
At the profit-maximizing level of output, what is TRUE of the total revenue (TR) and total cost (TC) curves?
► They must intersect with TC cutting TR from below.
► They must intersect with TC cutting TR from above.
► They must be tangent to each other.
► They must have the same slope.
Question No: 25 ( Marks: 1 ) - Please choose one
The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. What is the average total cost?
► 5Q.
► 5.
► 5 + (200/Q).
► None of the given options.
Question No: 26 ( Marks: 1 ) - Please choose one
In order for a taxicab to be operated in New York City, it must have a medallion on its hood. Medallions are expensive but can be resold and are therefore an example of:
► A fixed cost.
► A variable cost.
► An implicit cost.
► An opportunity cost.
Question No: 27 ( Marks: 1 ) - Please choose one
Costs determine all of the following EXCEPT:
► Demand for a product.
► Firm's behaviour.
► How firms should expand?
► Firm's profitability.
Question No: 28 ( Marks: 1 ) - Please choose one
The rate at which a firm can substitute capital for labour and hold output constant is the:
► Law of diminishing marginal returns.
► Marginal rate of substitution.
► Marginal rate of factor substitution.
► Marginal rate of production.
Question No: 29 ( Marks: 1 ) - Please choose one
If a simultaneous and equal percentage decrease in the use of all physical inputs leads to a larger percentage decrease in physical output, a firm’s production function is said to exhibit:
► Decreasing returns to scale.
► Constant returns to scale.
► Increasing returns to scale.
► Diseconomies of scale.