ECO401 Economics Quiz 01 Solution Ideas Fall 2014 Last Date 13th November 2014

1 In a free market economy, resources are allocated on the basis of:

a) vote taken by consumer

b) a central planning authority

c) consumers preferences == ans

d) the level of profit of firm

2 Accounts office of Z&X corporations has paid Rs.250000 on account of profit in the month of August 2011. Which of the following the accounts office has paid for?

a) Labour == ans

b) capital

c) land

d) entrepreneur

3 If the quantity demanded of mangoes exceeds the quantity supplied of mangoes:

a)there is a surplus of mangoes

b) market force will cause the price to fall

c) market force will cause the price to rise == ans

d) the market is in equilibrium

4The process by which we limit the supply or amount of some economic factor which is scarcely available is called:

a) Rationing == ans

b) Budling

c) price floor

d) price ceiling

5A point on a nationís production possibility frontier shows:

a) an undesireable combination of good and services

b) an unatainable combination of good and services

c) That resources are fully employed in producing particulars goods and services

d) the level of production that will cause both unemployment and inflation

6 Which of the following factors would cause leftward shift in supply curve for bicycles?

a) Decrease in wages

b) increase in price of input === ans

c) Decrease in price of input

d) use the latest technology in production of bicycle

7 Measurement of elasticites is made in percentage terms because:

a) it is easy to calculate

b) the resulting measurement is unit free === ansc) it give a more accurate answer

d) the answer is always negative way

8 Suppose quantity demanded of chicken increases by 5 percent in response to 2 percent increase in price of beef. The cross-price elasticity of demand for chicken with respect to price of beef is:

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a) +2.5 ==ans

B) -2.5

c) +.25

d) -.25

9 Normally the shape of production possibility frontier is:

a) positive === not confrm

b) convex

c) lenear

d) concave

10 If desk lamps and bulbs are complementary goods, a fall in price of desk lamps will shift the demand curve for:

a) bulbs to the right

b) bulbs to the right

c) Desk lamps to the right

d) desk lamps to the left====ans