Wednesday, July 8, 2009

ECO401- Economics 7th july page 1

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Question No: 1 ( Marks: 1 ) - Please choose one
In a free-market economy, the allocation of resources is determined by:

► Votes taken by consumers.
► A central planning authority.
► Consumer preferences.
► The level of profits of firms.

Question No: 2 ( Marks: 1 ) - Please choose one
The concave shape of the production possibilities curve for two goods X and Y illustrates:

► Increasing opportunity cost for both goods.
► Increasing opportunity cost for good X but not for good Y.
► Increasing opportunity cost for good Y but not for good X.
► Constant opportunity cost for both goods.

Question No: 3 ( Marks: 1 ) - Please choose one
If the quantity demanded of a product is greater than the quantity supplied of a product, then:
► There is a shortage of the product.
► There is a surplus of the product.
► The product is a normal good.
► The product is an inferior good.

Question No: 4 ( Marks: 1 ) - Please choose one
The supply curve is upward-sloping because:

► As the price increases, consumers demand less.
► As the price increases, suppliers can earn higher levels of profit or justify higher marginal costs to produce more.
► None of the given options.
► As the price increases, so do costs.

Question No: 5 ( Marks: 1 ) - Please choose one
When an industry's raw material costs increase, other things remaining the same:
► The supply curve shifts to the right.
► Output increases regardless of the market price and the supply curve shifts upward.
► Output decreases and the market price also decrease.
► The supply curve shifts to the left.

Question No: 6 ( Marks: 1 ) - Please choose one
When the price of petrol rises by 12%, the quantity of petrol purchased falls by 8%. This shows that the demand for petrol is:

► Perfectly elastic.
► Unit elastic.
► Elastic.
► Inelastic.

Question No: 7 ( Marks: 1 ) - Please choose one
Suppose price rises from $15 to $17 and quantity demanded decreases by 20%. We can conclude:

► Demand is unitary elastic.
► Demand is elastic.
► The elasticity of demand is 2.
► Total revenue will decrease.

Question No: 8 ( Marks: 1 ) - Please choose one
"Utility" is most closely related to the term:

► Useless.
► Require.
► Necessary.
► Satisfaction.

Question No: 9 ( Marks: 1 ) - Please choose one
When the marginal utility of a good is zero, this implies that:

► The consumer would not spend any additional income to buy more of that good.
► Consumption of additional units would have positive marginal utility.
► Total utility is minimized.
► Total utility is also zero.

Question No: 10 ( Marks: 1 ) - Please choose one
When the substitution effect of a lowered price is counteracted by the income effect, the good in question is:

► An inferior good.
► A substitute good.
► An independent good.
► A normal good.

Question No: 11 ( Marks: 1 ) - Please choose one
Diminishing marginal returns implies:

► Decreasing marginal costs.
► Increasing marginal costs.
► Decreasing average variable costs.
► Decreasing average fixed costs.

Question No: 12 ( Marks: 1 ) - Please choose one
A graph showing all the combinations of capital and labour available for a given total cost is the:
► Budget constraint.
► Expenditure set.
► Isoquant.
► Isocost.

Question No: 13 ( Marks: 1 ) - Please choose one
When an isocost line is just tangent to an isoquant, we know that:
► Output is being produced at minimum cost.
► Output is not being produced at minimum cost.
► The two products are being produced at the medium input cost to the firm.
► The two products are being produced at the highest input cost to the firm.

Question No: 14 ( 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: 15 ( Marks: 1 ) - Please choose one
The good produced by a monopoly:

► Has perfect substitutes.
► Has no substitutes at all.
► Has no close substitutes.
► Can be easily duplicated.

Question No: 16 ( Marks: 1 ) - Please choose one
Welfare economics is the branch of economics which deals with:

► Positive issues.
► Normative issues.
► Micro issues.
► Macro issues.

Question No: 17 ( Marks: 1 ) - Please choose one
The oligopoly model which predicts that oligopoly prices will tend to be very rigid is the:

► Cournot model.
► Cobweb model.
► Dominant firm model.
► Kinked demand model.

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