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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.
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:
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.