Which is not a sufficient condition for the emergence of an economic problem.
- Scarcity of resources
- Unlimited wants
- Alternative uses of scarce resources
- Use of money
Which is not a core economic problem?
- How to produce
- How to maximize private profit
- What to produce
- For whom to produce
Who described economics as a science that studies human actions as a relationship between alternate uses of ends and means?
- Alfred Marshall
- L. Robbins
- Paul A. Samuelson
- Joan Robinson
A mixed economy is characterized by the co-existence of:
- Public and private sectors
- Modem and traditional industries
- Commercial and subsistence farming
- Foreign and domestic investments
Which is not an essential feature of a socialist economy?
- Freedom of enterprise
- Social ownership of the means of production
- Government decisions
- Use of centralized planning
Which of the following is incorrect?
- Normative Economics studies how to solve the economic challenges facing society.
- A market necessarily refers to a meeting place between buyers and sellers
- A function demonstrates the association between two or more variables
- Equilibrium refers to the market conditions which once achieved, tend to persist
Microeconomics deals with the:
- Determination of prices of goods and services
- Behavior of industrial decision makers
- Allocation of resources of the economy as between production of different goods and services
- All of the above
Which of the following is Microeconomics concerned with?
- The size of national output
- Changes in the general level of prices
- The level of employment
- None of the above
Formulation of an economic theory involves:
- Testing the hypothesis against empirical evidence
- Logical deductions from the assumptions made
- Statement of various assumptions or postulates
- All of the above
An economic theory is:
- A hypothesis
- An axiom
- A tested hypothesis
- A proposition
Identify the aspect of taxation which is related to normative economics:
- Equity of tax
- Incidence of tax
- Effect of tax on the capacity willingness to work
- None of the above
Contraction of demand is the result of
- Increase in the price commodity concerned
- Decrease in the number of consumers
- Decrease in the income purchasers
- Increase in the prices of other goods
All but one of the following presumed that when drawing the demand curve of a person for a product, they stayed the same. What it is.
- His monetary income
- The preferences of the individual
- The prices of other goods
- The price of the commodity under consideration
An example of substitutes is which of the following pairs of commodities?
- Pen and ink
- Tea and sugar
- Shirt and trousers
- Tea and coffee
The price elasticity of demand at the mid-point of the line will be in the case of a straight-line demand curve meeting the two axes
- 1.5
- 0
- 1
- 2
Assuming other items remain unchanged, the Law of Demand defines the relationship between
- The price of a commodity and the quantity demanded
- The income of the consumer and the quantity of a commodity demanded by him
- Quantity demanded of a commodity and the relative prices of its complementary goads
- Price of a commodity and the demand for its substitute
Demand for a commodity refers to a:
- Quantity of the commodity demanded at a certain price during any particular period of time
- Need for the commodity
- Desire for the commodity
- Quantity demanded of that commodity
Identify the factor that typically maintains a low price-elasticity of demand for a product
- lts low price
- Variety of uses for that commodity
- High proportion of the consumer’s income spent on it
- Close substitutes for that commodity
If the demanded quantity of a good remains constant regardless of changes in its price, then the demand curve for the commodity will be
- Positively sloped
- Horizontal
- Vertical
- Negatively sloped
In the case of a Giffen product, the curve of demand will be
- Horizontal
- Downward-sloping to the right
- Upward sloping to the right
- Backward falling to the left
Identify the demand price elasticity coefficient when the percentage increase in the quantity of a demanded commodity is smaller than the percentage decrease in its price
- Greater than one
- Equal to one
- Zero
- Smaller than one
The income elasticity of demand in case of inferior good
- Zero
- Positive
- Infinite
- Negative
In respect of which of the following category of goods is consumer’s surplus highest?
- Necessities
- Giffen goods
- Prestige goods
- Luxuries
Total utility is maximum when
- Marginal utility is at its highest point
- Marginal utility is zero
- Average utility is maximum
- Marginal utility is equal to average
If the demand for a commodity is inelastic, an increase in its price will cause the total expenditure of the consumers of the commodity to
- Increase
- Remain the same
- Decrease
- Any of the above
The budget-line is also known as the
- Production possibility line
- Iso-utility curve
- Consumption possibility line
- Isoquant
Which one is not an assumption of the theory of demand based on analysis of indifference curves?
- Diminishing marginal rate of substitution
- Provided the scale of preferences between the two goods’ distinct combinations
- Consumers will often choose more to less of a specific product, other items staying the same
- Constant marginal utility of money
The elasticity of substitution between two perfect substitutions is
- Greater than zero
- Zero
- Infinity
- Less than infinity
The consumer is in equilibrium at a point where the budget line:
- Is below an indifference curve
- Is above an indifference curve
- Cuts an indifference curve
- Is tangent to an indifference curve
An indifference curve slopes down towards right since more of one commodity and less of another result in
- Maximum satisfaction
- Same satisfaction
- Greater satisfaction
- Decreasing expenditure
The Revealed Preference Theory deduces the inverse relationship between price and quantity from
- Assumption of indifference
- Observed behavior of the consumer
- Postulate of utility maximization
- Introspection
Which of the following statements is incorrect?
- The elasticity of substitution between two goods to a consumer is zero
- An indifference curve must be downward sloping to the right
- The total effect of a change in the price of a good on its quantity demanded is called the price effect
- Convexity of a curve implies that the slope of the curve diminishes as one move from left to right
Production is a function of:
- Costs
- Inputs
- Profits
- Price
An Iso-product curve slopes
- Upward to the right
- Downward to the right
- Upward to the left
- Downward to the left
Which cost increases continuously with the increase in production?
- Fixed cost
- Marginal cost
- Variable cost
- Average cost
What one of the cost curves below is never Un-shaped?
- Marginal cost curve
- Average cost curve
- Average fixed cost curve
- Average variable cost curve
Complete/Total costs are divided into fixed costs and variable costs in the short-term. What variable cost is one of the following?
- Interest payment on past borrowing
- Cost of raw materials
- Cost of equipment
- Payment of rent on buildings
In the short term, the total fixed cost rises as a company’s production
- Decrease
- Increase
- First declines and then rises
- Remains constant
A significant characteristic of the production function of Cobb Douglas is that the elasticity of substitution between inputs is
- More than unity
- Equal to unity
- Zero
- Less than unity
A vertical supply curve that is parallel to the price axis indicates that supply elasticity is
- Infinity
- Zero
- Greater than zero but less than infinity
- Equal to one
The supply of a commodity refers to
- The total existing stock of the commodity
- Actual production of the commodity
- Amount of the commodity offered for sale at a particular price per unit of time
- Stock available for sale
The production techniques are technically efficient:
- Above the upper ridge line
- Below the lower ridge line
- On the upper ridge line
- Between the two ridge lines
Which of the following is not a feature of Iso-product curves? lso-product curves
- Show different input combination producing the same output
- Are downward sloping to the right.
- Are convex to the origin
- Intersect each other
Some economists refer to iso-product curves as
- Production indifference curve
- Engels curve
- Ridge line
- Budget line
Which one of the following is also known as plant curves?
- Long-run average cost (LAC) curves
- Average total cost (ATC) curves
- Short-run average cost (SAC) curves
- Average variable cost (AVC) curves
What is the shape of the average fixed cost (AFC) curve?
- Horizontal up to a point and then rising
- U-shape
- Rectangular hyperbola
- Sloping down towards the right
An increase in the supply of a commodity is caused by:
- Fall in the prices of other commodities
- Fall in the prices of factors of production
- Improvements in its technology
- All of the above
Supply elasticity refers to the degree of responsiveness of a commodity’s supply to changes in its
- Costs of production
- Demand
- Price
- State of technology
In terms of the alternative given up, the cost of one item is known as
- Real cost
- Production cost
- Opportunity cost
- Physical cost
According to current thinking, the law diminishing returns applies to
- Agriculture
- All fields of production
- Manufacturing
- Mining
Identify the correct statement
- Scale economies exist only when the factors of production are indivisible.
- When the marginal product is equal to the average product, the average product is at its peak.
- The production possibility curve and the transformation curve are different curves
- The law of increasing returns refers to the impact of changes in the proportions of factors
Which of the above is closely associated with the notion of marginal cost?
- Fixed cost
- Variable cost
- Explicit cost
- Implicit cost
According to M. Kalecki, the true measure of the degree of monopoly power is the
- Extent of monopolistic profit enjoyed by the monopolist
- Ratio between price and marginal cost
- Price charged by the monopolist minus marginal cost of production .
- Cross-elasticity of demand for the product of the monopolist
A monopolist is able to maximize his profit when
- He charges a high price
- His output is maximum
- His marginal revenue is equal to marginal cost
- His average cost is minimum
What of the above does not constitute a basic condition of pure competition?
- Homogeneous product
- Large number of buyers sellers
- Absence of transport cost
- Freedom of entry
What is the shape of the curve of demand faced by a firm in perfect competition?
- Vertical
- Horizontal
- Negatively sloped
- Positively sloped
First order condition for profit maximization of a firm?
- MC=MR
- AC=MR
- AC=AR
- MR=AR
In which form of the market structure in the degree of control over the price of its product by a firm very large?
- Imperfect competition
- Monopoly
- Perfect competition
- Oligopoly
What the another name of average revenue curve?
- Profit curve
- Average cost curve
- Indifference curve
- Demand curve
In which market structure a firm is unable to control the price of its product?
- Perfect competition
- Monopoly
- Oligopoly
- Monopolistic competition
Which one of the following is the condition of equilibrium for the monopolist?
- MR=MC=Price
- MC=AR
- MR=MC
- AC=AR
The monopoly of discrimination means that the monopolist charges varying prices for his commodity
- For different uses
- At different places
- From different groups of consumers
- Any of the above
Price discrimination can only be efficient if the elasticity of the indifferent demand markets from which the overall market has been divided is
- Different
- Uniform
- Zero
- Less
Which of the following oligopoly models is concerned with the maximization of joint profits?
- Bertrand’s model
- Price leadership model
- Edge worth’s model
- Collusive model
In the sense of oligopoly, the Kinky demand curve hypothesis is intended to describe
- Price rigidity
- Price and output determination
- Collusion among rivals
- Price leadership
Which type of market structure is characterized by interdependence between the various competing firms in decision-making
- Perfect competition
- Imperfect competition
- Oligopoly
- None of the these
The situation of monopolistic competition is created by
- Imperfection of the market for that product
- Lack of homogeneity of the product produced by different firms
- Small number of producers of a commodity
- All of the these
Which one of the following is not the assumption of the Marginal Productivity Theory of Distribution
- Perfect competition in the factor market
- All factors, except one, are variable
- Given stock of each factor and full employment
- Homogeneity of a factor
With which of the theories of wages is the name of John Stuart Mill associated
- Wages-fund theory
- Marginal productivity theory of wages
- Iron law of wages
- Subsistence theory of wages
Under monophony in the labor market, the supply curve of labor facing the firm will be
- Downward-sloping to the right
- Upward-sloping to the right
- Horizontal
- Backward-sloping to the left
Economic rent can accrue to
- Capital only
- Specialized technical personnel only
- Land only
- Any of the factors of production
Which of the following statements is incorrect
- Rent is exclusively demand determined
- Quasi-rent is a purely short-term phenomenon
- Rent is the excess of actual earnings over transfer earnings
- Rent can accrue to land alone
In the context of the firm as a whole, quasi-rent is defined as the excess of the total receipts over the total
- Average cost
- Fixed cost
- Variable cost
- Fixed and variable cost
A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as
- Quasi-rent
- Surplus value
- Super normal profit
- Transfer earnings
Which of the following factors forms the basis of the Loan able Funds Theory of Interest?
- Psychological factors
- Monetary factors
- Monetary and non-monetary factors
- Technical factors
Which of the following purposes normally does not give rise to the demand for loanable funds?
- Saving
- Consumption
- Hoarding
- Investment
On which of the following does the demand for money for speculative motive mainly depend?
- Profits
- Income
- Rate of interest
- General Price level
The demand for liquidity preference is governed by
- Speculative motives
- Precautionary motives
- Transaction motives
- All of the above
Identify the neo-classical theory of the rate of interest
- Abstinence theory
- Time preference theory
- Loan able funds theory
- Liquidity-preference theory
The classical theory explained interest as a reward for:
- Abstinence
- Parting with liquidity
- Inconvenience
- Saving
According to Joseph Schumpeter, profit is the reward for
- Uncertainty-bearing
- Innovation
- Management
- Risk-taking
The term normal profit as used in the analysis of equilibrium of the firm under perfect competition refers to
- Reward for enterprise
- Earnings of management
- The residual income of a business
- Reward for innovation