ECO-401 Current Final term solve paper 18 august 2017
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Current Spring Paper ECO401 18 August
ECC401 Current Paper 18 August 2017
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:
solution= Ped= % change in Q demand /% change in Q Price= 10%/12%= 0.5 where e>1 elastice<1 inelastic
► 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: mid question
► A fixed cost.
► A variable cost.
► An implicit cost.
► An opportunity cost.
Question No: 15 ( Marks: 1 ) – Please choose one
As more of a good is consumed, then total utility typically:
► Increases at a decreasing rate.
► Decreases as long as marginal utility is negative.
► Decreases as long as marginal utility is positive.
► Is negative as long as marginal utility is decreasing.
Question No: 16 ( Marks: 1 ) – Please choose one
A production function:
► Relates inputs with output.
► Generates a curve that is upward sloping.
► Shows diminishing marginal product of an input, since it gets flatter as output rises.
► All of the given options.
Question No: 17 ( Marks: 1 ) – Please choose one
_______________ arises when an increase in all inputs leads to a more-than-proportional increase in the level of output. _____________ means that as inputs are added to the production process, output increases proportionally.
► Economies of scale; constant returns to scale.
► Constant returns to scale; decreasing returns to scale.
► Decreasing returns to scale; economies of scale.
► Economies of scale; decreasing returns to scale.
Question No: 18 ( Marks: 1 ) – Please choose one
Total costs are the sum of:
► Marginal costs and variable costs.
► Fixed costs and variable costs.
► Fixed costs and marginal costs.
► Average variable costs and marginal costs.
Question No: 19 ( Marks: 1 ) – Please choose one
As compared to existing firms, a new firm entering in monopolist market has:
► High costs.
► Low costs.
► Equal costs.
► None of the given options.
Question No: 20 ( 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: 21 ( Marks: 1 ) – Please choose one
The market structure in which strategic considerations are most important is:
► Monopolistic competition.
► Oligopoly.
► Pure competition.
► Pure monopoly.
Question No: 22 ( Marks: 1 ) – Please choose one
Price exceeds marginal revenue in which of the following market structure(s)?
► Differentiated oligopoly and monopoly only.
► Standardized oligopoly and pure competition only.
► Monopolistic competition and monopoly only.
► Monopolistic competition, oligopoly and monopoly.
Question No: 23 ( Marks: 1 ) – Please choose one
For a firm buying labor competitively, the marginal input cost is equal to the:
► Wage.
► Interest rate.
► Price of output.
► Cost of raw materials.
Question No: 24 ( Marks: 1 ) – Please choose one
Unlike the classical economists, Keynes believed that the economy could get stuck in the short run for a significant period of time because of:
► Insufficient aggregate supply.
► Insufficient aggregate demand.
► Quick self correcting mechanism.
► Government purchases of too many goods and services.
Question No: 25 ( Marks: 1 ) – Please choose one
According to Keynes, the economy does not self correct quickly because:
► With less consumption and more savings the interest rate will drop.
► In the short run workers are fully employed and cannot produce enough to get to long run equilibrium.
► Wages and prices are flexible in the short run.
► Wages and prices are sticky in the short run.
Question No: 26 ( Marks: 1 ) – Please choose one
An assumption of classical economics is:
► Prices and wages are inflexible.
► Self-correction takes a long time.
► Supply creates its own demand.
► Investment and saving are seldom equal.
Question No: 27 ( Marks: 1 ) – Please choose one
Government authorities have managed to reduce the unemployment rate from 8% to 4% in a hypothetical economy. As a result:
► The economy’s production possibilities curve will shift outward.
► The economy’s production possibilities curve will become steeper.
► The economy will move downward along its production possibilities curve.
► The economy will move from a point inside to a point closer to its production possibilities curve.
Question No: 28 ( Marks: 1 ) – Please choose one
Which of the following measures the percentage change in quantity demanded given a percentage change in consumer’s income?
► Price elasticity of demand.
► Income elasticity of demand.
► Supply price elasticity.
► Cross price elasticity.
Question No: 29 ( Marks: 1 ) – Please choose one
If the income elasticity of demand for boots is 0.2, a 10% increase in consumer’s income will lead to a:
► 20 percent decrease in the quantity of boots demanded.
► 2 percent increase in the quantity of boots demanded.
► 0.2 percent increase in the quantity of boots demanded.
► 20 percent increase in the quantity of boots demanded.
Question No: 30 ( Marks: 1 ) – Please choose one
Increase in pension benefits leads to income and substitution effect which:
► Encourage workers to retire later.
► Encourage workers to work more hours.
► Have no effect on incentive to retire.
► Encourage workers to retire earlier.
Question No: 31 ( 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: 32 ( 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: 33 ( Marks: 1 ) – Please choose one
If a firm experiences economies of scale, then the:
► Long-run average total cost curve is equal to the economies of scope.
► Long-run average total cost curve is positively sloped.
► Long-run average total cost curve is horizontal.
► Long-run average total cost curve is negatively sloped.
Question No: 34 ( Marks: 1 ) – Please choose one
When the marginal revenue product of labor is greater than the marginal input cost of labor then the profit maximizing firm will:
► Hire more labor.
► Hire less labor.
► Maintain the same employment.
► Decrease output.
Question No: 41 ( Marks: 2 )
Formula of unemployment rate (2)
Answer:
(number of unemployed/labor force)*100
Question No: 42 ( Marks: 3)
GDP,MPC,MPS Stand for
Answer:
GDP: Gross Domestic Product
MPS: Marginal Propensity Save
MPC: Marginal Propensity Consume
Question No: 43 ( Marks: 3)
Final Goods
Question No: 44 ( Marks: 5)
Current Account & Capital Account
Question No: 45 ( Marks: 5)
Type of taxes
Best of Luck
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