FINAL TERM EXAMINATION
Spring 2010
ECO401- Economics (Session - 3)
Time: 90 min
Marks: 69
Question No: 1 ( Marks: 1 ) - Please choose one
Land is best described as:
► Produced factors of production.
► "Organizational" resources.
► Physical and mental abilities of people.
► "Naturally" occurring resources.
Question No: 2 ( Marks: 1 ) - Please choose one
The price elasticity of demand measures the responsiveness of quantity demanded to:
► Quantity demanded.
► Quantity supplied.
► Price.
► Output.
Question No: 3 ( Marks: 1 ) - Please choose one
Suppose your local public golf course increases the greens fees for using the course. If the demand for golf is relatively inelastic, you would expect:
► A decrease in total revenue received by the course.
► An increase in total revenue received by the course.
► No change in total revenue received by the course.
► An increase in the amount of golf played on the course.
Question No: 4 ( 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: 5 ( Marks: 1 ) - Please choose one
At any given point on an indifference curve, the absolute value of the slope equals:
► Unity--otherwise there would be no indifference.
► The marginal rate of substitution.
► The consumer’s marginal utility.
► None of the given options.
Question No: 6 ( Marks: 1 ) - Please choose one
Fixed costs are fixed with respect to changes in:
► Output.
► Capital expenditures.
► Wages.
► Time.
Question No: 7 ( 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: 8 ( Marks: 1 ) - Please choose one
When a firm charges each customer the maximum price that the customer is willing to pay, the firm:
► Engages in a discrete pricing strategy.
► Charges the average reservation price.
► Engages in second-degree price discrimination.
► Engages in first-degree price discrimination.
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the following is true in long run equilibrium for a firm in a monopolistic competitive industry?
► The demand curve is tangent to marginal cost curve.
► The demand curve is tangent to average cost curve.
► The marginal cost curve is tangent to average cost curve.
► The demand curve is tangent to marginal revenue curve.
Question No: 10 ( Marks: 1 ) - Please choose one
Which one of the following characteristics is common in monopolistic competition and oligopoly?
► Free entry and exit from the industry.
► Strategic behavior.
► Standardized products.
► Advertising.
Question No: 11 ( Marks: 1 ) - Please choose one
Value of Marginal Product of Labor (VMPL) is equal to:
► MPPL/ Pi.
► MPPL.
► Pi.
► MPPL x Pi.
Question No: 12 ( Marks: 1 ) - Please choose one
According to classical economics, the economy was unlikely to experience:
► Full employment.
► Flexible wages and prices.
► Equality between saving and investment.
► High rates of unemployment.
Question No: 13 ( Marks: 1 ) - Please choose one
Say's Law is a proposition underlying classical economics stating that:
► Supply creates its own demand.
► Leakages are greater than injections.
► Unemployment is a common condition.
► Consumption expenditures are a function of disposable income.
Question No: 14 ( 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: 15 ( Marks: 1 ) - Please choose one
Which of the following will result if there is a decrease in aggregate demand?
► Expansion; inflation.
► Recession; deflation.
► Expansion; deflation.
► Recession; inflation.
Question No: 16 ( Marks: 1 ) - Please choose one
Real Gross Domestic Product (GDP) equals:
► Nominal GDP minus net exports.
► Nominal GDP divided by the GDP deflator.
► Nominal GDP multiplied by the GDP deflator.
► GDP minus depreciation.
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following statements is TRUE?
► Net National Product = Gross National Product – Depreciation.
► Net National Product = National Income.
► Net National Product = Disposable Personal Income.
► Net National Product = Personal Income.
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the following shows the Fisher equation of exchange?
► MT=PV.
► VT=PM.
► MV=PQ.
► MY=VP.
Question No: 19 ( Marks: 1 ) - Please choose one
In the Keynesian cross model, the 45-degree line has a slope of:
► 45.
► Infinity.
► 1.
► 0.
Question No: 20 ( Marks: 1 ) - Please choose one
The principle economic difference between a competitive and a non-competitive market is:
► The number of firms in the market.
► The extent to which any firm can influence the price of the product.
► The size of the firms in the market.
► The annual sales made by the largest firms in the market.
Question No: 21 ( Marks: 1 ) - Please choose one
An individual whose attitude towards risk is known as:
► Risk averse.
► Risk loving.
► Risk neutral.
► None of the given options.
Question No: 22 ( Marks: 1 ) - Please choose one
Which of the following best describes the ''Capital widening''?
► More capital per unit of labour.
► More capital and more labour but with the same amount of capital per unit of labour.
► Increasing the usage of existing capital.
► Importing capital from the developed world.
Question No: 23 ( Marks: 1 ) - Please choose one
Suppose there are two producers and two products. Which of the following is not TRUE in this situation?
► A producer has an absolute advantage on one product.
► A producer has the comparative advantage on both products.
► A producer has the comparative advantage on one product.
► A producer has an absolute advantage on both products.
Question No: 24 ( Marks: 1 ) - Please choose one
Public education creates:
► Asymmetric information.
► External costs.
► Internal costs.
► External benefits.
Question No: 25 ( Marks: 1 ) - Please choose one
A graph that depicts the relationship between the total quantity of goods and services demanded and the price level is known as:
► Aggregate demand curve.
► Average price level.
► Circular flow model.
► GDP curve.
