Economics mcqs 1
Quiz
- 1. The fundamental economic problem faced by all societies is?
- Unemployment
- Inequality
- Poverty
- Scarcity
- “Capitalism” refers to?
- The use of markets
- Government ownership of capital goods
- Private ownership of capital goods
- Private ownership of homes & cars
- The law of demand states that?
- As the quantity demanded rises, the price rises
- As the price rises, the quantity demanded rises
- As the price rises, the quantity demanded falls
- As supply rises, the demand rises
- The demand for a product would be more inelastic:
- The greater is the time under consideration
- The greater is the number of substitutes available to buyers
- The less expensive is the product in relation to incomes
- All of the above
- The bowed shape of the production possibilities curve illustrates?
- The law of increasing marginal cost
- That production is inefficient
- That production is unattainable
- The demand is relatively inelastic
- The process by which resources are transformed into useful forms is
- Capitalisation.
- Consumption.
- Allocation.
- Production.
- Which of the following is not a resource as the term is used by economists?
- Money
- Land
- Building
- labour
- A graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is a
- Demand curve
- Supply curve
- Production possibility frontier
- Circular flow diagram
- The phrase "cetris paribus" is best expressed as
- All else equal
- Everything affects everything alse
- Scarcity is a fact of life
- There is no such thing as a free lunch
- Positive statement in economics are
- Value judgements
- Verifiable or testable
- Statements in the affirmative
- Goods statements
- The law of "demand implies" that
- As price fall, quantity demanded increases
- As prices fall, demand increases
- As prices rise, quantity demanded increases
- As prices rise, demand decreases
- Equilibrium in the market for good A obtains
- When there is no surplus or shortage prevailing in the market
- Where the demand and supply curves for A intersect
- When all of what is produced of A is consumed
- All of the above
- A price floor is
- A maximum price usually set by government, that sellers may charge for a good or
service. - A minimum price usually set by government, that sellers must charge for a good
or service. - The difference between the initial equilibrium price and the equilibrium price after a
decrease in supply - The minimum price that consumers are willing to pay for a good or service.
- A maximum price usually set by government, that sellers may charge for a good or
- When the decrease in the price of one good causes the demand for another good to decrease, the goods are
- Complements
- Normal
- Inferior
- Substitutes
- The price elasticity of demand is the
- Ratio of the percentage change in quantity demanded to the percentage change in
price - Ratio of the change in price to the change in quantity demanded
- Ratio of the change in quantity demanded to the change in price
- Ratio of the percentage change in price to the percentage change in quantity
demanded.
- Ratio of the percentage change in quantity demanded to the percentage change in
- Income elasticity of demand is the % change in quantity demanded divided by the % change in income. Which type of goods have negative income elasticity of demand?
- Inferior goods.
- Normal goods.
- Substitute goods.
- Complementary goods
- If total revenue rises by 10% when price increases by 5%, this means:
- Demand is price inelastic
- Demand is price elastic
- Demand is unit elastic
- Demand is perfectly inelastic
- When firms advertise their product, they are trying to:
- Shift the demand curve to the right
- Make the demand curve steeper
- Make demand for the product more inelastic
- All of the above
- Economists use the term utility to mean
- The value of a product before it has been advertised.
- The satisfaction a consumer obtains from a good or service.
- Any characteristic of a good or service which cannot be measured
- The contribution a good or service makes to social welfare.
- The law of diminishing marginal utility states that
- Total satisfaction will decrease as more units of the good are consumed.
- The satisfaction derived from each additional unit of a good consumed will decrease.
- Total utility will become negative
- Both the A and C option
- Economists have used the idea of diminishing marginal utility to explain why
- "Demand curves slope downwards
- Demand curves become flatter at lower prices.
- Demand curves are inelastic.
- Both the A and B option.
- A consumer will buy more units of a good if the value of the good's
- Total utility is greater than price.
- Marginal utility is less than price
- Marginal utility is greater than price
- Total utility is less than price
- The limits imposed on household choices by income, wealth, and product prices are captured by the
- Budget constraint
- Choice set
- Assumption of perfect knowledge.
- Preference set
- If a household's money income is doubled
- The budget constraint will shift in and parallel to the old one
- The budget constraint is not affected
- The budget constraint will swivel outward at the Y-intercept
- The budget constraint will shift out parallel to the old one
- Indifference curves cannot
- Be L shaped
- Be straight lines
- Intersect
- All of the above
- “Moral hazard” and “adverse selection” are problems related to asymmetric information, that arise
- In ex-ante and ex-post contexts, respectively
- In ex-post and ex-ante contexts, respectively
- In ex-ante contexts
- In ex-post contexts
- Profit-maximising firms want to maximize the difference between
- Total revenue and total cost.
- Marginal revenue and marginal cost
- Marginal revenue and average cost.
- Total revenue and marginal cost.
- A graph showing all the combinations of capital and labour available for a given total cost is the
- Budget constraint
- Isoquant
- Expenditure set
- Isocost line
- Market power is
- A firm's ability to charge any price it likes
- A firm's ability to raise price without losing all demand for its product.
- A firm's ability to sell any amount of output it desires at the market-determined price.
- A firm's ability to monopolise a market completely.
- Economic profits are
- The difference between total revenue and total costs
- Anything greater than the normal opportunity cost of investing
- A rate of profit that is just sufficient to keep owners and investors satisfied.
- The opportunity costs of all inputs
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