Friday, September 12, 2014 Economics! Midterm ! 1. The fact that Human wants cannot be fully satisfied with available
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Friday, September 12, 2014
1. The fact that Human wants cannot be fully satisfied with available resources is called the problem of!
A. Scarcity! B. Choices! C. Opportunity Cost! D. None of the above!
! 2. All the following are economic problems except:! A. What to produce! B. Where to produce! C. How to produce! D. For whom to produce!
! 3. Economics is the study of how:! A. Scarce resources are used to satisfy unlimited wants! B. We choose to use unlimited resources! C. Unlimited resources are used to satisfy scarce wants! D. Societies use abundant resources to satisfy unlimited desires!
! 4. Supporter of a capitalistic system claims that the system would do all of the following except:! A. Promote efficiency! B. Stimulate innovation! C. Achieve an equal income distribution! D. Be directed by decisions of individual buyers and sellers!
Friday, September 12, 2014 5. Which of the following would be studied in microeconomics?! A. Total number of workers employed in a country! B. The general level of prices in the Malaysian economy! C. The output of the entire economy! D. The output and the price of chicken in Malaysia ???!
! 6. In order to save cost, the Milk Industry should use more labour than machines. This statement refers to:! A. What to produce! B. How to produce! C. For whom to produce! D. None of the above!
! 7. Which of the following will result in an inward shift in the production possibilities curve?! A. Upgrading on the quality of the nation’s human resources! B. A decline in the country’s population! C. A change in the combination of commodities produced! D. Improvement of a society’s technological knowledge!
! 8. A point inside the production possibilities curve may indicate! A. Unemployment! B. inefficient allocation of resources! C. Failure to use the best available technology! D. All of the above!
! 9. A movement along the production possibilities curve indicates! A. The labor force has increased!
Friday, September 12, 2014 B. Productivity has increased! C. Society has chosen a different set of output! D. improvement in technology know-how!
! 10. Decline in population of a country will shift the production possibilities curve! A. Either inward or outward! B. Outward then inward! C. Outward! D. Inward!
! 11. Which of the following is NOT a characteristic of a planned (command) economy?! A. Central Planning Authority! B. Private ownership of resources! C. Public ownership of resources! D. Promotes social justice!
! 14. Using a production possibilities curve, unemployment is represented by a point located! A. Outside the curve! B. On the curve! C. Inside the curve! D. All of the above!
! 15. The concept of opportunity cost is based upon the principle of! A. Need ???! B. Consumption! C. Scarcity! D. Profit!
Friday, September 12, 2014 16. Along a production possibilities curve, an increase in production of one good can be accomplished by! A. Decreasing the production of another good! B. Increasing the production of another good! C. Holding constant the production of another good! D. producing at a point on the corner of the curve!
! 17. Given the decreasing opportunity cost, the production possibilities curve is ??! A. Convex! B. linear! C. Concave! D. Vertical!
! 18. As price falls,! A. Demand increases! B. Quantity demand falls! C. Demand falls! D. Quantity demand rises!
! 19. Goods for which demand is negatively related to is called ! A. Normal! B. Substitute! C. Complement! D. Inferior!
! 20. In the market for tea, for some consumers! A. Cola is a complement! B. Coffee is a substitute!
Friday, September 12, 2014 C. Sugar is a substitute! D. Green tea is a complement!
! 21. When the price of demand for a good is more than one, an increase in the price of the product causes total revenue to ! A. decrease! B. increase! C. remain unchanged! D. all of the above!
! 22. Movement along the demand curve for high rise apartments will be caused by a change in ! A. price of single story link houses! B. consumers income! C. consumers taste and preference! D. price of high rise apartments!
! 23. To determine the relationship between two goods, an economist would estimate! A. price elasticity of demand! B. price elasticity of supply! C. income elasticity of demand! D. cross elasticity of demand!
! 24. Which of the following is NOT a determinant of demand for diesel?! A. Price of petrol! B. Price of diesel! C. Price of automobile! D. Consumer’s income!
Friday, September 12, 2014 25. If the elasticity of demand for microwave ovens is 1.5 it means! A. a 10% increase in price leads to a 150% decrease in quantity demanded! B. a 1% decrease in price leads to 15% increase in quantity demanded! C. a 5% decrease in price leads to a 7.5% increase in quantity demanded! D. Few substitutes exist!
! 26. Sugar and honey are substitutes. If the price of sugar rises! A. Demand for honey increases! B. Quantity demanded for honey increases! C. Demand for honey decreases! D. QD for honey decreases!
! 28. For any horizontal demand curve, the calculated price elasticity of demand is! A. Infinity! B. Zero! C. Less than one! D. More than one!
! 29. Raiz bakery observes that when it raises the price of the pie, total revenue from the pie increases and vice versa. This shows that! A. Demand for the pie must be inelastic! B. Demand for the pie must be elastic! C. Demand for the pie must be unitary elastic! D. There are many substitutes for the pie!
! 30. Suppose the price of the product X rises by 15 percent and the quantity supplied of X increases by 20 percent. The coefficient of price elasticity of supply for the good is! A. negative and therefore an inferior good!
Friday, September 12, 2014 B. positive and therefore a normal good! C. less than 1 therefore supply is inelastic! D. more than 1 and therefore supply is elastic!
! 31. As the price of egg increases, sophies production of cakes will! A. increase in supply! B. increase in quantity supplied! C. decrease in supply! D. decrease in quantity supplied!
! 32. A shift to either left or right of a supply curve is called! A. A change is quantity demanded! B. A change in supply! C. A change in demand! D. A change in quantity supplied!
! 33. The law of supply indicates that! A. Supply decreases when its price falls! B. Supply increases when price rises! C. Quantity supply increase when price rices! D. Quantity supplied decreases when price falls!
! 34. All of the following are held to be constant when the supply curve for a product is drawn. except! A. Price of product! B. State of technology! C. number of producers! D. price of inputs used to make products!
Friday, September 12, 2014
35. Sellers would offer ____ for sale as the price decreases and therefore the supply curve is _____ sloping! A. more, upward! B. more, downward! C. less, upward! D. less, downward!
! 36. Indifference curve is! A. Parallel to x-axis! B. straight line sloping downward! C. convex to the origin! D. none of the above!
! 37. Marginal utility! A. increases as more of a product is consumed! B. decreases as more of a product is consumed! C. is zero when total utility is maximum! D. is equal to total utility divided by number of units consumed!
! 38. Slope of indifference curve shows! A. Marginal product! B. Marginal revenue! C. Marginal cost! D. Marginal rate of substation!
! 39. Which of the following is not a property of indifference curves?! A. Curves closer to origin represent lower levels of satisfaction!
Friday, September 12, 2014 B. They are upsloping! C. They cannot intersect each other! D. They are convex to the origin!
! 40. When MU is positive, the TU! A. increases! B. decreases! C. at max! D. 0!
! 41. Law of diminishing MU implies that as a person consumes more and more of a given good! A. Marginal utility will decline! B. TU will fall and rise! C. MU becomes negative! D. TU will decline!
! 42. When the price of X is 5 and the price of Y is 4, if you have an income of 25, which of the following bundles is the affordable set?! A. (0,7)! B. (3,3)! C. (3,2)! D. (2,4)!
! 43. When plotting marginal and average product curves, the _________ product curve always crosses the ___________ product curve at its ___________! A. average variable; marginal; maximum! B. average variable; average total; minimum! C. marginal; average total; maximum! 9
Friday, September 12, 2014 D. marginal; average variable; maximum!
! 44. When total product is maximum, marginal product is! A. Positive! B. Negative! C. Zero! D. Maximum!
! 45. When average product curve is rising, ! A. Marginal product curve lies above the average product curve! B. MPC lies below the APC! C. MPC cuts the APC! D. None of the above!
! 46. In the short run, product curves have all the following characteristics except! A. Total products begin to decrease when average products begin to increase!
! 47. It is impossible for the total production to be ______ when the marginal product is _________! A. decreasing; positive! B. increasing; decreasing! C. increasing; increasing! D. positive; negative!
! 48. Which of the following is most likely a variable cost?! A. Property insurance premiums! B. Interest on bonded indebtedness! C. Rental payments on IBM equipment!
Friday, September 12, 2014 D. Payment for raw materials purchased!
! 49. Assume that in the short run a firm which is producing 100 units of output has average total costs of RM200 and AVC of RM150. The firms total fixed cost is! A. RM5000! B. RM500! C. RM0.50! D. RM50!
! 50. As output increases, AFC! A. Fall! B. Increase! C. Remain constant! D. Fall, and increase!
! 51. If a firm decides to produce no outputs in the short run, its cost will be____! A. zero! B. its fixed cost! C. its variable cost! D. marginal cost!
! 52. When average cost is equal to marginal cost, ! C. The average cost is at its minimum!
! 53. Which of the following curves are not U-shaped! B. AFC!
! 54. Relationship between SRAC and LRAC curves is that!
Friday, September 12, 2014 A. All of the SRACs are tangent to the LRAC and lie above it