4 chapter question
- 1. MICRO ECONOMICS CompiledbyLakshmi Kumaresh – 98422 23982 1) The various combinations of goods that can be produced in any economy when if used its available sources and technology efficiently are depicted by a) Demand curve b) Production curve c) Supply curve d) Production possibilities curve. 2) According to Table the opportunity cost of increasing Good A’s production from 2 to 4 units is equal to: a) 10 units of B b) 14 units of B c) 24 units of B d) 2 units of B 3) Under inductivemethods, the logic proceeds from: a) General to particulars b) Particulars to general c) Both (a) and (b) d) None 4) Accordingto Robbins,‘means’ are a) Scarce b) Unlimited c) Undefined d) all of these 5) Which of these would cause a rightward shift of the PPC curve? a) Improvement in technology b) Greater capital formation c) Increasein population d) All of these 6) The opportunity cost of increasing wine production from D to E is: a) 0 litres of grape juice b) 5 litres of grape juice c) 1 litres of wine d) 0.2 liters of wine. 7) What implication (s) does resources scarcity has for the satisfaction of wants? a) Not all wants can be satisfied. b) We will never be faced with the need to make choices. c) We must develop ways to decrease out individual wants d) The discovery of new natural resources in necessary to increaseout ability to satisfy wants. 8) Which of the following would be considere a disadvantage of allocating resources using a market system? a) Income will tend to be unevenly distributed b) Significantunemployment may occur. c) It cannot prevent the wastage of scarce economic resources. d) Profits will tend to be low. 9) Labour intensivetechnique would get chosen is a a) Labour surplus economy b) Capital surplus economy c) Developed economy d) Developing economy 10) What is the “Fundamental premiseof Economics”? a) Natural resources will always bescare b) Individual are capable of establishing goals and actingin a manner consistent with achievement of those goals c) Individual choose the alternative for which they believe the net gains to be the greatest d) No matter what the circumstances, individual choicealways involves a trade- off 11) Which of followingis a normativestatement? a) Planned economics allocate resource via government departments b) Most transitional economics have experienced problems of falling output and rising prices over the pastdecade. c) There is a greater degree of consumer sovereignty in market economics than planned economics d) Reducing inequality should be a major priority for mixed economics 12) Which of the following does not suggest a macro approach for India? a) Determining the GNP of india b) Finding the causes of failure of x and co c) Identifyingthe causeof inflation in india d) Analyse the causes of failure of industry in providinglargescaleemployment 13) If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumersof the goodsto: a) Remainthe same b) Increase c) Decrease d) Anyof these 14) The law of demandis: a) A quantitative statement b) Qualitative statement c) Both a quantitative and a qualitative statement d) Neither a quantitative nor a qualitative statement 15) A movement along the demand curve for soft drinksisbestdescribedas: a) An increase indemand b) A decrease indemand c) A change in quantity demanded d) A change indemand 16) If a good is a luxury, its income elasticity of demandis: a) Positive andlessthanI. b) Negative butgreaterthan – I c) Positive and greater than I. d) Zero. 17) If the quantity demanded of beef increase by 5% when the price of chicken increases by 20%, the cross- price elasticity of demand between beef and chickenis a) – 0.25 b) 0.25 c) -4 d) 4
- 2. MICRO ECONOMICS CompiledbyLakshmi Kumaresh – 98422 23982 18) Suppose the price of movies seen at a theater rises from Rs. 120 per person to Rs. 200 per person. The theater manager observes that the rise in price because attendance at a given movie to fall from 300 persons to 200 persons. What is the price elasticityof demandformovies? a) .5 b) .8 c) 1.0 d) 1.2 19) If the local pizzeria raises the price of a medium pizza from Rs. 60 to Rs. 100 and quantity demanded falls from 700 pizzas a night to 100 pizzas a night, the price elasticity of demand for pizzasis: a) .67 b) 1.5 c) 2.0 d) 3.0 20) Suppose the demand for meals at a medium- priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expectarelatively: a) Large fall in quantitydemanded b) Large fall indemand c) Small fall inquantitydemanded d) Small fall indemand 21) Demand for a good will tend to be more inelastic if it exhibits which of the following characteristics? a) The good has manysubstitutes b) The good is a luxury ( as opposed to a necessity) c) The good is a small part of the consumer’s income d) There is a great deal of time for the consumer to adjustto the change in prices. 22) An increase in price will result in an increase in total revenue if: a) The percentage change in quantity demanded is less than the percentage change in price b) The percentage change in quantity demanded isgreaterthan the percentage change inprice c) Demandiselastic d) The consumer is operating along a liner demand curve at a point at which the price is very high and the quantity demanded is very low. 23) The consumer is in equilibrium at a point where the budgetline: a) Is above n indifference curve b) Is belowanindifference curve c) Is tangent to an indifference cure? d) Cuts an indifference curve. 24) Which of the following is a property of an indifferencecurve? a) It is convex to the origin b) The marginal rate of substitution is constant as youmove alongan indifference curve. c) Marginal utility is constant as you move along an indifferencecurve d) Total utility is greatest where the 45- degree line the indifference curve. 25) If burgers sell of for Rs. 14 each, what is Bozzo’s profitmaximizinglevel of output: a) 10 burgers b) 40 burgers c) 50 burgers d) 60 burgers 26) What is the total variable cost when 60 burgers are produced? a) Rs. 690 b) Rs. 960 c) Rs. 110 d) Rs. 440 27) What is average fixed cost when 20 burgers are produced? a) Rs. 5 b) Rs. 3.33 c) Rs. 10 d) Rs. 2.5 28) Between 10 to 20 burgers, what is the marginal cost ( perburger)? a) Rs. 11 b) Rs. 13 c) Rs. 14 d) Rs. 9 Use Table to answerquestions68.To Rs.69 table Hours of labour Total output Marginal product 0 1 2 3 0 200 - 480 0 200 160 - 29) What is the total output when 2 hours of labour are employed? a) 160 b) 200 c) 360 d) 400 30) What is the marginal product of the third hour labour? a) 120 b) 160 c) 200 d) 480 31) The law of diminishingreturns a) States that beyond some level of a variable input, the average product if that variable inputbeginstoincrease steadily
- 3. MICRO ECONOMICS CompiledbyLakshmi Kumaresh – 98422 23982 b) Assumes that there is technological improvementovertime c) States that beyond some level of a variable input, the marginal product of that variable beginsto decrease steadily. d) Informs a firm whether or not to use a factor input 32) When --- we known that the firms must producing at the minimum point of the average cost curve and so there A productive efficiency. a) Ac= AR b) Mc=AC c) MC= MR d) AR=MR 33) What is the total output when 2 hours of labour are employed? a) 160 b) 200 c) 360 d) 540 34) What is the marginal product of the third hour of labour? a) 120 b) 160 c) 200 d) 180 35) All of the following are U shaped curves except the a) AVCcurve b) AFC curve c) AC curve d) MC curve 36) The following are some of he costs of a clothing manufacturing. State which among them will you considerasfixedcost? a) Cost of cloth b) Piece wagespaidtoworkers c) Depreciationon machinesowing to time d) Cost of electricityforrunningmachines 37) Under market condition, firms make normal profits in the long run. a) Perfect competition b) Monopoly c) Oligopoly d) None of the above 38) When ----, we known that the firms are earning just normal profits. a) AC= AR b) MC= MR c) MC= AC d) AR= MR 39) Under perfect competition the priceof product a) Can be controlled b) Cannot be controlled c) Controlled within certain limit d) None of the above 40) Pricetaker firms: a) Advertise to increase the demand for their products b) Do not advertise because most advertising is harmful for the society c) Do not advertise because they can sell as much as they want at the current price d) Who advertise will get more profits than those who do not 41) The AR curve and industry demand curve aresame: a) In the case of monopoly b) In the caseof oligopoly c) In the caseof perfect competition d) None of the above 42) While analyzing Marshall’s measure of consumer’s surplus oneassumes ---- a) Imperfect competition b) Perfect competition c) Monopoly d) Monopsony 43) Excess capacity is notfound under ---- a) Monopoly b) Monopolistic completion c) Perfect competition d) Oligopoly 44) The average profitis the different between ----- a) AC and TC b) AC and VC c) AC and AR d) AC and TR 45) When the perfectly competitive firm and industry re in longrun equilibriumthen: a) P= MR= SAC= LAC b) D= MR= SMC= LMC c) P= MR= lowest pointon the LAC curve d) All of the above 46) In monopoly, the relationship between average and marginal revenue curve is as follows: a) AR curve lies above the MR curve b) AR curve coincides with the MR curve c) AR curve lies belowthe MR curve d) AR curve is parallel to the MR Curve 47) The sale of branded articles is common in a situation of ------ a) Excess capacity b) Monopolistic competition c) Monopoly d) Pure competition Questions 97 to 100 are based on the demand and supply diagrams in Figure D1 and S1 are the original demand and supply curves. D2, D3, S2 and S3 are possible new demand and supply curves. Starting from initial equilibrium point (1) what point on the graph is most likely to resultfrom each change? P S3 2 S1 5 3 7 S2 1 4 8 D2 6 D1
- 4. MICRO ECONOMICS CompiledbyLakshmi Kumaresh – 98422 23982 9 D3 Q 48) Suppose wage rate of coal miners increase and price of natural gas decreases. (cost and natural gas are substitutes) ‘What point in above figure is most likely to be the equilibriumpriceand quantity? a) Point6 b) Point 4 c) Point3 d) Point2 49) Assume that consumer income has increased. Given that y is an inferior good, which point in figure is most likely to be new equilibriumpriceand quantity? a) Point4 b) Point 6 c) Point5 d) Point8 50) Assume that the government has just removed the 10% excise duty on good X. what point in Figure 1 is most likely to be the new equilibrium price and quantity? a) Point6 b) Point4 c) Point7 d) Point 8