ECO401 midterm mcqs preparation 2022

Created on May 30, 2022 By

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ECO401 midterm mcqs preparation 2022

1 / 14

If pen and ink are complements, then an increase in the price of pen will cause:

An increase in the price of ink.

Less ink to be demanded at each price.

A decrease in the demand for pen.

A rightward shift in the demand curve for ink.

2 / 14

A good for which income and quantity demanded are inversely related is known as:

Inferior good.

Complementary good.

Normal good.

None of the given options.

3 / 14

At the equilibrium price:

There will be a shortage.

There will be neither a shortage nor a surplus.

There will be a surplus

There are forces that cause the price to change.

4 / 14

A market is said to be in equilibrium when:

Demand equals output.

There is downward pressure on price.

The amount consumers wish to buy at the current price equals the amount producers wish to sell at that price.

All buyers are able to find sellers willing to sell to them at the current price.

5 / 14

We know that the demand for a product is elastic:

When price rises, total revenue rises.

When price rises, total revenue falls.

When income rises, quantity demanded rises.

When income falls, quantity demanded rises.

6 / 14

Which of the following is regarded as a general determinant of price elasticity of demand?

Nature of the good (luxury versus necessity).

Availability of close substitutes.

Share of consumer's budget and passage of time.

All of the given options.

7 / 14

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.

8 / 14

Which of the following is the term that economists use to describe how consumers rank

different goods and services?

Satisfaction index.

Goodness.

Utility

None of the given options.

9 / 14

The extra value that consumers receive above what they pay for that good is called:

Producer surplus.

Utility.

Marginal utility.

Consumer surplus.

10 / 14

A risk-averse individual has:

A diminishing marginal utility of income.

An increasing marginal utility of risk.

An increasing marginal utility of income.

A diminishing marginal utility of risk.

11 / 14

As long as all prices remain constant, an increase in money income results in:

An increase in the slope of the budget line.

A decrease in the slope of the budget line.

An increase in the intercept of the budget line.

A decrease in the intercept of the budget line.

12 / 14

Assume leisure is a normal good. If income effect equals substitution effect then a wage rate

increase will lead a person to:

Increase hours of work.

Decrease hours of work.

Not change hours of work.

None of the given options.

13 / 14

The budget line is the boundary between:

Preferred and non preferred consumption combinations.

Affordable and unaffordable consumption combinations.

Income and expenditure.

One point on a budget line.

14 / 14

A perfectly competitive firm maximizes profit by finding the level of production at which:

Price = Marginal Cost.

Price = Average Total Cost.

Average Total Cost = Marginal Cost.

Price < Marginal Cost.

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The average score is 46%

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