Quiz 1 Past Paper

Quiz 1 +-----------------------------------------------------------------------+ | Seminar 1 | +=======================================================================+ | 1\. Which of the following describes the reason why scarcity exists?...

Quiz 1 +-----------------------------------------------------------------------+ | Seminar 1 | +=======================================================================+ | 1\. Which of the following describes the reason why scarcity exists? | | | | A. Governments make bad economic decisions. | | | | B. The gap between the rich and the poor is too wide. | | | | C. Wants exceed the resources available to satisfy them. | | | | D. There is too much unemployment. | | | | Answer: C | | | | 2\. Which of the following defines economics? | | | | Economics is the social science that studies\_\_\_\_\_\_\_\_\_\_\_\_. | |. | | | | A. the best way of eliminating scarcity | | | | B. the choices made to cope with scarcity, how incentives influence | | those choices, and how the choices are coordinated | | | | C. how money is created and used | | | | D. The inevitable conflict between self-interest and the social | | interest | | | | Answer: B | | | | 3\. Of the three big questions, what, how, and for whom, which of | | the following is an example of a how question? | | | | A. Why do doctors and lawyers earn high incomes? | | | | B. Why don't we produce more small cars and fewer gas guzzlers? | | | | C. Why do we use machines rather than migrant workers to pick grapes? | | | | D. Why do college football coaches earn more than professors? | | | | Answer: C | | | | 4\. Which of the following is not a key idea in the economic way of | | thinking? | | | | A. People make rational choices by comparing costs and benefits. | | | | B. Poor people are discriminated against and should be treated more | | fairly. | | | | C. A rational choice is made at the margin. | | | | D. Choices respond to incentives. | | | | Answer: B | | | | 5\. A rational choice is\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. | | | | A. the best thing you must forgo to get something | | | | B. what you are willing to forgo to get something | | | | C. made by comparing marginal benefit and marginal cost | | | | D. the best for society | | | | Answer: C | | | | 6\. Which of the following statements is a microeconomic topic? | | | | A. Motor vehicles production in China is growing by 10 percent a | | year. | | | | B. Globalisation has reduced African poverty. | | | | Answer: A | | | | 7\. Identify the statement that represents a microeconomic topic. | | | | A. Coffee prices rocket. | | | | B. The government must cut its budget deficit. | | | | Answer: A | | | | 8\. Which statement illustrates a macroeconomic topic? | | | | A. Apple sells 20 million iPhone 16 smartphones a month. | | | | B. Globalisation has reduced African poverty. | | | | Answer: B | | | | 9\. Determine which of the following is a macroeconomic issue. | | | | A. The government must cut its budget deficit. | | | | B. Coffee prices rocket. | | | | Answer: A | | | | 10\. Which of these statements is considered a microeconomic topic? | | | | A. Apple sells 20 million iPhone 16 smartphones a month. | | | | B. The unemployment rate has increased nationally. | | | | Answer: A | | | | 11\. What does a point inside the Production Possibility Curve (PPC) | | represent for an economy producing only two products, say, food and | | clothing? | | | | A\) Efficient production of both products | | | | B\) Inefficient use of resources | | | | C\) The maximum possible production of both products | | | | D\) Unachievable production levels with current resources | | | | Answer: B | | | | 12\. If the economy moves from a point on the Production Possibility | | Curve (PPC) to a point outside the PPC for two products, what does | | this indicate? | | | | A\) The economy has reduced its resource usage | | | | B\) The economy has achieved maximum efficiency with current | | resources | | | | C\) The economy has acquired more resources or improved technology | | | | D\) The economy has become less productive | | | | Answer: C | | | | 13\. In the context of a Production Possibility Curve (PPC) for two | | goods, what does a point on the curve itself represent? | | | | A\) Full employment and efficient use of resources | | | | B\) An unattainable production level with current resources | | | | C\) A situation where one good is produced, but not the other | | | | D\) Inefficient use of resources | | | | Answer: A | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Seminar 2 | +=======================================================================+ | 14. Which of the following events illustrates the law of demand: | | Other things remaining the same, a rise in the price of a good | | will \_\_\_\_\_\_\_\_\_\_\_. | | | | A. decrease the quantity demanded of that good | | | | B. increase the demand for a substitute of that good | | | | C. decrease the demand for the good | | | | D. increase the demand for a complement of that good | | | | Answer: A | | | | 15. In the market for jeans, which of the following events increases | | the demand for a pair of jeans? | | | | A. The wage rate paid to garment workers rises. | | | | B. The price of a denim skirt (a substitute for jeans) rises. | | | | C. The price of denim cloth falls. | | | | D. New technology reduces the time it takes to make a pair of jeans. | | | | Answer: B | | | | 16\. Other things remaining the same, a fall in the price of peanuts | | will \_\_\_\_\_\_\_\_\_\_\_. | | | | A. increase the supply of peanuts | | | | B. decrease the supply of peanut butter | | | | C. decrease the quantity supplied of peanuts | | | | D. decrease the supply of peanuts | | | | Answer: C | | | | 17. In the market for smartphones, which of the following events | | increases the supply of smartphones? | | | | A. New technology lowers the cost of making a smartphone | | | | B. Rise in the price of an e-book reader (a substitute in production) | | | | C. An increase in people's incomes | | | | D. A rise in the wage rate paid to electronics workers | | | | Answer: A | | | | 18. When floods wiped out the banana crop in Central America, the | | equilibrium price of bananas and the equilibrium quantity of | | bananas \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. | | | | A. rose; increased | | | | B. rose; decreased | | | | C. fell; increased | | | | D. fell; decreased | | | | Answer: B | | | | 19. A decrease in the demand for chocolate with no change in supply | | will create a \_\_\_\_\_\_\_of chocolate at today's price, but | | gradually the price will \_\_\_\_\_\_\_\_\_\_\_. | | | | A. surplus; fall | | | | B. shortage; fall | | | | C. surplus; rise | | | | D. shortage; rise | | | | Answer: A | | | | 20\. Many Lebanese are now using quinoa instead of the traditional | | bourghul in their staple foods, like tabbouleh. Other things | | remaining the same, in the market for bourghul, | | \_\_\_\_\_\_\_\_\_\_ and in the market for quinoa, | | \_\_\_\_\_\_\_\_\_\_. | | | | A. demand decreases and the price falls; demand increases and the | | price rises | | | | B. demand decreases and the price rises; supply increases and the | | price falls | | | | C. both demand and supply decrease and the price might rise, fall, or | | not change; demand increases and the price rises | | | | D. demand decreases, supply increases, and the price falls; supply | | increases and the price falls | | | | Answer: A | | | | 21\. If the price of coffee falls, people may buy more coffee, which | | could lead to a decrease in the quantity of tea consumed. | | | | A. True | | | | B. False | | | | Answer: A | | | | 22\. A decrease in the price of coffee will lead to a rise in the | | price of tea. | | | | A. True | | | | B. False | | | | Answer: B | | | | 23\. When the price of coffee falls, tea is considered a substitute, | | and the demand for tea will likely decrease. | | | | Answer: A | | | | 24\. Which of the following pairs of goods are considered | | substitutes? | | | | Answer: A | | | | 25\. Which of the following best describes complementary goods? | | | | A. Goods that consumers buy less of when their income rises | | | | B. Goods that are consumed together, so a price increase in one | | reduces demand for the other | | | | C. Goods that replace each other when prices change | | | | D. Goods that have no relation to each other in consumption | | | | Answer: B | | | | 26\. What happens to the demand for a substitute good when the price | | of the other substitute increases? | | | | A. The demand for the substitute good increases. | | | | B. The demand for the substitute good decreases. | | | | C. The demand for the substitute good remains unchanged. | | | | D. The substitute good becomes a complementary good. | | | | Answer: A | | | | 27\. Which of the following best describes an inferior good? | | | | A. A good that consumers buy more of as their income rises | | | | B. A good that consumers buy less of as their income rises | | | | C. A good that consumers buy the same amount of, regardless of income | | changes | | | | D. A good that is always of lower quality than other goods | | | | Answer: B | | | | 28\. Which of the following is an example of an inferior good? | | | | A. Organic fruits and vegetables | | | | B. Public transportation for daily commutes | | | | C. High-end electronics | | | | D. Luxury cars | | | | Answer: B | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Seminar 3. | +=======================================================================+ | 29\. Suppose when the price of one pack of Nestlé cappuccino powder | | rises from £5.5 to £8.5, the quantity of one pack bought decreases | | by 10 percent. The price elasticity of demand for cappuccino powder | | is \_\_\_\_\_\_\_\_. | | | | A. 0.18 | | | | B. 5 | | | | C. 0.4 | | | | D. 0.55 | | | | Answer: A | | | | 30\. In Hong Kong, the price elasticity of demand for MTR (Mass | | Transit Railway) rides is 0.4. When the price of a MTR ticket rises | | by 2 percent,\_\_\_\_\_\_\_\_\_\_\_\_. | | | | A. the demand for MTR rides decreases by 5 percent | | | | B. the quantity of MTR rides demanded decreases by 0.8 percent | | | | C. the demand for bus rides increases by 5 percent | | | | D. the quantity of bus rides demanded increases by 0.8 percent | | | | Answer: B. | | | | 31\. The price elasticity of demand for a good is 0.2. A 10 percent | | rise in the price will \_\_\_\_\_\_\_\_\_the total revenue from | | sales of the good. | | | | A. decrease | | | | B. increase | | | | C. decrease the quantity sold with no change in | | | | D. not change | | | | Answer: B | | | | 32\. If the price of a good falls and expenditure on the good rises, | | the demand for the good is \_\_\_\_\_\_\_\_\_\_\_\_. | | | | A. elastic | | | | B. perfectly elastic | | | | C. inelastic | | | | D. unit elastic | | | | Answer: A | | | | 33\. When the price of a good rises from £5 to £7 a unit, the | | quantity supplied increases from 110 to 130 units a day. The price | | elasticity of supply is \_\_\_\_\_\_\_\_\_. The supply of the good | | is\_\_\_\_\_\_\_\_\_. | | | | A. 60; elastic | | | | B. 10; elastic | | | | C. 0.5; inelastic | | | | D. 2; inelastic | | | | Answer: C | | | | 34\. The cross elasticity of demand for good A with respect to good | | B is 0.2. A 10 percent change in the price of good B will lead to a | | \_\_\_\_ percent change in the quantity of good A demanded. Goods A | | and B are \_\_\_\_\_\_\_\_\_. | | | | A. 2; substitutes | | | | B. 0.5; complements | | | | C. −2; complements | | | | D. −0.5; substitutes | | | | Answer: A | | | | 35\. A 2 percent increase in income increases the quantity demanded | | of a good by 1 percent. The income elasticity of demand for this | | good is \_\_\_\_\_\_\_\_\_. The good is a | | \_\_\_\_\_\_\_\_\_\_\_good. | | | | A. 2; normal | | | | B. --2; inferior | | | | C. 1/2; normal | | | | D. 2; inferior | | | | Answer: C | | | | 36\. Suppose when the price of a bottle of olive oil rises from £10 | | to £12, the quantity demanded decreases by 5 percent. The price | | elasticity of demand for olive oil is \_\_\_\_\_\_\_\_. | | | | A. 0.25 | | | | B. 2 | | | | C. 0.5 | | | | D. 0.1 | | | | Answer: A | | | | 37\. When the price of a loaf of bread rises from £2 to £3, the | | quantity demanded decreases by 15 percent. The price elasticity of | | demand for bread is \_\_\_\_\_\_\_\_. | | | | A. 0.15 | | | | B. 0.3 | | | | C. 1 | | | | D. 0.5 | | | | Answer: B | | | | 38\. If the price of a concert ticket increases from £50 to £70 and | | the quantity demanded decreases by 20 percent, the price elasticity | | of demand for the concert ticket is \_\_\_\_\_\_\_\_. | | | | A. 1.2 | | | | B. 0.4 | | | | C. 0.5 | | | | D. 0.6 | | | | Answer: C | | | | 39\. The price elasticity of demand for a product is 0.5. A 15 | | percent increase in the price will \_\_\_\_\_\_\_\_ the total | | revenue from sales of the product. | | | | A. decrease | | | | B. increase | | | | C. leave unchanged | | | | D. decrease the quantity sold with no change in revenue | | | | Answer: B | | | | 40\. If the demand for a good is elastic, what happens to total | | revenue when the price of the good decreases? | | | | A. Total revenue decreases | | | | B. Total revenue increases | | | | C. Total revenue remains unchanged | | | | D. Total revenue fluctuates unpredictably | | | | Answer: B | | | | 41\. Which of the following is most likely to have an elastic | | demand? | | | | A. Salt | | | | B. Luxury perfume | | | | C. Electricity | | | | D. Basic food staples like rice or bread | | | | Answer: B | | | | 42\. For a product with elastic demand, a 10% increase in price will | | result in \_\_\_\_\_\_\_\_. | | | | A. A less than 10% decrease in quantity demanded | | | | B. A 10% decrease in quantity demanded | | | | C. A greater than 10% decrease in quantity demanded | | | | D. No change in quantity demanded | | | | Answer: C | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Seminar 4 | +=======================================================================+ | 42\. Assume a good costs £15 today. How long can the delay in | | receiving £30 of benefits be before a person with a monthly | | discount factor of 0.85 no longer purchases the good? | | | | A. 4 months | | | | B. 9 months | | | | C. 10 months | | | | D. 12 months | | | | Answer: A | | | | 43\. A product costs £22 today, and a person expects £40 of benefits | | in the future. If their monthly discount factor is 0.89, what is | | the maximum delay before they no longer purchase the product? | | | | A\) 5 months | | | | B\) 9 months | | | | C\) 11 months | | | | D\) 13 months | | | | Answer: A | | | | 44\. A person is offered £100 today or £150 in 4 months. If their | | monthly discount factor is 0.90, which option is more valuable? | | | | A. £100 today | | | | B. £150 in 4 months | | | | C. Both options are equally valuable | | | | D. Insufficient information | | | | Answer: A | | | | 45\. An investor can receive £200 today or £500 in 2 years. With an | | annual discount factor of 0.80, which option should the investor | | choose? | | | | A. £200 today | | | | B. £500 in 2 years | | | | C. Both options are equally valuable | | | | D. Insufficient information | | | | Answer: B | | | | 46\. A gadget costs £50 today, and a person expects £80 in benefits | | in the future. With a monthly discount factor of 0.91, what is the | | longest delay before they decide the gadget is no longer worth | | buying? | | | | A. 5 months | | | | B. 7 months | | | | C. 9 months | | | | D. 11 months | | | | Answer: A | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Seminar 5a | +=======================================================================+ | 47\. A firm's cost of production equals \_\_\_\_\_\_\_\_. | | | | A. all the costs paid with money, called explicit costs | | | | B. the implicit costs of using all the firm's own resources | | | | C. all explicit costs and implicit costs, excluding normal profit | | | | D. the costs of all resources used by the firm whether bought in the | | marketplace or owned by the firm | | | | Answer: D | | | | 48\. Marginal returns start to decrease when more and more workers | | \_\_\_\_\_\_\_\_\_\_. | | | | A. have to share the same equipment and workspace | | | | B. produce less and less output | | | | C. require jobs to be too specialised | | | | D. produce less and less average product | | | | Answer: A | | | | 49\. Average variable cost is at a minimum when \_\_\_\_\_\_\_\_. | | | | A. marginal cost equals average variable cost | | | | B. average total cost is at a minimum | | | | C. marginal cost exceeds average fixed cost | | | | D. average total cost exceeds average variable cost | | | | Answer: A | | | | 50\. An increase in the rent that a firm pays for its factory does | | not increase \_\_\_\_\_\_\_. | | | | A. total cost | | | | B. fixed cost | | | | C. marginal cost | | | | D. average fixed cost | | | | Answer: C | | | | 51\. An increase in the wage rate \_\_\_\_\_\_\_\_\_\_. | | | | A. shifts the average total cost curve and the marginal cost curve | | upward | | | | B. shifts the average fixed cost and average variable cost curve | | upward | | | | C. increases average variable cost but does not change marginal cost | | | | D. does not change average variable cost but increases average total | | cost | | | | Answer: A | | | | 52\. In the long run, with an increase in the plant size, | | \_\_\_\_\_\_\_\_\_. | | | | A. the short-run average total cost curve shifts downward | | | | B. the long-run average cost curve slopes downward | | | | C. the short-run average cost curve shifts downward if economies of | | scale exist | | | | D. the average total cost of production rises | | | | Answer: C | | | | 53\. The cost of leather used to make shoes: | | | | A. Fixed Cost | | | | B. Variable Cost | | | | C. Both Fixed and Variable Cost | | | | D. None of the Above | | | | Answer: B | | | | 54\. The salary of the factory manager: | | | | A. Fixed Cost | | | | B. Variable Cost | | | | C. Both Fixed and Variable Cost | | | | D. None of the Above | | | | Answer: A | | | | 55\. The electricity bill for the production facility, which | | increases with the number of shoes produced: | | | | A. Fixed Cost | | | | B. Variable Cost | | | | C. Both Fixed and Variable Cost | | | | D. None of the Above | | | | Answer: B | | | | 56\. The cost of renting the factory building, regardless of the | | number of shoes produced: | | | | A. Fixed Cost | | | | B. Variable Cost | | | | C. Both Fixed and Variable Cost | | | | D. None of the Above | | | | Answer: A | +-----------------------------------------------------------------------+ | Seminar 5b | +-----------------------------------------------------------------------+ | 57\. A company produces 1-4 units of a product. The average cost | | (AC) and average revenue (AR) for each output level are given | | below. Calculate the total cost (TC) for output levels 1-4 and the | | marginal cost (MC) for producing the 3rd unit. What is the marginal | | cost (MC) for producing the 3rd unit? | | | | **Output** **Average Cost (AC)** **Average Revenue (AR)** | | ------------ ----------------------- -------------------------- | | 1 £20 £10 | | 2 £15 £10 | | 3 £14 £10 | | 4 £14 £10 | | | | A. £10 | | | | B. £12 | | | | C. £14 | | | | D. £20 | | | | Answer: B | | | | 58\. A company produces 1-4 units of a product. The average cost | | (AC) and average revenue (AR) for each output level are given | | below. Calculate the total revenue (TR) for output levels 1-4 and | | the marginal revenue (MR) for producing the 3rd unit. What is the | | marginal revenue (MR) for producing the 3rd unit? | | | | A. £10 | | | | B. £12 | | | | C. £14 | | | | D. £20 | | | | Answer: A | | | | 59\. A company produces 1-4 units of a product. The average cost | | (AC) and average revenue (AR) for each output level are given | | below. Calculate the total cost (TC) for output levels 1-4 and the | | marginal revenue (MR) for producing the 4th unit. What is the | | marginal revenue (MR) for producing the 4th unit? | | | | **Output** **Average Cost (AC)** **Average Revenue (AR)** | | ------------ ----------------------- -------------------------- | | 1 £18 £12 | | 2 £16 £12 | | 3 £14 £12 | | 4 £13 £12 | | | | A. £0\ | | B. £10\ | | C. £12\ | | D. £13 | | | | Answer: C | | | | 60\. A company produces 1-4 units of a product. The average cost | | (AC) and average revenue (AR) for each output level are given | | below. Calculate the total cost (TC) for output levels 1-4 and the | | marginal cost (MC) for producing the 2nd unit. What is the marginal | | cost (MC) for producing the 2nd unit? | | | | **Output** **Average Cost (AC)** **Average Revenue (AR)** | | ------------ ----------------------- -------------------------- | | 1 £25 £15 | | 2 £18 £15 | | 3 £17 £15 | | 4 £16 £15 | | | | A. £9\ | | B. £10\ | | C. £11\ | | D. £14 | | | | Answer: C | +-----------------------------------------------------------------------+