ECO401 Quiz No.1 Shared by Maryam Ali

QUIZ # 1 (6 MAY 2014)

1.Suppose Saqib spends all his income on magazines. To get maximum level of satisfaction, the marginal utility of last dollar of income spent on magazines must be:

• Positive
• Negative
• Equal to the total income
• Equal to the price of the magazines

2. If there is increase in resource prices then supply curve will:

• Increase
• Decrease
• Remain same
• Remain undertermined

3.  If the economy is operating at a point inside the production possible then_________ output could be produced with available resources.

• More
• Less
• Equal
• Aggregate

4. If Nestle Company has elastic demand for Nestle juices, then, increase in price of Nestle juices will:

• Increase total reveue
• Decrease total revenue
• Bring no change in total revenue
• Decrease marginal revenue

5. Since more substitutes of Pepsi are available in the market like Coca Cola, Sprite etc., the demand for Pepsi is said to be __________ in response to change in price

• More elastic
• More inelastic
• Unit elastic
• Perfectly inelastic

6. If government imposes a price ceiling on wheat, which of the following will occur in the market for wheat?

• There will be excess demand for wheat
• There will be excess supply for wheat
• The demand curve for wheat will shift leftward
• The supply curve for wheat will shift rightward

7. Which of the following is a characteristic of a mixed economy?

• Resources are governed by both government and individuals
• It utilizes the characteristics of both market economy and planned economy
• People are free to market their decisions and government controls the demand
• All of the given options are true

8. The minimum price that a Government sets to support a desired commodity or service in a society is known as:

• Price ceiling
• Price rationaling
• Price floor
• Price control

10. . suppose a teacher organizes a study group by reserving a meeting room, compiling study materials and attracting students. The meeting room would most likely be which of the following factors of production?

• Labour
• Money
• Capital
• Entrepreneurship

11. Suppose second hand television is inferior good for consumers, then due to fall in consumer’s income, the demand for second hand television will:

• Decrease
• Increase
• Remain same
• Remain undertermined

12. If the cross price elasticity of demand between two products is -3.5, then:

• One of the product is expensive and one is relatively unexpensive
• One product is normal good and the other is an inferior good
• The two products are complement
• The two products are substitutes

13. If the supply of a product decreases and supply curve shifts leftward, and the demand for that product simultaneously increases and demand curve shifts rightward, then equilibrium:

• Price must rise
• Price must fall
• Quantity must rise
• Quantity must fall

14. Asifa while addressing the young parliamentarians said that rising inflation in  Pakistan was due to the high interest rates. Which category her statement falls in?

• Normative
• Positive
• Negative
• None of the given options

15. Suppose AKJ Company is manufacturing leather  goods and has inelastic demand for leather products. In this situation, more of the tax burden would fall on:

• Producers
• Consumers
• Government
• Both producers and consumers

16. If a 40% increase in the price of a product causes a 20% fall in the quantity demanded, the price elasticity of demand will be

• -0.5
• -0.1
• +0.5
• -0.89

17. If we measure consumer preferences numerically then it is commonly k nown as:

• Satisfaction
• Usage
• Pleasure
• Utility

18. The demand for apples is expressed as: Qd = 80 - P The supply of apples is  expressed as: Qs = 3P Refer to the above scenario, if the equilibrium price of apples is Rs. 20, the equilibrium quantity of apples is:

• 55
• 60
• 80
• 100

19.A market is said to be in equilibrium when

• Supply equals price
• There is upward pressure in price
• There is downward pressure in price
• Quantity demanded is equal to Quantity supplies

20. Suppose that the total utilities for the third and fourth units of a good consumed are 69 and 83, respectively. The marginal utility for the fourth unit is:

• -14
• 14
• 69
• 83