Question:

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true?

A.

The firm will earn accounting and economic profits.

B.

The firm will face accounting and economic losses.

C.

The firm will face an accounting loss, but earn economic profits.

D.

The firm may earn accounting profits, but will face economic losses.

Answer» d. The firm may earn accounting profits, but will face economic losses.

Question:

When an individual’s income falls, when everything else remains the same, his demand for inferior goods:

A.

Increases

B.

Decreases

C.

Remains unchanged

D.

Cannot say

Answer» a. Increases

Question:

When the price of the substitute commodity of X falls, the demand for X:

A.

Rises

B.

Falls

C.

Remains unchanged

D.

All of the above is possible

Answer» b. Falls

Question:

When marginal product reaches its maximum, what can be said of total product?

A.

Total product must be at its maximum

B.

Total product starts to decline even if marginal product is positive

C.

Total product is increasing if marginal product is still positive

D.

Total product levels off

Answer» c. Total product is increasing if marginal product is still positive

Question:

1- C/Y is defined as:

A.

Average propensity to consume

B.

Marginal propensity co consume

C.

Average propensity to save

D.

Marginal propensity to save

Answer» c. Average propensity to save

Question:

The word macro was first used in Economics by:

A.

Keynes

B.

Ragner Frisch

C.

J.R. Hicks

D.

J.B. Say

Answer» b. Ragner Frisch

Question:

An increase in the price of the commodity when demand is inelastic causes the total expenditure of consumers of the commodity to:

A.

Increase

B.

Decrease

C.

Remains unchanged

D.

Any of the above

Answer» c. Remains unchanged

Question:

Which of the following results in an increase in an increase in demand:

A.

Fall in prices of substitutes

B.

Increase in price of complementary goods

C.

Fall in consumer’s income

D.

None of the above

Answer» d. None of the above

Question:

Knowledge used to combine resources productively is called:

A.

Comparative advantage

B.

Capitalism

C.

Entrepreneurship

D.

Technology

Answer» d. Technology

Question:

At prices above the equilibrium price:

A.

Quantity supplied exceeds quantity demanded

B.

Quantity demanded exceeds quantity supplied

C.

There is shortage

D.

All of the above is possible

Answer» a. Quantity supplied exceeds quantity demanded