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***** ECO401 QUIZ NO.1 8MAY2014******

1) If a 2% rise in consumer’s incomes causes a 4% rise in product’s demand, the income elasticity of demand for the product will be
: Select correct option:


2) 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?

Select correct option:
None of the given options

3) When the price of computer and the number of computers purchased both rise over the course of the year. One can say:

Select correct option:

The demand for computers has increased.
The demand curve for computers must be upward-sloping.
The supply of computers has increased.
The demand curve for computers must be downward-sloping.

4) The effect of a change in income on the quantity of the good consumed is called the

: Select correct option:
Income effect.
Budget effect.
Substitution effect.
Real income effect.

5) When railways authority raises its fares, it may experience an increase in total revenue. This suggests that demand is:

Select correct option:
Price inelastic.
Price elastic.
Unit price elastic.

6) Which of the following is a characteristic of a mixed economy?

Select correct option:
Resources are governed by both government and individuals.
It utilizes the characteristics of both market economy and planned economy.
People are free to make their decisions and government controls the defense.
All of the given options are true.

7) When government sets the price of a good and that price is above the equilibrium price, the result will be:

Select correct option:
A surplus of the good.
A shortage of the good.
An increase in the demand for the good.
A decrease in the supply of the good.

8) The total utility curve starts at the origin and reaches the peak when marginal utility is:

Select correct option:

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

Select correct option:

10) Q= a – b P” represents equation of:

Select correct option:
Labor supply.
Budget line.

11) A Demand Curve is price inelastic when changes in demand are:

Select correct option:
Greater than zero.
Equal than those in price.
Proportionately smaller than those in price.
Proportionately greater than those in price.

12) Production possibility frontier analysis assumes that resources:

Select correct option:
Increase with production.
Are saved for emergency use.
Are used to produce thousands of goods.
Are used in a technically efficient way.

13) When the price for entry tickets for parks decrease, families tend to spend more time at parks instead at home. This best reflects:

Select correct option:

Diminishing marginal utility.
The income effect.
The rationing function of markets.
The substitution effect.

14)The law of diminishing marginal utility indicates that the demand curve is:

Select correct option:
U shaped.
Upward sloping.
Downward sloping.

15) If the cross price elasticity of demand between two products is +3.5, then:

Select correct option:
One of the products is expensive and one is relatively inexpensive.
One product is a normal good and the other is an inferior good.
The two products are complements.
The two products are substitutes.

16) If a good is having inelastic demand then if price rises:

Select correct option:
Quantity demanded of good rises.
Quantity supplied of good falls.
Total revenue of good rises.
Total revenue of good falls.

17) During exams, Ali is studying for two hours a day and decides to spend an extra hour for better performance. The marginal benefit is the benefit that he gets from studying:

Select correct option:

All three hours

An extra hour

Two hours

Four hours

18) Demand is elastic when the elasticity of demand is:

Select correct option:
Greater than 0.
Greater than 1.
Less than 1.
Less than 0.

19) Microeconomics is the branch of economics that deals with which of the following?

Select correct option:
Individual consumers.
Individual firms and investors.
Unemployment and interest rates.
Individual consumers, individual firms and investors.

20) Suppose the total utility derived from first four units of a good consumed are 12, 22, 32, and 42 respectively. What is the marginal utility of the third unit?

Select correct option:

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Fahad Nabeel  thanks for sharing ..keep it up 

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