ECO401 Past Papers Midterm Download ECO401 Past Exam Papers
1. Which policy moves the economy
from equilibrium to a state of surplus?
a)
Price ceiling
b) Price floor
c) Per unit tax imposed by the
government
d) Subsidy given by the government
2. Suppose a good is having elastic
demand. If price of a good increases:
a) Quantity demanded of will
increase.
b) Quantity supplied of good will
decrease.
c) Total revenue will increase.
d)
Total revenue will decrease.
3. If price elasticity of supply is zero,
then the supply curve will be:
a) Upward sloping
b) Downward sloping
c)
Vertical
d) Rectangular hyperbola
4. If the demand for a good or
service is inelastic then increase in its price:
a) Increases quantity demanded of a
good.
b) Decreases quantity supplied of a
good.
c)
Increases total revenue.
d) Decreases total revenue.
5. The services of land and capital
are exchanged through:
a) Good markets.
b)
Factor markets.
c) Product markets.
d) Commodity markets.
6. The minimum wage set by the government
is an example of:
a) Free market equilibrium
b) Price celling
c)
Price floor
d) Shortages
7. Which of the following is a
determinant of quantity supplied?
a) Prices of substitute goods.
b) Tastes.
c) Prices of complimentary goods.
d)
Aims of producers.
8. The services of land and capital
are exchanged through.
a) Good markets.
b) Factor markets.
c)
Product markets.
d) Commodity markets.
9. When the price of wheat rises by
10% the quantity of wheat purchased
falls by 4%. This shows that the demand
for wheat is:
a) Perfectly price elastic
b) Unit price elastic
c) Price elastic
d)
Price inelastic
10. Demand tends to be more elastic
in the
a) Short run time period
b) Immediate time period
c)
Long run time period
d) All of the given options
11. Measurement of elasticities is
made in percentage terms because:
a)
It is easy to calculate
b) The resulting measure is unit free
c) It gives a more accurate answer
d) The answer is always negative
12. When government sets the price of
a good below the equilibrium price,
the result will be:
a)
A surplus of the good
b) A shortage of the good
c) A decrease in the demand for the
good
d) An increase in the supply of the
good
13. Suppose the government sets
minimum prices of crops to support
farmers. This is an example of:
a) Price ceiling
b)
Price floor
c) Free market equilibrium
d) Shortages
14. Which of the following is a
determinant of quantity supplied?
a) Cost of productions
b) Profitability of alternative goods
c) Aims of productions
d)
All of the given options
15. Points inside the production
possibility frontier (PPF) show that:
a) Efficient use of resources
b) Inefficient use of resources
c)
Resources are not utilized
d) All of the given options
16. Normal goods are those goods
whose quantity demanded goes up as:
a)
Consumer income increases
b) Consumer income decreases
c) Consumer income remains constant
d) Price of goods increases
17. When government gives subsidy to
producers on production of a good,
supply of that good will:
a)
Increase
b) Decrease
c) Remain unchanged
d) Be infinite
18. If an increase in price decreases
the total revenue then it shows that
demand is:
a)
Elastic
b) Inelastic
c) Perfectly inelastic
d) Unit elastic
19. Subcategory of inferior goods is:
a)
Giffen goods
b) Normal goods
c) Luxury goods
d) Expensive goods
20. Giffen goods are the sub category
of:
a) Normal goods
b)
Inferior goods
c) Luxury goods
d) Expensive goods
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