If a firm’s price is less than average cost but more than part of variable cost, the firm is covering
- A. all of its fixed cost and variable cost
- B. all of its fixed cost and part of variable cost
- C. all of its variable cost and part of fixed cost
- D. part of its fixed cost and part of varible cost
In the firm’s production process, marginal cost
- A. falls continuously throughout
- B. falls and later rises
- C. remains unchanged throughout
- D. rises and later falls
Which of the following is capable of increasing the population of a country?
- A. increase in birth rate
- B. increase in death rate
- C. poor medical facilities
- D. decrease in birth rate
why is the law of diminishing returns a short run phenomenon?
- A. all inputs are fixed
- B. all inputs are variable
- C. some outputs are variable
- D. some inputs are variable
The law of diminishing marginal utility applies to a
- A. firm which minimizes cost
- B. consumer who maximizes satisfaction
- C. producer who maximizes marginal product
- D. consumer who minimizes total utility
If a particular consumer derives total utility of 22 utils having consumed 4 units of a given product, his average utility will be
- A. 88 utils
- B. 18 utils
- C. 5.5 utils
- D. 3.5 utils
Given the demand function Qd = 20 – 1/ 2P. What is Qd when P is $12?
- A. 6 units
- B. 10 nits
- C. 12 units
- D. 14 units
The allocation of goods and services in a free market economy is performed by
- A. the price system
- B. the banking system
- C. the central planning body
- D. government budgets
Any price below the equilibrium price will lead to
- A. increase in supply
- B. excess demand
- C. equality of demand and supply
- D. decreases in demand
A decrease in the demand for a product X resulted in a decrease in the demand for another product Y. The demand for X and Y is
- A. derived
- B. composite
- C. joint
- D. competitive
The demand curve for a commodity is downward sloping because the consumer will pay
- A. less as the marginal utility falls
- B. more as the marginal utility falls
- C. less as the total utility falls
- D. more as the average utility falls
A demand schedule shows the quantities of goods that are
- A. bought at given price at a time
- B. supplied at given prices at a time
- C. produced at given prices at a time
- D. reserved for future consumption
Where a commodity takes an insignificant proportion of the consumer’s income, demand for it will be
- A. unitary elastic
- B. price inelastic
- C. fairly elatic
- D. income inelastic
Which of the following best describes the mode? the
- A. observation with the highest frequency
- B. average of two middle numbers
- C. item that occupies the middle position
- D. difference of two extreme values
A condition for consumer utility maximization is
- A. equality of the ratio of marginal utilities and the ratio of prices
- B. equality of the ratio of average utilities and the ratio of prices
- C. equality of the marginal utility to total utility ratio for both commodities
- D. total utility and marginal utility must be zero
If a 6% decrease in price results in more than 6% decrease in quantity supplied, supply can be regarded as
- A. elastic
- B. unitary elastic
- C. perfectly inelastic
- D. perfectly elastic
A shift in the demand curve indicates
- A. exceptional demand
- B. change in demand
- C. change in quantity demanded
- D. elasticity of demand
Visible balance is also known as
- A. terms of trade
- B. balance of payments
- C. balance of trade
- D. capital balance
Which of the following problems arises where there are more than one technically possible methods of production
- A. Where to produce
- B. for whom to produce
- C. how to produce
- D. what to produce