ECO401 QUIZ NO. 4

Quiz Start Time: 04:18 PM Time Left 70
sec(s)



Question # 1 of 15 ( Start time: 04:18:55 PM ) Total Marks: 1
The average propensity to consume is the ratio of:
Select correct option:



A change in consumption to a change in disposable income.

A change in consumption to total disposable income at a specific income level.

Total consumption to total disposable income at a specific income level.

Total consumption to a change in disposable income.










Quiz Start Time: 04:18 PM Time Left 89
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Question # 2 of 15 ( Start time: 04:19:31 PM ) Total Marks: 1
A firm never operates:
Select correct option:



At the minimum of its average total cost curve.

At the minimum of its average variable cost curve.

On the downward-sloping portion of its average total cost curve.

On the downward-sloping portion of its average variable cost curve.










Quiz Start Time: 04:18 PM Time Left 89
sec(s)



Question # 3 of 15 ( Start time: 04:19:41 PM ) Total Marks: 1
An important difference between the approaches of the classical and Keynesian economists use to achieve a macroeconomic equilibrium is that:
Select correct option:



Keynesian economists actively promote the use of fiscal policy; the classical economists do not

Keynesian economists actively promote the use of monetary policy to improve aggregate economic performance; classical economists do not

classical economists believe that monetary policy will certainly affect the level of output; Keynesians believe that money growth affects only prices

classical economists believe that fiscal policy is an effective tool for achieving economic stability; Keynesians do not









Quiz Start Time: 04:18 PM Time Left 87
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Question # 4 of 15 ( Start time: 04:19:51 PM ) Total Marks: 1
When an industry's raw material costs increase, other things remaining the same:
Select correct option:



The supply curve shifts to the left.

The supply curve shifts to the right.

Output increases regardless of the market price and the supply curve shifts upward.

Output decreases and the market price also decrease.










Quiz Start Time: 04:18 PM Time Left 89
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Question # 5 of 15 ( Start time: 04:20:00 PM ) Total Marks: 1
Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be:
Select correct option:



A surplus of credit.

A shortage of credit.

Greater profits for banks issuing credit.

A perfectly inelastic supply of credit in the market place.










Quiz Start Time: 04:18 PM Time Left 88
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Question # 6 of 15 ( Start time: 04:20:11 PM ) Total Marks: 1
Demand is elastic when the elasticity of demand is:
Select correct option:



Greater than 0

Greater than 1

Less than 1

Less than 0










Quiz Start Time: 04:18 PM Time Left 89
sec(s)



Question # 7 of 15 ( Start time: 04:20:23 PM ) Total Marks: 1
You observe that the price of houses and the number of houses purchased both rise over the course of the year. You conclude that:
Select correct option:



The demand for houses has increased

The demand curve for houses must be upward-sloping

The supply of houses has increased

Housing construction costs must be decreasing










Quiz Start Time: 04:18 PM Time Left 89
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Question # 8 of 15 ( Start time: 04:20:30 PM ) Total Marks: 1
In the long run, competitive firms MUST be profit maximizes, because if they do not maximize profits:
Select correct option:



They will attract new competitors.

They will not be price takers.

The profits that they do earn will only cover variable costs.

They will not survive.










Quiz Start Time: 04:18 PM Time Left 89
sec(s)



Question # 9 of 15 ( Start time: 04:20:40 PM ) Total Marks: 1
Suppose the short-run production function is q = 10 * L. If the wage rate is $10 per unit of labor, then MC=
Select correct option:



q/10

0/q

q

1










Quiz Start Time: 04:18 PM Time Left 89
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Question # 10 of 15 ( Start time: 04:20:51 PM ) Total Marks: 1
Potential GDP is an estimate of the economy’s ability to produce goods and services if:
Select correct option:



Labor force is fully employed.

Price level is stable.

Trade balance is zero.

Federal budget is balanced.










Quiz Start Time: 04:18 PM Time Left 86
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Question # 11 of 15 ( Start time: 04:21:00 PM ) Total Marks: 1
Those who hold the classical view of the labour market are likely to believe that
Select correct option:



Monetary, but not fiscal policy will have an effect on output and employment

Fiscal but not monetary policy will have an effect on output and employment.

Both monetary and fiscal policy will have an effect on output and employment.

Neither monetary nor fiscal policy will have an effect on output and employment.










Quiz Start Time: 04:18 PM Time Left 86
sec(s)



Question # 11 of 15 ( Start time: 04:21:00 PM ) Total Marks: 1
Those who hold the classical view of the labour market are likely to believe that
Select correct option:



Monetary, but not fiscal policy will have an effect on output and employment

Fiscal but not monetary policy will have an effect on output and employment.

Both monetary and fiscal policy will have an effect on output and employment.

Neither monetary nor fiscal policy will have an effect on output and employment.









Quiz Start Time: 04:18 PM Time Left 74
sec(s)



Question # 12 of 15 ( Start time: 04:21:12 PM ) Total Marks: 1
Which of the following would cause the short run aggregate supply curve to shift to the left, but have no effect over the long run aggregate supply?
Select correct option:



The amount of factors of production (such as labor and capital) increase

The amount of factors of production (such as labor and capital) decrease

Prices of inputs (such as wages or oil prices) increase

Prices of inputs (such as wages or oil prices) decrease










Quiz Start Time: 04:18 PM Time Left 88
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Question # 13 of 15 ( Start time: 04:21:35 PM ) Total Marks: 1
According to Keynesian economics, aggregate expenditures are the sum of desired or planned spending undertaken by:
Select correct option:



The household sector after taxes.

The business and government sectors.

All four sectors only when the economy is at full employment.

All four sectors at a specific aggregate production level.










Quiz Start Time: 04:18 PM Time Left 88
sec(s)



Question # 14 of 15 ( Start time: 04:21:43 PM ) Total Marks: 1
The demand curve facing a perfectly competitive firm is:
Select correct option:



The same as the market demand curve.

Downward-sloping and less flat than the market demand curve.

Downward-sloping and more flat than the market demand curve.

Perfectly horizontal.










Quiz Start Time: 04:18 PM Time Left 89
sec(s)



Question # 15 of 15 ( Start time: 04:21:53 PM ) Total Marks: 1
An economist will define the exchange rate between two currencies as the:
Select correct option:



Amount of one currency that must be paid in order to obtain one unit of another currency.

Difference between total exports and total imports within a country.

Price at which the sales and purchases of foreign goods takes place.

Ratio of import prices to export prices for a particular country.

ECO401 – Economics
Online Quiz # 4
January 6, 2010

Total Questions: 15


Question # 1 of 15 ( Start time: 01:57:16 PM ) Total Marks: 1
A Natural Monopoly is most likely to exist when:
Select correct option:
There are large barriers to entry.
There are long term patents.
There are large economies of scale.
There is government regulation of the industry.
(I'm not 100% about this question, but kindly see handouts, page # 56. I think option # 3 "There are large economies of scale" seems most appropriate. Anyways I'll go with this option)


Question # 2 of 15 ( Start time: 01:57:59 PM ) Total Marks: 1
Indifference curves that are convex to the origin reflect:
Select correct option:
An increasing marginal rate of substitution.
A decreasing marginal rate of substitution.
A constant marginal rate of substitution.
A marginal rate of substitution that first decreases, then increases.


Question # 3 of 15 ( Start time: 01:58:36 PM ) Total Marks: 1
Real GDP is equal to:
Select correct option:
Nominal GDP – Inflation.
Nominal GDP + Inflation.
Nominal GDP / Inflation.
Inflation / Nominal GDP.
(I think it is the first option, but anyways, please confirm it too)


Question # 4 of 15 ( Start time: 01:59:54 PM ) Total Marks: 1
Which of the following can be thought of as a barrier to entry?
Select correct option:
Scale economies.
Patents.
Strategic actions by incumbent firms.
All of the given options are true.
(I'm not 100% sure, but I selected option # 4 and I think it is correct)


Question # 5 of 15 ( Start time: 02:00:40 PM ) Total Marks: 1
If marginal product is above the average product:
Select correct option:
The total product will fall
The average product will rise (see page # 55)
Average variable costs will fall
Total revenue will fall


Question # 6 of 15 ( Start time: 02:01:57 PM ) Total Marks: 1
A partial explanation for the inverse relationship between price and quantity demanded is that a:
Select correct option:
Lower price shifts the supply curve to the left
Higher price shifts the demand curve to the left
Lower price shifts the demand curve to the right
Higher price reduces the real incomes of buyers


Question # 7 of 15 ( Start time: 02:02:41 PM ) Total Marks: 1
A Demand Curve is price inelastic when:
Select correct option:
Changes in demand are proportionately smaller than those in price
Changes in demand are proportionately greater than those in price
Changes in demand are equal than those in price
None of the given options.


Question # 8 of 15 ( Start time: 02:03:50 PM ) Total Marks: 1
Oligopoly differs from monopolistic competition in that an oligopoly includes:
Select correct option:
Product differentiation.
No barriers to entry.
Barriers to entry. (see handouts, page # 54)
Downward sloping demand curves facing the firm.


Question # 9 of 15 ( Start time: 02:04:55 PM ) Total Marks: 1
The good produced by a monopoly:
Select correct option:
Has perfect substitutes
Has no substitutes at all
Has no close substitutes
Can be easily duplicated
(I got confused b/w option # 2 and 3. But I think option # 2 is correct, anyways please try to verify it)


Question # 10 of 15 ( Start time: 02:05:52 PM ) Total Marks: 1
If there is a price ceiling, there will be:
Select correct option:
Shortages
Surpluses
Equilibrium
None of the given options.


Question # 11 of 15 ( Start time: 02:06:48 PM ) Total Marks: 1
Our economy is characterized by:
Select correct option:
Unlimited wants and needs
Unlimited material resources
No energy resources
Abundant productive labor


Question # 12 of 15 ( Start time: 02:07:16 PM ) Total Marks: 1
This market situation is much like a pure monopoly except that its member firms tend to cheat on agreed upon price and output strategies. What is it?
Select correct option:
Duopol
Cartel
Market sharing monopoly
Natural monopoly


Question # 13 of 15 ( Start time: 02:07:42 PM ) Total Marks: 1
Which of the following is not a reason why the aggregate demand curve slopes downward?
Select correct option:
The exchange-rate effect
The wealth effect.
The classical dichotomy/monetary neutrality effects.
The interest-rate effect


Question # 14 of 15 ( Start time: 02:08:50 PM ) Total Marks: 1
Diminishing marginal returns implies:
Select correct option:
Decreasing marginal costs.
Increasing marginal costs.
Decreasing average variable costs.
Decreasing average fixed costs.

Reference: http://en.wikipedia.org/wiki/Diminishing_returns
(Read Returns and costs heading)


Question # 15 of 15 ( Start time: 02:10:03 PM ) Total Marks: 1
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

Question # 1 of 15 ( Start time: 07:34:09 AM ) Total Marks: 1
An exchange rate that has an officially fixed value less than its fundamental value is called a(n) _______ exchange rate.
Select correct option:

Devalued.
Revalued.
Depreciated.
Undervalued.


Question # 2 of 15 ( Start time: 07:35:24 AM ) Total Marks: 1
Inflation:
Select correct option:

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Reduces both the purchasing power of the dollar and one's real income.
Reduces the purchasing power of the dollar and increases one's real income.
Reduces the purchasing power of the dollar but may have no impact on one's real income.
Increases the purchasing power of the dollar and reduces one's real income.

Question # 3 of 15 ( Start time: 07:36:43 AM ) Total Marks: 1
Monopolistic competition and oligopoly share which characteristic?
Select correct option:

Free entry and exit from the industry
Strategic behavior
Standardized products
Advertising


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Question # 4 of 15 ( Start time: 07:37:42 AM ) Total Marks: 1
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


Question # 5 of 15 ( Start time: 07:39:05 AM ) Total Marks: 1
Deflation is:
Select correct option:

An increase in the overall level of economic activity.
An increase in the overall price level.
A decrease in the overall level of economic activity.
A decrease in the overall price level.

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Question # 6 of 15 ( Start time: 07:40:18 AM ) Total Marks: 1
If the income elasticity of demand for boots is 0.2, a 10% increase in consumer income will lead to a:
Select correct option:

20 percent increase in the quantity of boots demanded
20 percent decrease in the quantity of boots demanded
2 percent increase in the quantity of boots demanded
0.2 percent increase in the quantity of boots demanded


Question # 7 of 15 ( Start time: 07:41:23 AM ) Total Marks: 1
Real GDP is equal to:
Select correct option:



Nominal GDP – Inflation.
Nominal GDP + Inflation.
Nominal GDP / Inflation.
Inflation / Nominal GDP.

Question # 8 of 15 ( Start time: 07:42:53 AM ) Total Marks: 1
GDP measures:
Select correct option:

Expenditure on all final goods and services.
Total income of everyone in the economy.
Total value-added by all firms in the economy.
All of the given options

Question # 9 of 15 ( Start time: 07:43:14 AM ) Total Marks: 1
Fixed exchange rates may be preferred to floating exchange rates because with fixed exchange rates:
Select correct option:

There is greater stability of the exchange rate which encourages trade and investment.
There is less likely to be a balance of payments deficit.
There is less need for a country to hold large reserves of foreign currency.
Interest rates can be used to meet domestic policy objectives such as keeping growth stable.

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Question # 10 of 15 ( Start time: 07:43:57 AM ) Total Marks: 1
Diminishing marginal returns implies:
Select correct option:

Decreasing marginal costs.
Increasing marginal costs.
Decreasing average variable costs.
Decreasing average fixed costs.

Question # 11 of 15 ( Start time: 07:44:10 AM ) Total Marks: 1
The slope of the saving function (or line) is the:
Select correct option:

Average propensity to save.
Average propensity to consume.
Marginal propensity to save.
Marginal propensity to consume.


Question # 12 of 15 ( Start time: 07:45:36 AM ) Total Marks: 1
Personal income:
Select correct option:

Is income received by individuals during a given year.
Is the income individuals have available for spending during a given year.
Equals national income minus indirect taxes.
Is the sum of wages plus interest received by individuals during a given year.


Question # 13 of 15 ( Start time: 07:47:10 AM ) Total Marks: 1
The point at which AC intersects MC is where:
Select correct option:

AC is decreasing.
MC is at its minimum.
AC is at its minimum.
AC is at its maximum.
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Question # 14 of 15 ( Start time: 07:48:02 AM ) Total Marks: 1
A graph showing all the combinations of capital and labour available for a given total cost is the:
Select correct option:

Budget constraint.
Expenditure set.
isoquant.
isocost line.

Question # 15 of 15 ( Start time: 07:49:13 AM ) Total Marks: 1
Microeconomics is the branch of economics that deals with which of the following topics?
Select correct option:

The behavior of individual consumers
Unemployment and interest rates
The behavior of individual firms and investors
The behavior of individual consumers and behavior of individual firms and investors.

In the long run, profits will equal zero in a competitive market because of:
Select correct option:



The availability of information.

Identical products being produced by all firms.

Constant returns to scale.

Free entry and exit


A partial explanation for the inverse relationship between price and quantity demanded is that a:
Select correct option:



Lower price shifts the supply curve to the left

Higher price shifts the demand curve to the left

Lower price shifts the demand curve to the right

Higher price reduces the real incomes of buyers


When the price of petrol rises 10%, the quantity of petrol purchased falls by 8%. The demand for petrol is:
Select correct option:



Perfectly elastic

Unit elastic

Elastic

Inelastic


Which of the following would cause the short run aggregate supply curve to shift to the left, but have no effect over the long run aggregate supply?
Select correct option:



The amount of factors of production (such as labor and capital) increase

The amount of factors of production (such as labor and capital) decrease

Prices of inputs (such as wages or oil prices) increase

Prices of inputs (such as wages or oil prices) decrease



Economic activity moves from a trough into a period of _______until it reaches a _____ and then into a period of _______.
Select correct option:



Expansion; trough; recession.

Recession; trough; expansion.

Expansion; peak; recession.

Recession; peak; expansion.


If firms in a competitive industry are experiencing losses in the short run, then:
Select correct option:



The firms will try to raise prices.

Some firms will choose to shut down.

The industry will cease to exist.

New firms will enter the industry.



A monopolistically competitive firm in short run equilibrium:
Select correct option:



Will make negative profit (lose money).

Will make zero profit (break-even).

Will make positive profit.

Any of the given is possible.


The cross elasticity of demand of complements goods is:
Select correct option:



Less than 0.

Equal to 0.

Greater than 0.

Between 0 and 1.


An exchange rate that has an officially fixed value less than its fundamental value is called a(n) _______ exchange rate.
Select correct option:



Devalued.

Revalued.

Depreciated.

Undervalued.


Assume that the current market price is below the market clearing level. We would expect:
Select correct option:



A surplus to accumulate.

Downward pressure on the current market price.

Upward pressure on the current market price.

Lower production during the next time period.



If consumer incomes increase, the demand for product Y:
Select correct option:



Will necessarily remain unchanged

Will shift to the right if Y is a complementary good

Will shift to the right if Y is a normal good

Will shift to the right if Y is an inferior good


One explanation why the economy does not self correct quickly is
Select correct option:



With less consumption and more savings the interest rate will drop

In the short run workers are fully employed and cannot produce enough to get to long run equilibrium

Wages and prices are flexible

Wages and prices are sticky


Which of the following could be considered a fixed cost for a pizza store?
Select correct option:



The mortgage payment on the store.

Tomatoes and cheese.

The utility cost to operate the ovens.

Pizza boxes.


If diminishing marginal utility holds, and a person consumes less of a good, then all else being equal:
Select correct option:



The price of the good will rise.

Marginal utility will rise

Expenditure on the good will increase

Marginal utility will decline


When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is:
Select correct option:



Price

Cost of production

The overall state of the economy

Consumer incomes

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