30 Economic Questions and Answers for Examination

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1. When is the marginal product is positive, then

A. the total product will increase at increasing rate

B. the total product will increase at decreasing rate

C. the total product will reach maximum 

D. all the above.

2. When average product is rising, marginal product can fall if

A. Average product is more than marginal product

B. average product is less than marginal product

C. average product is equal to marginal product

D. none of the above.

3. When marginal product is negative, then

A. total product is zero B. total product rises

C. total product falls D. any of the above.

4. The total fixed cost curve is parallel to the x axis because

A. expenditure on fixed factors increases as output increases

B. expenditure on fixed factors is zero at zero level of output & increases there after

C. expenditure on fixed factors is same throughout the production process    D. none of the above.

5. The average fixed cost curve is a rectangular hyperbola because

A. TFC remains constant during production in the short run

B. TFC decreases as more units are producer

C. TFC is zero at zero level of output   

D. none of the above.

6. TVC curve will increase at decreasing rate when

A. AFC increases B. Marginal product increases

C. Total product increases at decreasing rate 

D. None of the above.

7. TVC curve will increase at increasing rate when

A. AFC falls B. Marginal product decreases

C. Total product increases at increasing rate 

D. All the above.

8. Under perfect competition,

A. AR=MR because price is uniform for all levels of output sold.

B. AR > MR as to sell more units, price is reduced.

C. AR=MR because the increases at increasing rate

D. None of the above.

9. A producer is said to be in equilibrium under perfect competition when

A. AR=MR=Price and MC curve is falling when MC=Price

B. Price=MC and MC curve is rising at the point of equally.

C. Price > MC & MC is falling.  

D.  Any of the above.

10. The price elasticity of supply of a good shown by a supply curve starting from the origin and making an angle of 75º with the x axis is

 A. infinity B. zero C. one  C. greater than 1

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11. If the supply curve of a good shifts to the lift it may mean that the cost of production has risen and

A. Marginal cost has faller   B. Marginal cost has risen

C. Marginal cost is unaffected    D. TFC has increased.

12. If the price of substitute goods in production rises, then the supply curve of the good will

A. shift to the right B. shift to the left                C. remain unaffected D. downward sloping to the right.

13. Excess demand for a good will cause

A. competition amongst sellers which will push the price down

B. competition amongst buyers which will push the price up.

C. competition amongst sellers which will push the price up.

D. Competition amongst buyer which will push the price down.

14. Which out of the following is not a final good:

A. Refrigerator in a restaurant. 

B. Refrigerator in the hospital.

C. Refrigerator in the chemist shop.

D. Refrigerator purchased by electronic showroom.

15. Identify the flow variable:

A. Capital formation B. Wealth

C. Inventories D. Capital

16. If the price of good x shown on x-axis falls, then the budget the will          

A. shift to the right B. shift to the left

C. rotate to the right on the x axis 

D. rotate to the left on the x axis.

17. The budget line is a straight because.

A. price ratio of the 2 goods remains the same.

B. income of the consumer remains the same.

C. both price ratio & income remain the same.

D. none of the above.

18. The demand curve will shift to the right when:

A. price falls & income is same  B. price same & income falls C. price same & income rises   D. Birth price & income increase.

19. When price of the substitute good increases, then

A. the demand curve for the good will shift to the right

B. the demand curve for the good will shift to the left

C. there will be an upward movement along the demand curve

D. there will be a downward movement along the demand curve.

20. If the cross price effect is negative then the demand curve in the good will

A. shift to the left if the price of the other good falls

B. shift to the right if the price of the other good rises

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C. shift to the left if the price of the other good rises

D. any of the above.   E. income of the consumer falls

21. Mr. A earns #300 and pays #15 in tax, Mr. B earns #100 and pays #6 in tax, this system of tax can be described as 

A. proportional tax   B. progressive tax 

C. regressive tax    D. excise tax

22. Which of the following is the standard concept for measuring and analyzing population growth?                                                                           A. The rate of natural increase                  B. The net migration       C. The rate of population increase             D. All of the above

23. Capital earns income because 

A. It is productive B. It is expensive C. It is always easy to substitute capital for labour D. It is technically more efficient than labour 

24. The value of money depends primarily on       A. gold backing of the currency                                 B. the gold backing of both currency and deposits  C. the general price level                             D. government decree that it is legal tender

25. Which of the following taxes appear generally progressive in nature 

A. sales tax                                       

B. personal income tax 

C. property tax                                            

D. corporation tax

26. Cost push inflation is likely to arise when 

A. there is an increase in bank lending B. there is increase in subsidies C. demand for higher wages is granted D. there is decrease in bank lending

27. Fiscal policy that can control inflation will include the use of                      

A. balanced budgeting                                          

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B. tax holidays 

C. budget deficit                                                    

D. budget surplus

28. Direct taxes include                                                    

A. excise duty B. ad valorem tax C. specific tax D. capital gains tax

29. A measure of the value of money in an economy is the                                  

A. size of worker’s income   B. the general price level C. total level of savings D. total amount of loans granted by the banks

30. Demand pull inflation is likely to be caused by                                           

A. increase in the cost of factors input                      B. increase in the income tax rate C. increase in bank lending rates D. increasingly large budget deficit 

ANSWERS

1. A          16. A

2. A          17. C

3. C           18. N.A

4. D           19. D

5. B            20. C

6. D            21.C

7. D            22. D

8. A            23. A

9. A             24. C

10. C            25. B

11. B            26. B

12. D            27. D

13. B            28. D

14. D            29. B

15. C             30. C

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