Economics Quiz For Beginners

Total Questions : 100

Scoring System:
Correct Answer    : +4 points
Incorrect Answer  : -1 point
Not Answered      :  0 point


The final result will appear at the end. All The Best.
  

1. The Opportunity Cost Of Something Is
What you have to give up by not putting the resources necessary to acquire it to their next best alternative use
The price you paid for it
Any cost that cannot be recovered
2. Which Of The Following Best Describes A Technology With Increasing Returns To Scale?
Q(2L, 2K) = 4Q(L, K)
Q(2L, K) = Q(L, 2K)
Q(2L, 2K) = Q(L, K)
3. In Which Of The Following Circumstances A Natural Monopoly Would Likely Arise?
Unit production costs are very high at relatively low output levels
Entrance of a second firm to the industry would result in losses for the entrant
Both
4. The Market Demand Curve Is
Derived by horizontally summing the individual demand curves at each price.
Derived by vertically summing the individual demand curves at each price.
Derived by horizontally summing the individual demand curves at each quantity.
5. Which Of The Following Is True For A Long-Run Equilibrium In A Competitive Industry?
min(ATC) = P
min(MC) = P
min(AVC) = P
6. For A Demand Curve To Slope Upward,
The good must be an inferior good with an income effect that dominates the substitution effect
Consumers are irrational
The good must be a normal good with a substitution effect that dominates the income effect
7. Which Of The Following Combinations Is More Likely To Have Straight-Line Indifference Curve?
Lukoil gasoline and Rosneft gasoline
Pizza and beer
Gasoline and automobiles
8. Which Of The Following Is A Necessary Condition For A Monopoly To Arise?
None
Superior technology or scale economies
Production-specific patents
9. A Monopolist's Marginal Revenue Curve Lies Below Average Revenue, Because:
A monopolist has to decrease price of all goods sold if it wants to expand output
Marginal magnitudes consider smaller increments than average ones
Price elasticity of demand decreases as quantity rises
10. The Market Demand Curve For A Luxury Good:
Is downward sloping
Is upward sloping
Has price elasticity greater than unity
11. Along A Country’s Production Possibilities Curve
There are no idle resources
The costs of production of the goods that are produced are identical
Resources are equally well equipped for the production of any good
12. Which Of The Following Is True For A Long-Run Equilibrium In A Competitive Industry?
min(ATC) = P
min(MC) = P
min(AVC) = P
13. Which Of The Following Is An Example Of A Normative Economic Statement?
The Russian budget deficit has reached alarming levels due to crisis.
10% of the population in Russia lives below poverty level.
Moscow had a budget surplus in 2007.
14. By The Term “Demand Curve” Economists Mean The Curve Describing The Relationship Between Price And Quantity Demanded. The Focus On Price Means That
Economists are assuming that other influences on quantity demanded are constant so that the effect of price can be isolated.
The model's predictive power is of little value.
Economists believe price is the only factor that influences quantity demanded.
15. A Firm Increases The Number Of Hours Its Workers Are Employed From 7,000 To 8,000, And Output Increases From 140,000 Bushels To 155,000 Bushels. The Marginal Product Of An Extra Hour Is
15
10
20
16. Which Of The Following Is NOT A Defining Feature Of Perfect Competition?
Perfect information
No barriers to entry
Heterogeneous product
17. An Individual Competitive Firm's Short-Run Supply Function Is (Over The Relevant Range Of Prices):
Its MC schedule
Its AVC schedule
Its AFC schedule
18. Which Of The Following Best Describes A Technology With Increasing Returns To Scale?
Q(2L, K) = Q(L, 2K)
Q(2L, 2K) = Q(L, K)
Q(2L, 2K) = 4Q(L, K)
19. Which Of The Following Will NOT Entail An Outward Shift Of The Production Possibilities Curve?
An upgrading of the quality of a nation's human resources
The reduction of unemployment
An increase in the quantity of a society's labour force
20. Which Of The Following Is A Necessary Condition For A Monopoly To Arise?
Superior technology or scale economies
Production-specific patents
None
21. A Typical Shop In Bavaria Would Offer About A Hundred Brands Of Local Beer. The Local Beer Industry In Bavaria Would Likely Constitute:
An oligopoly
A monopolistic competition
A natural monopoly
22. Vasya Is An Accountant. He Receives $200 Per Hour Doing Tax Returns. He Can Type 12,000 Characters Per Hour Into Spreadsheets. He Can Hire An Assistant Who Types 3,000 Characters Per Hour Into Spreadsheets. Which Of The Following Statements Is True?
Vasya should hire the assistant as long as he pays the assistant less than $50 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $100 per hour.
Vasya should hire the assistant as long as he pays the assistant less than $200 per hour.
23. Creation Of A Trade Union Will Typically Lead To:
A loss of jobs by insiders
An increase in labour market efficiency
A rise in economic rent of insiders
24. Consider A Small Town Build Around A Coal Mine Which Is Perfectly Competitive In Its Product Market And Is The Sole Employer In The Town. Suppose That Employment Is Controlled By A Trade Union Seeking To Maximize The Total Wage Bill Of Its Members. Then Wages Will Be Determined By:
MRPL = MCL
MVPL = MCL
None
25. Cournot Oligopoly Is Characterized By:
Easy adjustment of prices, thus strategic choice of output
Easy adjustment of output, thus strategic choice of prices
Sequential decision-making
26. The Net Result Of The Prisoner's Dilemma, When Applied To A Situation Involving Two Oligopolists, Is That
Prices will be above the level implied by joint profit maximization
Neither firm makes a profit and both leave the industry
Prices will be below the level implied by joint profit maximization
27. A Profit-Maximizing Monopolist Practicing Price Discrimination Will Charge The Lowest Price In The Market Where Demand
Is least price-elastic
Is most price-elastic
has unit price-elasticity
28. A Monopolist's Marginal Revenue Curve Lies Below Average Revenue, Because:
Marginal magnitudes consider smaller increments than average ones
A monopolist has to decrease price of all goods sold if it wants to expand output
A monopolist typically has to pay high taxes
29. Which Of The Following Could Constitute A Case Of Strategic Entry Deterrence?
The incumbent forgoes some of the current profit in favour of better opportunities in case of possible a price war
The incumbent invests into production to make more profit before its market share is contested by an entrant
The incumbent accounts for the expected moves of the entrant and uses that information to maximize own profits
30. Which Of The Following Is A Necessary Condition For A Monopoly To Arise?
Superior technology or scale economies
Production-specific patents
None
31. Elasticity In Economics Is:
A measure of responsiveness.
The relative difference in price and marginal cost.
An index used to measure market competitiveness.
32. Two Points On The Same Indifference Curve Represent The Same
Utility level
Capital level
Price level
33. Which Of The Following Industries Is Most Prone To The Occurrence Of Natural Monopolies?
Utility
Computer software
Agriculture
34. Which Of The Following Is Not A Characteristic Of A Perfectly Competitive Industry?
Producers set the price of their products freely.
The industry consists of many small firms producing similar products.
There is no government intervention in the industry.
35. The Invisible Hand Refers To:
Adam Smith’s description of the workings of market economies.
David Ricardo’s depiction of global gains from international trade.
Paul Krugman’s interpretation of the events preceding the financial crisis of 2007-08.
36. Which Of The Following Changes Would Most Likely Increase The Price Of Music CDs?
A decrease in the popularity of online music streaming services
A decrease in the cost of CD production
An increase in the price of cheese
37. The Demand Curve For Cigarettes Is Steep Because:
The quantity of cigarettes demanded does not vary much with price.
When the price increases quantity of cigarettes supplied increases rapidly.
The cigarette market is competitive.
38. When The Planting Of A Beautiful Garden In One Home Increases The Happiness Of The Neighbors Who Also Have A View Of The Garden, The Garden Is Said To Create A
Positive externality
Positive marginal cost
Human factor of production
39. According To British Economist David Ricardo, The Gains From International Trade Depend On:
Comparative advantage in production
The restrictions placed by the government on trade transactions
The possession of natural resources
40. Which Of The Following Would Be An Opportunity Cost Of Going To College?
Four years of foregone earnings in the labor market
The student debt accumulated during college
The tuition cost of college
41. Which Of The Following Is A Basic Characteristic Of 'Oligopoly'?
Few sellers, many buyers
Few sellers, few buyers
Many sellers, many buyers
42. What Effect Will A Decrease In Demand And An Increase In Supply Have On Equilibrium Price?
Equilibrium price will fall
Equilibrium price will be constant
Equilibrium price will rise
43. In India, Inflation Measured By The -
Wholesale Price Index Number
National Income Deflator
Consumer Price Index for urban non-manual workers
44. Which Of The Following Statements Is NOT Correct About The Factors That Gave Rise To The Consumer Movement In India?
Tax on soft beverages
Hoarding and Black Marketing
Frequent food shortages
45. One Of The Essential Conditions Of "Perfect Competition" Is
same price for same things at one time
product differentiation
many sellers and a few buyers
46. Zero Price Elasticity Of Demand Means
whatever the change in price, there is absolutely no change in demand
for a small change in price, there is a large change in demand
for a large change in price, there is a small change in demand
47. Which Of The Following Is The Most Close To The Definition Of Oligopoly?
The cigarette industry
The welding shop
Wheat growing farmers
48. Duopoly Is The Special Case Of Which Type Of Market Structure?
Oligopoly
Monopsony
Monopoly
49. Which Of The Following Correctly Describes The Nature Of India’s Economy?
Mixed Economy
Socialist Economy
Capitalist Economy
50. In Economic Terms, Globalization Is The Process Of Rapid ______ Between Countries.
Integration
Investment
Competition
51. A Good For Which Demand Decreases With Increase In Income Of Consumer Is Called
Inferior good
Giffen good
Public good
52. The Law Of Demand Implies That The Demand Curve
slopes down
first slopes up and then slopes down
slopes up
53. Which Of The Following Is Not Correct With Respect To Consumer Price Index?
CPI-U is the Consumer Price Index for Rural Consumers.
It measures the average change in prices of a basket of goods
It is the most widely used measure of inflation
54. Which Of The Following Is NOT Related To Microeconomics?
Unemployment
Labor Economics
Demand, Supply, and Equilibrium
55. Which Of The Following Is Measured By The Lorenz Curve?
Inequality of Income
Unemployment
Population growth rate
56. The Condition In Which Market Supply Matches Market Demand Is Called
Equilibrium
Normalisation
Equalisation
57. The Statement "Supply Creates Its Own Demand" Is Given By
J.B. Say
Thomas Jefferson
James Madison
58. Zero Price Elasticity Of Demand Means
whatever the change in price, there is absolutely no change in demand
for a large change in price, there is a small change in demand
for a small change in price, there is a large change in demand
59. The Law Of Demand States That:
as the price rises, the demand falls
as the price rises, the demand rises
as the demand rises, the price rises
60. A Situation Where The Expenditure Of The Government Exceeds Its Revenue Is Called ______.
Budget Deficit
Default Financing
Deficit Revenue
61. Which Of The Following Is A Basic Characteristic Of 'Oligopoly'?
Many sellers, many buyers
Few sellers, many buyers
Few sellers, few buyers
62. What Effect Will A Decrease In Demand And An Increase In Supply Have On Equilibrium Price?
Equilibrium price will rise
Equilibrium price will be constant
Equilibrium price will fall
63. In India, Inflation Measured By The -
Wholesale Price Index Number
National Income Deflator
Consumer Price Index for urban non-manual workers
64. Which Of The Following Statements Is NOT Correct About The Factors That Gave Rise To The Consumer Movement In India?
Adulteration of food
Tax on soft beverages
Frequent food shortages
65. One Of The Essential Conditions Of "Perfect Competition" Is
product differentiation
many sellers and a few buyers
same price for same things at one time
66. Zero Price Elasticity Of Demand Means
whatever the change in price, there is absolutely no change in demand
for a small change in price, there is a large change in demand
for a large change in price, there is a small change in demand
67. Which Of The Following Is The Most Close To The Definition Of Oligopoly?
The cigarette industry
The welding shop
The barber shop
68. Duopoly Is The Special Case Of Which Type Of Market Structure?
Monopoly
Oligopoly
Imperfect Competition
69. Which Of The Following Correctly Describes The Nature Of India’s Economy?
Capitalist Economy
Mixed Economy
Socialist Economy
70. In Economic Terms, Globalization Is The Process Of Rapid ______ Between Countries.
Integration
Competition
Change
71. A Good For Which Demand Decreases With Increase In Income Of Consumer Is Called
Inferior good
Complementry good
Public good
72. The Law Of Demand Implies That The Demand Curve
no regular pattern
slopes up
slopes down
73. Which Of The Following Is Not Correct With Respect To Consumer Price Index?
It measures the average change in prices of a basket of goods
CPI-U is the Consumer Price Index for Rural Consumers.
It cover professionals, self-employed, poor, unemployed and retired people in the country
74. Which Of The Following Is NOT Related To Microeconomics ?
Demand, Supply, and Equilibrium
Unemployment
Behaviour of individual economic units
75. Which Of The Following Is Measured By The Lorenz Curve?
Inequality of Income
Unemployment
Illiteracy
76. The Condition In Which Market Supply Matches Market Demand Is Called
Normalisation
Equalisation
Equilibrium
77. The Statement "Supply Creates Its Own Demand" Is Given By
J.B. Say
Thomas Jefferson
David Ricardo
78. Zero Price Elasticity Of Demand Means
for a small change in price, there is a small change in demand
whatever the change in price, there is absolutely no change in demand
for a large change in price, there is a small change in demand
79. The Law Of Demand States That:
as the demand rises, the price rises
as the price rises, the demand rises
as the price rises, the demand falls
80. A Situation Where The Expenditure Of The Government Exceeds Its Revenue Is Called ______.
Default Revenue
Budget Deficit
Default Financing
81. Jevan Compares The Unit Price Of Chocolate Bars In Order To Get The "Best Buy". This Represents Using Money As
a store of value.
a unit of account.
a unit of deferred payment.
82. The Real Demand For Money Is
the nominal demand for money divided by the price level.
equal to the nominal demand for money as long as inflation is fully anticipated.
equal to the supply of money at all times.
83. Monetary Validation
causes a supply shock.
increases unemployment.
can perpetuate inflation.
84. Under A System Of Flexible Exchange Rates, A Nation Which Uses A Tight Money Policy During A Period Of Worldwide Inflation Would Be Likely To Experience
an appreciation of its currency.
a loss in international reserves.
a fall in the value of its currency.
85. If The Economy Is Currently In Monetary Equilibrium, An Increase In The Money Supply Will
cause a reduction in the demand for money, leading to a higher rate of interest.
lead to a movement down the money demand curve to a lower rate of interest.
cause an increase in the demand for money, leading to a lower rate of interest.
86. Stable Growth In The Money Supply Rule Will Contribute To
increased ability for the Bank of Canada to "fine tune" the economy.
stability of the price level.
destabilization if the demand for money fluctuates.
87. With Respect To The Balance Of Payments,
if the current account is in deficit, the capital account must also be in deficit.
total payments must equal total receipts.
the current account balance must be zero.
88. Suppose That In Canada We Experience A Rise In The Canadian Dollar Price Of Foreign Exchange. In This Circumstance, The Dollar Will Have ________ And The Exchange Rate Will Have ________.
appreciated; risen
depreciated; fallen
depreciated; risen
89. The Difference Between The Government's Debt And Deficit Is That The Debt Is The
amount the government pays interest payments whereas the deficit has not yet incurred interest charges.
accumulation of past deficits minus surpluses whereas the deficit is the annual shortfall between revenues and disbursements.
amount owed by the Bank of Canada to the commercial banks where as the deficit is the amount owed by the Government of Canada to the Bank of Canada.
90. In The Case Of Frictional Unemployment,
the unemployed workers and the employers with available job vacancies have not yet found each other.
there is a mismatch between the needs of employers with job vacancies and the unemployed workers.
the only possible cure comes from shifting the aggregate demand curve to the left.
91. A Decrease In The Money Supply Is Most Likely To
raise interest rates, lower investment, and lower aggregate expenditures.
lower interest rates, investment, and aggregate expenditures.
raise interest rates and investment, and lower aggregate expenditures.
92. When The Price Level Increases It Causes Households And Business Firms To Try To
reduce money balances, which drives interest rates up.
reduce money balances, which drives national income up.
increase money balances, which drives interest rates up.
93. When Metal Coins, Such As Gold And Silver Were Used As Money, A Technique Which Made Them Easy To Recognize And Which Did Not Reduce Their Value Was
re-minting.
sweating.
milling
94. The Main Cause Of Cyclical Unemployment Is That
workers often voluntarily quit a job to look for a better job.
the level of overall economic activity fluctuates.
some individuals skills do not have marketable skills for the jobs that do exist.
95. "Foreign Exchange" Refers To
the actual transaction that occurs as currencies are traded.
foreign currency or various claims on it.
the price at which purchases and sales of foreign goods take place.
96. Publicly Subsidized Education And Retraining Schemes Are
aimed at reducing structural unemployment.
ways of resisting adjustment to technological change.
aimed at reducing cyclical unemployment.
97. Which One Of The Following Statements Correctly Describes The Transmission Mechanism?
An increase in personal consumption leads to an upward shift in the AE curve and thereby increases real GDP.
An decrease in imports causes the AE curve to shift upwards, leading to a higher interest rate.
An increase in the money supply leads to a lower interest rate, higher investment, an upward shift in the AE curve and a higher GDP.
98. If All The Banks In The Banking System Collectively Have $20 Million In Cash Reserves And Have A Desired Reserve Ratio Of 20 Percent, The Maximum Amount Of Demand Deposits The Banking System Can Support Is
$40 million.
$80 million.
$100 million.
99. One Implication Of An Increase In The Cash Drain To The Public Is That The
banking system's ability to create new money following a new deposit is reduced.
desired ratio is reduced.
desired reserve ratio is increased.
100. A Rise In The Price Level, Given No Change In The Supply Of Money, Will
decrease the demand for money and decrease aggregate demand.
increase the demand for money and decrease aggregate expenditure.
increase the demand for money and increase aggregate expenditure.

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