Advance Micro Economics

1. 1. What is full-cost pricing?

• a) Pricing strategy based on the market price

• b) Pricing strategy that includes only variable costs
  
  

• c) Pricing strategy that covers both fixed and variable costs

• d) Pricing strategy that sets prices based on customer demand
  
  

2. 2. Which of the following costs is NOT typically included in full-cost pricing?

• a) Fixed costs

• b) Variable costs

• c) Direct material Costs

• d) Opportunity costs

3. 3. In which industry is full-cost pricing most commonly used?

• a) Luxury goods

• b) Retail services

• c) Manufacturing

• d) Software development

4. 4. Full-cost pricing includes both fixed and variable costs in the pricing calculation.

• a) True

• b) False

5. 5. The classical theory of interest suggests that interest rates are determined by the supply and demand of loanable funds.

• a) True

• b) False

6. 6. Which theory combines both monetary and non-monetary factors to explain the determination of interest rates?

• a) Time preference theory

• b) Loanable funds theory 

• c) Liquidity preference theory

• d) Marginal utility theory

7. 7. Which economist is most closely associated with the classical theory of interest?

• a) John Maynard Keynes

• b) Alfred Marshall

• c) Adam Smith

• d) Irving Fisher

8. 8. The loanable funds theory of interest suggests that the rate of interest is determined by the supply and demand of what?

• a) Money

• b) Loans

• c) Capital
  
  

• d) Savings and investments

9. 9. Which theory of profit suggests that profit is the result of risk-taking by entrepreneurs?

• a) Innovation theory

• b) Risk-bearing theory

• c) Monopoly theory
  
  

• d) Marginal productivity theory
  
  

10. 10. Which economist is associated with the innovation theory of profit?

• a) Joseph Schumpeter

• b) Alfred Marshall

• c) Frank Knight

• d) Adam Smith