Basic Economic Concepts Quiz

A Dubai-based construction company specializes in building luxury skyscrapers, while a competitor focuses on affordable housing projects. The comparative advantage of each company lies in:

• Their ability to produce more at a lower cost in the market.

• The distinct type of projects they are best equipped to complete efficiently.

• The geographical location of their projects.

• The number of workers they employ.

A new tax on carbon emissions in the UAE causes firms to increase their prices. In this case, the tax is likely to:

• Shift the supply curve to the right.

• Decrease the cost of production for businesses.

• Increase the marginal cost of production, shifting the supply curve to the left.

• Have no effect on market prices or quantity.

In the UAE, the price of public transportation increases, leading to a significant decrease in demand for public transport. This suggests that public transportation is:

• A necessity with inelastic demand.

• A normal good with elastic demand.

• A luxury good with elastic demand.

• A substitute for private transport with inelastic demand.

A luxury hotel in Dubai increases its rates, and simultaneously, the demand for hotel rooms decreases more than expected. Which of the following is most likely?

• The hotel is experiencing elastic demand.

• The hotel is experiencing inelastic demand.

• The demand curve for the hotel shifts to the right.

• The hotel is operating in a perfectly competitive market.

If the price elasticity of demand for a product in Dubai is 0.5, and the price of the product increases by 10%, the total revenue from the product will:

• Increase by 5%.

• Increase by 10%.

• Decrease by 5%.

• Decrease by 10%.

In the short run, a UAE-based firm faces diminishing marginal returns after hiring additional workers. Which of the following best describes the firm's situation?

• The marginal product of labor decreases while total output still increases.

• Total output decreases because of diminishing marginal returns.

• The firm's marginal cost is decreasing.

• The firm’s long-run average cost curve is shifting downward.

A UAE tech company has reached the point where its long-run average cost curve is at its lowest point. At this point, the company is experiencing:

• Diseconomies of scale.

• Economies of scale.

• Constant returns to scale.

• Marginal cost equal to average cost.

The government of the UAE introduces regulations that require businesses to pay higher wages, which increases their production costs. In the short run, which of the following will most likely occur?

• A decrease in market prices for goods.

• An increase in the quantity of goods supplied.

• A decrease in supply, leading to higher market prices.

• A shift of the supply curve to the right.

A luxury retail store in Dubai experiences a drop in the demand for its high-end products. The store increases its advertising and introduces discounts to boost sales. This change is likely a response to:

• A leftward shift in the supply curve.

• A decrease in consumer preferences.

• A leftward shift in the demand curve.

• A rightward shift in the demand curve.

In a perfectly competitive market, the price in the long run is equal to:

• Average total cost.

• Marginal cost.

• Average variable cost.

• Marginal revenue.