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Total questions: 60
Worksheet time: 3hrs 34mins
Which of the following statements related the concept of opportunity cost is false?
A. The opportunity cost of using resources to produce more health care is the
output of the next best alternative product that could be produced with the
same resources
A. The opportunity cost of a decision is the next best forgone alternative.
A. Some decisions have zero opportunity cost.
A. Scarcity implies that the opportunity cost of any decision can never be zero.
The phrase ‘ceteris paribus’ which is used frequently in economic analysis, means
to each according to his need
something for something in return; payback
production is the source of riches
A. other things being equal.
The economic system in which all the basic decisions are made through a centralized authority such as a government agency, is termed a
market economy.
capitalist economy.
command economy.
traditional economy.
On a production possibilities curve, a change from economic inefficiency to economic efficiency is obtained by
movement along the curve.
movement from a point inside the curve to a point on the curve.
movement from a point outside the curve to a point on the curve.
a change in the slope of the curve.
Assuming chicken drumstick and potatoes are complements, a decrease in the price of chicken drumstick will
decrease the demand for chicken drumstick.
increase the demand for chicken drumstick.
increase the demand for potatoes.
decrease the demand for potatoes.
An increase in the wage paid to vegetables pickers will cause the
demand curve for vegetables to shift to the right, resulting in higher prices for vegetables
demand curve for vegetables to shift to the left, resulting in lower prices for vegetables.
supply curve for vegetables to shift to the left, resulting in lower prices for vegetables.
supply curve for vegetables to shift to the left, resulting in higher prices for vegetables.
Agricultural minimum price supports are designed to
decrease the demand for agricultural products.
keep the prices of agricultural products high to benefit the farmers.
keep the price of food low for consumers
keep tax rates low.
Used furniture is an inferior good. An increase in income or wealth is likely to
increase the demand for used furniture.
increase the supply for used furniture.
decrease the supply for used furniture
decrease the demand for used furniture
what is the formula to calculate price elasticity of demand?
the percentage change in quantity demanded into the percentage change in
supply.
the percentage change in price into the percentage change in demand.
the percentage change in quantity demanded into the percentage change in
the price.
the percentage change in demand into the percentage change in the income.
Consumers buy candy bars regardless of the price. What is the consumer’s elasticity of demand for candy bars?
-1
0
-4
infinity
The cross elasticity of demand for mango with respect to the price of banana is 0.3. Other things being equal, a 10% increase in the price of banana will
have no effect on the amount of mango purchase.
decrease the amount of mango purchased by 3%.
decrease consumer expenditure on mango.
increase the amount of mango purchased by 3%.
A firm producing toenail clippers employs 4 workers. At current levels of operation, each workers produces 40 clippers per week. Assuming labor is the only variable input and the weekly wage is RM400 per worker
average variable cost is RM10.
average cost is RM10
average variable cost is RM30
average fixed cost is RM10
If a firm enjoys economies of scale as it expands in the long run, then, any given input prices
average cost will remain constant as the firm expands
average cost will increase as the firm expands.
average fixed cost will decrease as the firm expands.
average cost will decrease as the firm expands.
A firm operating out a small factory producing DVD Players calculates that the marginal product of labor is 43 DVD Players per labor. The average product of labor at the same level of production is calculated to be 28 DVD Players per labor. It follows that
the average product of labor will decrease if the firm increases output.
the average product of labor will increase at first if the firm increases output.
the average product of labor is at a maximum.
there will be no change in the average product of labor if the firm increases
output
A profit-maximizing firm will increase production when
Marginal revenue is less than marginal cost
Marginal revenue equals marginal cost.
Marginal revenue exceeds the price.
Marginal revenue exceeds marginal cost.
When profits are zero and maximized for a competitive firm in the short run, all of the following are generally true except
marginal cost is increasing.
price equals marginal revenue
marginal revenue is equal to marginal cost
marginal revenue is zero
At the level of output where marginal revenue equals marginal cost, assume that the price of a competitive firm’s product is between the firm’s average cost curve and its average variable cost curve. In this case the firm would
shut down the operation
continue to operate in the short run
decrease output to reduce costs
increase output to increase profit
When a monopoly industry in the long-run equilibrium
firms earn zero economic profit.
firms earn economic profit
price equals minimum possible average cost
price equals marginal cost
Price discrimination by a monopoly firm can cause
total cost to increase
profit to decrease
profit to increase
average cost to increase
An improvement in the production technology will
tend to increase equilibrium price
shift the supply curve to the left
shift the supply curve to the right
shift the demand curve to the left
The hierarchy of Islamic Goods
Kamaliyyah, Tarafiyyah, Dharuriyyah, Hajiyyah.
Dharuriyyah, Hajiyyah, Kamaliyyah, Tarafiyyah.
Hajiyyah, Kamaliyyah, Dharuriyyah, Tarafiyyah.
Tarafiyyah, Dharuriyyah, Hajiyyah, Kamaliyyah
If the price of an egg is reduced from RM0.25 to RM0.20, the quantity demanded by consumers will increase from 10 dozens per week to 12 dozens per week. The price elasticity of demand is:
0.04
4.80
0.80
1.00
Price control are
established by firms with monopoly powers.
usually enacted if government believe that the market price of a good or service is unfair to buyers or sellers.
used to make market more efficient.
nearly always effective in eliminating inequalities
Producer will pay more tax if
the elasticity of demand is zero.
the elasticity of supply is zero.
the elasticity of supply is elastic.
the elasticity of supply is inelastic
Diseconomies of scale is reflected by the
increase in the long run average cost.
increase in short run marginal cost.
increase in short run marginal cost.
decrease in long run price
The distinguishing feature of the short run is that
input prices are variable.
at least one input is fixed.
the amount of all resources can be varied.
the level of output is fixed
The law of diminishing returns indicates that
the demand for goods produced by purely competitively industries is down sloping
extra units of a variable resource are added to fixed resource the extra or marginal product will decline beyond some point.
beyond some point the extra utility derived from additional units of product will yield the consumer smaller and smaller extra amounts of satisfaction.
because the economics and diseconomies of scale a competitive firm's long run average cost curve will be U-shaped
When the amount of output increases the _______________ will decrease
marginal cost
average variable cost
average fixed cost
average cost
Monopolistic competition is characterized by which of the following attributes?
Product differentiation.
Free entry.
Price taker.
A few producers
Which of the following is not a characteristic of oligopoly?
Differentiated product.
A few large firms.
A perfectly elastic demand curve.
Mutual interdependence among firms
When a perfectly competitive firm is in long run equilibrium, all of the following are true except
long run marginal cost is equal to marginal revenue.
long run marginal cost curve is at its minimum point.
price and long run average cost are equal to each other.
firms in the industry are earning normal profit
If the cross elasticity of demand between product J and K is 0.5, then a 10% increase the price of product J would result in
a 10% increase in the quantity demanded of product K.
a 2.5% increase in the quantity demanded of product K.
a 0.5% increase in the quantity demanded of product K.
a 5% increase in the quantity demanded of product K.
The price floor is set __________the equilibrium price.
equal to
lower than
higher than
none of the above
When the market price is lower than the equilibrium price, there is
a surplus
a shortage
both a shortage and a surplus
neither a shortage nor a surplus.
An increase in population tends to
increase in both equilibrium price and quantity.
decrease in both equilibrium price and quantity.
increase equilibrium price and decrease equilibrium quantity.
increase equilibrium quantity and decrease equilibrium price
The downward-sloping segment of the long-run average cost curve corresponds to:
Economies of scale
Diseconomies of scale
The decrease in average variable costs
Both economies and diseconomies of scale
Which of the following is true when the total product of labor is maximized?
Marginal product is increasing
Marginal product is negative.
Marginal product is zero.
Average product is increasing.
The Law of Diminishing Marginal Returns happens when
the production is in the long run.
marginal product increases.
marginal product decreases.
average product is zero
A perfectly elastic demand curve is a characteristic feature of
oligopoly
monopoly
monopolistic competition
perfect competition
In which market structure, entry is the most difficult?
pure competition
monopolistic competition
oligopoly
pure monopoly
In monopolistically competitive market, firms achieve some degree of market power
by producing differentiated products.
by virtue of size alone.
because of barriers to entry into the industry.
because of barriers to exit from the industry
Mutual interdependence means that
each firm produces a product identical to the products produced by its rivals
each firm faces a perfectly elastic demand for its product.
each firm must consider the reactions of its rivals when it determines its pricing strategy.
each firm produces a product similar but not identical to the products produced by its rivals
sketch a demand curve
sketch a supply curve
Ahmad runs a catering business. He received a wedding food order for 1000 people and needs a worker to help him with the order. The demand for a worker is considered
joint supply
joint demand
derived demand
competitive demand
Kunti Bakery observes the following: When it raises the price of pie, the total revenue from pie increases and vice versa. This indicates that
the demand for pie must be unitary elastic
the demand for pie must be inelastic
the demand for pie must be elastic
there are many substitutes for pie
This market structure produces homogenoue or differentiated products. Which market structure is this?
(a)
This market structure has large numbers of firms.
Perfect competition
Oligopoly
Monopoly
Monopolistic competition
To enter this market structure, is it almost impossible.
Perfect competition
Monopoly
Monopolistic competition
Oligopoly
What is the formula for Profit
(a)
In a perfect competitive labour market, a firm hires until
MRP<MWC
MRP = wage rate
MRP > wage rate
none of the above
The formula for economic rent
(a)
Accounting profit > economic profit
TRUE
FALSE
Name 4 types of market structure
(a)
This market structure is the price maker
monopoly
monopolistic
competition
perfect competition
oligopoly
Ponti industry has RM2000in variable costs and RM500 in fixed costs when its output is 250 units. The firm sells each unit of output at the price of RM25. If the price of each output drops to RM10, should the firm continue its operation in the short run?
No, because profit is zero
No, because price is less than ATC
Yes, because price is less than AVC
Yes, because price is greater than AVC
At the price of RM20, a monopoly firm's marginal revenue and marginal cost is equal to 10 units of output. At the same output, the price of the demand curve and average total cost is RM25 and RM21, respectively. The total profit is___.
RM20
RM40
RM21
RM400
in monopoly firm, equilibrium quantity occurs when
(a)
If a firm produces 20,000 bottles of tomato sauce in a month and sells them for RM1.50 per bottle, the implicit cost of production is RM5000. The explicit cost of production is RM15000. Thus, the firm has an economic profit of ______ and accounting profit of _______.
RM15,000:RM5,000
RM5,000:RM15,000
RM15,000; RM10,000
RM10,000;RM15,000
In the short run, a firm which produces 100 units of output has an average total cost of RM200 and average variable cost of RM150. The firm's total fixed cost is
RM5000
RM500
RM50
RM0.50
