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WorksheetsFDNB1044 Economics MCQ Quiz
Total questions: 80
Worksheet time: 1hrs 20mins
Scarcity in economics means:
Unlimited resources, unlimited wants
Limited resources, unlimited wants
Unlimited resources, limited wants
Limited resources, limited wants
The Production Possibility Curve (PPC) shows:
Maximum possible output combinations of two goods
Actual production in an economy
The demand for goods in the market
Government spending
Opportunity cost is:
The cost of producing one more unit
The next best alternative forgone
The amount of money spent on production
The profit earned from production
If moving from point C to D on the PPC requires giving up 1.5 kg of grapes to gain 1 kg of apples, the opportunity cost of 1 kg of apples is:
1.5 kg grapes
1 kg grapes
2 kg grapes
0.5 kg grapes
A movement along a demand curve occurs when:
Price changes
Consumer income changes
Tastes change
Technology changes
A shift in the demand curve occurs when:
Price of the good changes
Only supply changes
Non-price factors change
Quantity supplied changes
Normal goods have:
Positive relationship with income
Negative relationship with income
No relationship with income
Constant demand regardless of income
Inferior goods have:
Positive income elasticity
Negative income elasticity
Zero income elasticity
Elastic demand
Public goods are:
Rival and excludable
Non-rival and non-excludable
Rival but non-excludable
Excludable but non-rival
Merit goods are provided by the government because:
They are harmful
They are under-consumed if left to the market
They have no cost
They are private goods
Which is an example of a merit good?
Cigarettes
Education
Gambling
Private security
In Sabah and Sarawak, scarcity is most evident in:
Freshwater resources in remote villages
Shopping malls
Imported luxury cars
Social media usage
Which statement about PPC is true?
Points inside PPC are inefficient
Points outside PPC are always attainable
PPC cannot shift over time
PPC shows only market prices
An increase in productive resources will:
Shift PPC outward
Shift PPC inward
Cause movement along PPC
Reduce opportunity cost
If the price of coconuts rises, ceteris paribus:
Quantity demanded increases
Quantity demanded decreases
Demand curve shifts right
Supply curve shifts left
Market equilibrium occurs when:
Demand equals supply
Demand is greater than supply
Supply is greater than demand
Prices are falling
A price above equilibrium causes:
Shortage
Surplus
Market clearing
Price stability
A price ceiling set below equilibrium will cause:
Surplus
Shortage
No change
Increase in supply
If the government sets RM7 as maximum price for coconuts when equilibrium is RM10, there will be:
Shortage
Surplus
Equilibrium
Excess supply
Law of demand states that:
Price and quantity demanded move in the same direction
Price and quantity demanded move in opposite directions
Price affects supply only
Demand is unaffected by price
Law of supply states that:
Price and quantity supplied move in the same direction
Price and quantity supplied move in opposite directions
Price affects demand only
Supply is fixed
When demand increases and supply remains constant:
Price falls
Price rises
Price unchanged
Supply decreases
When supply increases and demand remains constant:
Price rises
Price falls
Price unchanged
Demand decreases
At equilibrium price:
Quantity demanded > quantity supplied
Quantity supplied > quantity demanded
No shortage or surplus exists
Market fails
A leftward shift in demand curve means:
Increase in demand
Decrease in demand
Increase in supply
Decrease in supply
If supply decreases while demand is constant:
Price falls
Price rises
Price unchanged
Demand increases
Consumer income increase will shift demand for normal goods:
Right
Left
Downward along curve
Upward along curve
If two goods are substitutes, an increase in price of one will:
Increase demand for the other
Decrease demand for the other
Not affect demand
Decrease supply
If two goods are complements, an increase in price of one will:
Increase demand for the other
Decrease demand for the other
Not affect demand
Increase supply
A market is in disequilibrium when:
Price is at equilibrium
Surplus or shortage exists
No buyers exist
No sellers exist
What happens to the demand curve when consumer preferences shift towards a product?
It shifts left
It shifts right
It remains unchanged
It becomes vertical
Which of the following would likely cause a leftward shift in the supply curve?
Increase in production costs
Technological advancements
Decrease in consumer demand
Increase in the number of suppliers
What is the effect of a price floor set above equilibrium?
Increases demand
Creates a surplus
Creates a shortage
No effect on the market
If PED > 1, demand is:
Elastic
Inelastic
Unitary
Perfectly inelastic
If PED = 1, demand is:
Elastic
Inelastic
Unitary elastic
Perfectly elastic
Which factor affects PED the most?
Availability of substitutes
Government taxes
Number of sellers
Law of supply
Luxury goods tend to have:
Elastic demand
Inelastic demand
Perfectly elastic demand
Perfectly inelastic demand
Necessities tend to have:
Elastic demand
Inelastic demand
Perfectly elastic demand
Unitary demand
Cross elasticity of demand measures:
Change in demand for one good due to change in price of another
Change in supply due to change in price
Change in income due to change in price
Change in demand due to change in income
Positive cross elasticity means goods are:
Complements
Substitutes
Unrelated
Inferior goods
Negative cross elasticity means goods are:
Complements
Substitutes
Unrelated
Normal goods
Income elasticity of demand measures:
Change in demand due to change in income
Change in supply due to change in income
Change in income due to change in demand
Change in price due to change in demand
If income elasticity > 0, the good is:
If income elasticity < 0, the good is:
If income elasticity > 1, the good is:
Luxury
Necessity
Inferior
Complement
If income elasticity between 0 and 1, the good is:
Luxury
Necessity
Inferior
Complement
PED for addictive goods like cigarettes is usually:
Elastic
Inelastic
Perfectly elastic
Unitary elastic
In rural Sabah, demand for basic rice is likely to be:
Elastic
Inelastic
Perfectly elastic
Unitary elastic
If the price of Good X decreases and demand for Good Y increases, X and Y are:
Complements
Substitutes
Unrelated
Inferior goods
If the price of Good X decreases and demand for Good Y decreases, X and Y are:
Complements
Substitutes
Unrelated
Normal goods
Total utility is:
Additional satisfaction from one more unit
Overall satisfaction from consumption
Price paid for goods
Cost of production
Marginal utility is:
Additional satisfaction from consuming one more unit
Overall satisfaction from consumption
Price paid for goods
Cost of production
Law of diminishing marginal utility states that:
Marginal utility increases with each additional unit
Marginal utility decreases after a certain point
Total utility decreases as consumption increases
Price falls as demand rises
If a bowl of salad costs RM3 and gives 15 utils, MU per RM is:
5
45
3
15
Indifference curves slope:
Vertical
Upwards
Flat
Downwards
Higher indifference curves represent:
Lower satisfaction
Zero satisfaction
Equal satisfaction
Higher satisfaction
Indifference curves are:
Convex to the origin
Concave to the origin
Straight lines
Parallel lines
Two indifference curves can:
Intersect
Be the same curve for all goods
Always be parallel
Never intersect
Budget line shows:
Government spending
All possible production combinations
Only the most preferred combinations
All combinations of goods affordable at given income and prices
A shift in the budget line can be caused by:
Change in income
Change in prices
Both A and B
Change in taste only
If income increases, budget line shifts:
Outward
Inward
Rotates clockwise
Rotates anticlockwise
If price of one good decreases, budget line:
Rotates outward along that axis
Rotates inward along that axis
Shifts parallel inward
Shifts parallel outward
At consumer equilibrium, the slope of the indifference curve equals:
Price ratio of two goods
Total utility
Marginal utility
Income level
Total product (TP) is:
Output per worker
Maximum possible output
Output at zero workers
Total output produced by all workers
Marginal product (MP) is:
Price multiplied by quantity
Output per unit of capital
Total product divided by total input
Change in total product divided by change in input
When MP is rising, total product is:
Falling
Constant
Increasing at a decreasing rate
Increasing at an increasing rate
The law of diminishing returns states:
Returns never change
Adding more of a variable input reduces total product
Adding more of a variable input will always increase marginal product
Adding more of a variable input will eventually reduce marginal product
Stage 1 of production ends when:
MP = 0
MP reaches its maximum
TP reaches its maximum
AP = MP
In Stage 2 of production:
TP increases, MP is positive but decreasing
TP decreases, MP is negative
TP is constant
MP increases
Stage 3 of production begins when:
MP is negative
MP is zero
AP is constant
TP is increasing
A rational producer operates in:
Stage 1
Stage 2
Stage 3
All stages equally
In short run, at least:
All inputs are variable
One input is fixed
No inputs are fixed
All inputs are fixed
In long run, all inputs are:
Fixed
Variable
Constant
Irrelevant
MP is calculated by:
TP ÷ number of inputs
ΔTP ÷ Δinput
TP × price
Price ÷ quantity
If TP is 125 units with 3 workers, and 85 units with 2 workers, MP of 3rd worker is:
40
85
125
3
The point where TP is maximum, MP is:
Positive
Negative
Infinite
Zero
Increasing returns to scale means:
Output increases more than proportionately to inputs
Output increases less than proportionately to inputs
Output is constant when inputs increase
Output decreases when inputs increase
Constant returns to scale means:
Output changes proportionately to inputs
Output changes more than inputs
Output changes less than inputs
Output decreases when inputs increase
Fixed costs are:
Costs that change with output
Costs that vary per unit
Costs that are zero in short run
Costs that remain constant regardless of output
Variable costs are:
Costs that change with output
Costs that remain constant regardless of output
Always zero
Not part of total cost
