Microeconomics mcq pdf

Key Points The Consumer Price Index CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, which includes transportation, food, and medical care.

It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is a statistic for identifying periods of inflation or deflation. It does not include things like savings and investments, and can often exclude spending by foreign visitors. The CPI statistics incorporate professionals, self-employed, poor, unemployed, and retired people in the country but excludes non-metro or rural populations, farm families, armed forces, people serving in prison, and those in mental hospitals.

Answer Detailed Solution Below Option 3 : as the price rises, the demand falls. Key Points Law of Demand - The amount of a good that a consumer would optimally choose is likely to increase when the price of the good falls and it is likely to decrease with a rise in the price of the good.

This means the price rises, the demand falls. Hence option 3 is correct. However, this rule is not valid for high-value goods whose demand increases when the price rises. A fall in the price of one commodity would cause an increase in the demand of the complementary commodity.

For example, other factors being constant, fall in prices of sugar would increase the demand for tea and vice versa. This commodity is called the complementary commodity. Substitute goods or competing goods are those which can be used in place of a commodity. Tea and coffee are substitute goods. If there is a rise in the prices of tea, there is an increase in demand for coffee. Many sellers, many buyers Few sellers, few buyers Few sellers, many buyers Many sellers, few buyers. Few sellers, many buyers Few sellers, many buyers is a basic characteristic of 'Oligopoly'.

Oligopoly is a situation where there are only a few sellers who sell different or identical products and dominate the market since they have control over the price of the product. Technological, legal, or economic factors contribute to the dissolution or formation of oligopolies. The statement "Supply creates its own demand" is given by J. Jean-Baptiste Say was a French economist who had liberal views and argued in favour of competition and free trade. He is best known for Say's law, which is also known as the law of markets.

Thomas Jefferson served as the third president of the United States from to He also served as the second vice president of the United States from to James Madison served as the fourth president of the United States from to David Ricardo was a classical economist best known for his theory on wages and profit and the labour theory of value.

Answer Detailed Solution Below Option 3 : slopes down. The correct answer is slopes down. The demand curve is the relationship between the price and quantity o f a good or service. There is an inverse relationship between price and demand and due to this the demand curve always has a downward slope.

The cigarette industry The barber shop The welding shop Wheat growing farmers. Key Points An oligopoly is a market where industry or sales are dominated by a small group of sellers.

It can result in collusion between sellers that reduces the market competition and leads to a higher price for consumers. Oligopoly markets share some common features and less concentrated than monopoly and more concentrated than a competition system. The cigarette industry is an oligopoly that is dominated by a handful of players in domestic and international markets. As a result, competition is rare in the industry, and the incentive for innovation is also low.

Other examples of oligopoly: automobile industry, airlines, soft-drink companies, etc. The correct answer is Minimum Support Price.

Additional Information It is announced by the government of India every year before the sowing season and provides incentives to the farmers for raising the production of their crops. The crops were selected based on the recommendations of the commission for agricultural costs and Prices CACP. If the market price for the commodity falls below the minimum support price due to the issues in the market, government agencies purchase the entire quantity at the announced minimum price.

In India, there are twenty-two crops covered under Minimum Support Price. The 22 mandated crops under MSP consist of 14 Kharif crops, 6 rabi crops, and two other commercial crops. Some important minimum support price crops in India are: Paddy, wheat, barley, jowar, bajra, maize, and ragi. Groundnut, mustard, sunflower seed, sesamum, and safflower seed. The opportunity cost is maximum The opportunity cost is zero The opportunity cost is negative The good having the highest price out of its substitutes.

Option 2 is correct. A free good is a good with zero opportunity cost. This means it can be consumed in as much quantity as needed without reducing its availability to others. Example sunlight, ideas, music or air. Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. Answer Detailed Solution Below Option 3 : 1, 2 and 3.

The correct answer is 1, 2 and 3. Important Points Demand is the number of goods that the customers are ready and able to buy at several prices during a given time frame. The association between price and quantity demanded is also called a Demand curve. When the price of a commodity falls, its demand rises and when its price rises, its demand falls. Hence, statement 1 is correct. When the price of the complementary goods rises then demand for the given commodity falls and vice versa.

Hence, statement 3 is correct. Basmati Rise Inferior Goods: These are the goods whose demand falls with the rise in income and vice versa. Low-quality rice. Necessities: A third category is also there, necessities, demand for these generally does not change with change in income e. We will only cover it once. Likewise, questions may measure more than one standard, drawing on the simultaneous application of multiple skills and concepts.

The 60 questions come from the seven units of the AP Macro course. Jumpstart student success with one-on-one educator support and time-saving tools, all within the SaplingPlus digital platform.

Part 1 consists of 25 AP level multiple choice questions. Students will be expected to apply quantitative and mathematical skills to economics. AP Stylebook, 55th Edition spiral-bound print Published in , the 55th edition of The Associated Press Stylebook and Briefing on Media Law includes more than new or revised entries, with chapters covering data journalism, business, religion and sports terms, as well as media law, news values, punctuation If you earned a 4 or a 5 on the AP macro test, you can obtain 6 units of Lawrence credit, and you should take Economics Note on exams: There are differences between the paper and digital versions of some AP Exams, and those variations differ by course.

Section 1: Introduction. You have 70 minutes for the multiple-choice section which gives you a little over a minute per question.

View our options for online private tutoring and exam practice to get you ready for a great score on your AP test. Total scores on the multiple-choice section are based on the number of questions answered correctly. Assessment Overview.

Time Limit. It emphasizes the study of national income, price determination, economic performance measures, economic growth, and international economics. But this was an unforgettable class to be sure. Economics Online variety of Econ videos!!. Video 3. Multiple-Choice Questions. Informational graphics, such as tables, charts, and graphs, will accompany some of the passages, but no math is required. Planet Holloway AP physics C. PowerPoint: 6. The first five of these questions may require twelve minutes each to answer and normally relate to one topic or category.

The first section contains 60 multiple-choice questions. Selected values of R t are given in the table above. A stock in a company is: A. View a summary of all AP Exam formats. Art History. You can practice FRQs and tons of multiple choice questions all from your mobile device for the low, low price of. The second section is the free-response Questions require the use of economics content knowledge and reasoning across the range of course topics and skills in skill categories 1, 2, and 3.

Download latest questions with multiple choice answers for Class 1 to class 12 in pdf free or read online in online reader free. Measure the rate at which one good can be substituted for another. Measure the rate at which a consumer is willing to trade one good for another. Represent the quantity of each good that could be purchased if all of the budget were to that good. As a result, the demand curve for telephone service in Pakistan: Select correct option: Has shifted to the right.

Select correct option: Giffen Real price Income Substitution The function which shows combinations of inputs that yield the same output is called a n : Select correct option: Isoquant curve. Boeing Corporation and Airbus Industries are the only two producers of long-range commercial aircraft. Select correct option: Labour Land Capital Demand www. Select correct option: Consumers must make the best purchasing decisions they can, given their limited incomes.

Workers do not have as much leisure as they would like, given their wages and working conditions. The law of diminishing returns applies to: Select correct option: The short run only. For an inferior good: Select correct option: The price elasticity of demand is negative; the income elasticity of demand is negative.

The price elasticity of demand is positive; the income elasticity of demand is negative. REF: When the income-consumption curve has a negative slope, the quantity demanded decreases with income. The income elasticity of demand is negative. The snob effect refers to the to own exclusive or unique goods. A production function in which the inputs are perfectly substitutable would have isoquants are: that www. An increase in income, holding prices constant, can be represented as: Select correct option: A change in the slope of the budget line.

The slope of the budget line, faced by an investor deciding what percentage of her portfolio place in a to risky asset, increases when the: Select correct option: Standard deviation of the portfolio gets smaller.

Select correct option: The behavior of individual consumers Unemployment and interest rates The behavior of individual firms and investors The behavior of individual consumers, firms and investors Jane is trying to decide which courses to take next semester.

She has narrowed down her tochoice two courses Microeconomics and Macroeconomics. She cannot decide which of the two courses to take. Violate the assumption that more is preferred to less.

The level of income depends on the level of utility The law of diminishing returns refers to diminishing: Select correct option: Total returns. Production possibilities frontier Moving down along a demand curve for apples: Select correct option: Consumer well-being decreases. REF: The risk premium is the amount of money that a risk-averse person would pay to avoid a risk. Select correct option: Giffen Real price Income Substitution www. Zero because price equals marginal costs.

Positive because price exceeds average variable costs. Positive because price exceeds average total costs. Governments may successfully intervene in competitive markets in order to achieve economic efficiency: Select correct option: At no time; competitive markets are always efficient without government intervention. In cases of positive externalities only. In cases of both positive and negative externalities.

What happens in a perfectly competitive industry when economic profit is greater than zero? Select correct option: Existing firms may get larger. New firms may enter the industry. Firms may move along their LRAC curves to new outputs. Which of the following is NOT true about price floors? Select correct option: Consumer surplus is always lower than it would be in the competitive equilibrium. Producer surplus could be lower, higher, or the same as it would be in competitive equilibrium.

Producer surplus could be negative as the result of a price floor. Producers will often respond to a price floor by cutting production to the point at which price equals marginal cost. Indifference curves that are convex to the origin reflect: www. A decreasing marginal rate of substitution. A constant marginal rate of substitution. A marginal rate of substitution that first decreases, then increases. Which of the following statements is true regarding the differences between economic and accounting costs?

Select correct option: Accounting costs include all implicit and explicit costs. Economic costs include implied costs only. Accountants consider only implicit costs when calculating costs. Accounting costs include only explicit costs. Rabia and Samina are shopping for new cars one each. A decreasing-cost industry has a downward-sloping: Select correct option: Long-run marginal cost curve. Short-run average cost curve.

Short-run marginal cost curve. Long-run industry supply curve. Producer surplus is measured as the: Select correct option: Area under the demand curve above market price. Entire area under the supply curve. Area under the demand curve above the supply curve. Area above the supply curve up to the market price. In a constant-cost industry, an increase in demand will be followed by: Select correct option: www. An increase in supply that will not change price from the higher level that occurs after the shift.

An increase in supply that will bring price down below the level it was before the demand shift. The "perfect information" assumption of perfect competition includes all of the following except one. Which one? Select correct option: Consumers know their preferences. Consumers know their income levels.

Consumers know the prices available. Consumers can anticipate price changes. A Giffen good: Select correct option: Is always the same as an inferior good. Is the special subset of inferior goods in which the substitution effect dominates the income effect. Is the special subset of inferior goods in which the income effect dominates the substitution effect.

Must have a downward sloping demand curve. If the supply of good X increases: Select correct option: The demand for both Y and Z will increase The demand for Y will increase while the demand for Z will decrease The demand for Y will decrease while the demand for Z will increase The demand for both Y and Z will decrease Which of the following can be thought of as a barrier to entry?

Select correct option: Scale economies. Strategic actions by incumbent firms. Is a hypothesis used to test economic theory. Is a statement of what ought to be, not what is.

Is a statement of what will occur if certain assumptions are true. The extra value that consumers receive above what they pay for that good is called: Select correct option: Producer surplus Utility Marginal utility Consumer surplus The point at which AC intersects MC is where: Select correct option: AC is decreasing. MC is at its minimum. AC is at its minimum. AC is at its maximum. A normal good but not a luxury. An inferior good. A Giffen good. What happens in the market for airline travel when the price of traveling by rail decreases?

Select correct option: The demand curve shifts left. The demand curve shifts right. The supply curve shifts left. The supply curve shifts right. Indifference curves that are convex to the origin reflect: Select correct option: An increasing marginal rate of substitution. Marginal utility will rise Expenditure on the good will increase Marginal utility will decline Prospective sunk costs: Select correct option: Are relevant to economic decision-making. Are considered as investment decisions.

Rise as output rises. Do not occur when output equals zero An isoquant: Select correct option: Must be linear. Cannot have a negative slope.

Is a curve that shows all the combinations of inputs that yield the same total output. Is a curve that shows the maximum total output as a function of the level of labor input. Which of the following would cause a shift to the right of the supply curve for gasoline? A increase in the price of public transportation. A large decrease in the price of large automobiles.

A large reduction in the costs of producing gasoline. II only. III only. II and III only. Lower prices to gain revenue from extra volume.

Shut down immediately, but not liquidate the business. Continue operating, but plan to go out of business. The amount of output that a firm decides to sell has no effect on the market price in a competitive industry because: Select correct option: The market price is determined through regulation by the government.

The firm supplies a different good than its rivals. The firm's output is a small fraction of the entire industry's output.