0% Created on November 11, 2024 Economics Full Book Test 3rd Test.Advertisements 1 / 50 1. The kinked demand curve theory of oligopoly suggests that: a) Price increases by one firm may not be followed by others, while price cuts are followed b) Firms in an oligopoly will always maintain prices c) Firms have perfect knowledge and react instantly to price changes d) Demand is perfectly elastic in an oligopoly 2 / 50 2. Which of the following statements is true in the short run for a firm in a perfectly competitive market? a) The firm can earn supernormal profits only b) The firm can earn normal profits, supernormal profits, or incur losses c) The firm can influence the market price d) The firm always breaks even 3 / 50 3. If the price elasticity of supply for a product is zero, this means that: a) Supply decreases as prices increase b) Supply does not respond to changes in price c) Supply increases as prices increase d) Supply is infinite at all price levels 4 / 50 4. In which scenario would a firm maximize its profit in a perfectly competitive market? a) Where total revenue is highest b) Where marginal revenue equals average revenue c) Where marginal cost equals marginal revenue d) Where price equals average total cost 5 / 50 5. When the cross-price elasticity of demand between two goods is positive, the goods are: a) Complements b) Substitutes c) Normal goods d) Inferior goods 6 / 50 6. In which of the following situations would a firm experience diseconomies of scale? a) Increased output leads to constant costs b) Increased output results in higher long-run average costs c) Output increases and average costs decrease d) Average costs are minimized 7 / 50 7. Economies of scale in production occur when: a) Marginal costs increase with increased output b) There is an increase in the fixed costs c) There is an increase in the fixed costs d) Long-run average costs decrease with increased output 8 / 50 8. Which cost will always be lower than the average total cost in the short run? a) Marginal cost b) Fixed cost c) Average variable cost d) Total cost 9 / 50 9. When the marginal cost of production is less than the average total cost, the average total cost: a) Remains constant b) Decreases c) Increases d) Equals the average variable cost 10 / 50 10. If a monopolist practices perfect price discrimination, the consumer surplus will: a) Be maximized b) Be reduced to zero c) Remain constant d) Be divided equally between consumer and producer 11 / 50 11. A natural monopoly exists when: a) A firm controls a natural resource b) The government grants exclusive rights to a company c) One firm can supply the entire market at a lower cost than multiple firms d) Market demand is perfectly elastic 12 / 50 12. Collusion is most likely to occur in which market structure? a) Perfect competition b) Monopolistic competition c) Oligopoly d) Monopoly 13 / 50 13. In which market structure is non-price competition most prevalent? a) Perfect competition b) Monopolistic competition c) Monopoly d) Oligopoly 14 / 50 14. Which of the following features is exclusive to a monopolistically competitive market? a) Product differentiation b) Perfect substitutes c) A single producer d) No barriers to entry 15 / 50 15. When a firm is operating under increasing returns to scale, a proportional increase in all inputs will lead to a) An increase in output by more than the proportional increase in inputs b) An increase in output by less than proportional inputs c) A decrease in overall output d) No change in output 16 / 50 16. Structural unemployment is most often caused by: a) A mismatch between workers’ skills and available jobs b) Seasonal changes in demand c) Insufficient demand for goods and services d) Cyclical economic downturns 17 / 50 17. Cost-push inflation typically occurs due to: a) An increase in consumer demand b) An increase in production costs c) Decreased supply of money d) Increased investment 18 / 50 18. If the Consumer Price Index (CPI) increases from 120 to 132, the inflation rate is approximately: a) 8% b) 10% c) 12% d) 6% 19 / 50 19. Gross National Product (GNP) differs from Gross Domestic Product (GDP) by: a) Including the value of all imports and exports b) Adding net income from abroad to GDP c) Excluding government spending d) Only measuring income generated within domestic borders 20 / 50 20. Price leadership, where one firm sets prices and others follow, is commonly associated with which market structure? a) Perfect competition b) Monopolistic competition c) Oligopoly d) Monopoly 21 / 50 21. Expansionary fiscal policy is typically used to: a) Reduce inflation b) Increase aggregate demand c) Decrease aggregate demand d) Lower public spending 22 / 50 22. When the central bank sells government bonds, it primarily aims to: a) Decrease the money supply b) Increase the money supply c) Reduce the interest rate d) Increase the reserve ratio 23 / 50 23. Which of the following policies would likely reduce demand-pull inflation? a) Lowering interest rates b) Increasing taxes c) Increasing government spending d) Reducing reserve requirements 24 / 50 24. The natural rate of unemployment includes: a) Seasonal unemployment only b) Frictional, structural, and cyclical unemployment c) Only cyclical unemployment d) Frictional and structural unemployment 25 / 50 25. Which of the following would NOT be counted as part of GDP? a) A used car sale b) Investment in new machinery c) Consumer spending on food d) Government spending on infrastructure 26 / 50 26. Which type of tax system is designed to redistribute income by taxing higher income earners at a higher rate? a) Proportional tax b) Regressive tax c) Progressive tax d) Lump-sum tax 27 / 50 27. When a country has high inflation and the central bank decides to raise interest rates, this policy is primarily intended to: a) Reduce aggregate demand b) Increase exports c) Increase consumer spending d) Increase money supply 28 / 50 28. Which of the following tools of monetary policy directly increases the money supply? a) Raising interest rates b) Selling government securities c) Lowering the discount rate d) Increasing reserve requirements 29 / 50 29. If the velocity of money is constant and the money supply grows by 3% while real GDP grows by 1%, according to the quantity theory of money, what will be the approximate inflation rate? a) 1% b) 2% c) 3% d) 4% 30 / 50 30. An increase in the reserve requirement set by the central bank will lead to: a) A decrease in the money supply b) An increase in lending c) Lower interest rates d) Higher levels of investment 31 / 50 31. A depreciating domestic currency is likely to result in: a) Higher export competitiveness b) Decreased cost of imports c) Increased supply of imports d) Reduced inflation 32 / 50 32. if a country applies a tariff on imported goods, the likely short-term outcome is: a) An increase in the supply of imported goods b) Higher prices for imported goods c) Decreased domestic production d) Increase in trade balance 33 / 50 33. The concept of comparative advantage suggests that a country should specialize in producing goods: a) For which it has the highest absolute production rate b) That it can produce using the least resources c) Where it has the lowest opportunity cost d) That yield the highest profit 34 / 50 34. A country with a trade surplus is experiencing: a) Exports less than imports b) Exports greater than imports c) Equal exports and imports d) Negative balance of payments 35 / 50 35. When a country’s currency appreciates, it is likely that: a) Exports become more competitive internationally b) Imports become cheaper c) Exports increase d) Trade balance improves 36 / 50 36. The paradox of thrift suggests that if everyone saves more during a recession: a) It may reduce overall demand and slow economic recovery b) It will lead to increased investment c) Economic growth will speed up d) Aggregate demand will remain stable 37 / 50 37. During an economic recession, which policy is most effective in stimulating growth? a) Increasing government spending b) Raising taxes c) Increasing interest rates d) Cutting public projects 38 / 50 38. A trough in the business cycle indicates: a) Maximum economic growth b) Minimum economic activity c) Rising inflation d) Peak unemployment 39 / 50 39. The phase of the business cycle where economic activity is at its peak and unemployment is low is called: a) Recession b) Boom c) Recovery d) Contraction 40 / 50 40. A leading economic indicator would be: a) Interest rate changes b) Stock market performance c) GDP growth rate d) Unemployment rate 41 / 50 41. A subsidy given by the government to encourage production of a good that has positive externalities will: a) Shift the supply curve leftward b) Shift the supply curve rightward c) Reduce demand for the good d) Decrease social welfare 42 / 50 42. Which of the following is a common solution for correcting a negative externality? a) Implementing a Pigovian tax b) Providing a subsidy c) Increasing consumer surplus d) Reducing price controls 43 / 50 43. The Coase Theorem suggests that externalities can be efficiently solved when: a) Governments impose taxes on polluters b) Market prices are perfectly competitive c) Property rights are well-defined and transaction costs are low d) Firms are regulated by the government 44 / 50 44. If a factory’s production imposes pollution costs on a nearby community, this is an example of: a) A positive externality b) A negative externality c) An internal cost d) A public good 45 / 50 45. A good that is non-excludable and non-rival in consumption is known as a: a) Private good b) Common resource c) Public good d) Club good 46 / 50 46. In Game Theory, a Nash equilibrium occurs when: a) All players are maximizing their payoffs without considering others b) Each player’s strategy is optimal, given the strategies of others c) There is always a dominant strategy d) One player can improve their payoff by changing strategies 47 / 50 47. The Laffer Curve illustrates that: a) Tax revenues first increase and then decrease as tax rates rise b) Lower tax rates always result in lower revenues c) Higher tax rates always increase government revenue d) There is no relationship between tax rates and tax revenue 48 / 50 48. Which of the following would increase the marginal productivity of labor in an economy? a) Increased access to better technology b) A higher minimum wage c) Increased immigration d) Higher unemployment benefits 49 / 50 49. When the minimum wage is set above the equilibrium wage, the result is likely to be: a) Full employment b) Unemployment c) A labor shortage d) Increased demand for labor 50 / 50 50. The labor force participation rate is defined as the: a) Percentage of the working-age population that is in the labor force b) Percentage of unemployed workers in the economy c) Total population employed in various sectors d) Ratio of full-time to part-time workers Your score isThe average score is 60% 0% Restart quiz Advertisements
