ECO401 Final Term Past Paper Session 2

FINALTERM EXAMINATION ECO401- Economics (Session - 2)

Q1. Aslam decides to stay at home and study for his exam rather than going out with his friends to a movie. His dilemma is an example of: (1 marks)

1. The economic perspective.
2. Marginal analysis.
3. Allocative efficiency.
4. Opportunity cost.

Correct answer: Opportunity cost.

Q2. A good for which income and quantity demanded are inversely related is known as: (1 marks)

1. Inferior good.
2. Complementary good.
3. Normal good.
4. None of the given options.

Correct answer: Inferior good.

Q3. An increase in supply is shown by: (1 marks)

1. Shifting the supply curve to the left.
2. Shifting the supply curve to the right.
3. Upward movement along the supply curve.
4. Downward movement along the supply curve.

Correct answer: Shifting the supply curve to the right.

Q4. Price floor results in: (1 marks)

1. All of the given options.
2. Excess supply.
3. Equilibrium.
4. Excess demand.

Correct answer: Excess demand.

Q5. The price elasticity of demand measures the responsiveness of quantity demanded to: (1 marks)

1. Quantity demanded.
2. Quantity supplied.
3. Price.
4. Output.

Correct answer: Price.

Q6. Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively. The marginal utility for the sixth unit is: (1 marks)

1. -14.
2. 14.
3. 83.
4. 97.

Q7. Indifference curves that are convex to the origin reflect: (1 marks)

1. An increasing marginal rate of substitution.
2. A decreasing marginal rate of substitution.
3. A constant marginal rate of substitution.
4. A marginal rate of substitution that first decreases, then increases.

Correct answer: A decreasing marginal rate of substitution.

Q8. To find the profit maximizing level of output, a firm finds the output level where: (1 marks)

1. Price equals marginal cost.
2. Marginal revenue and average total cost.
3. Price equals marginal revenue.
4. None of the given options.

Correct answer: Price equals marginal cost.

Q9. As compared to existing firms, a new firm entering in monopolist market has: (1 marks)

1. High costs.
2. Low costs.
3. Equal costs.
4. None of the given options.

Correct answer: High costs.

Q10. A firm is charging a different price for each unit purchased by a consumer. This is called: (1 marks)

1. First-degree price discrimination.
2. Second-degree price discrimination.
3. Third-degree price discrimination.
4. None of the given options.

Correct answer: Third-degree price discrimination.