ECO402 Final Term MCQs Updated by VU Topper RM

Q1. Vu-Topper RM (1 marks)

The benefit of a subsidy accrues mostly to producers: A. In every instance. B. If Ed/Es is small. C. If Ed and Es are equal. D. If Ed/Es is large.

Q2. Vu-Topper RM (1 marks)

When a product transformation curve is bowed out, there will be __________ in production. A. Economies of scale

B. Diseconomies of scale

C. Diseconomies of scope D. Economies of scope

Q3. Vu-Topper RM (1 marks)

Suppose total revenue of a monopolist increases from Rs.105 to Rs.108 as a result of increase in output from 3 units to 4 units. The marginal revenue for the 4th unit will be: A. 4 B. 8

C. 3

D. 2

Q4. Vu-Topper RM (1 marks)

In the long run under perfect competition a firm produces at a point where: A. Price is greater than long run average cost B. Price is less than long run average cost C. Price is greater than long run marginal cost

D. Price is equal to long run average cost

Q5. Vu-Topper RM (1 marks)

All of the following options are true for monopoly EXCEPT?

1. The profit maximizing output is the one at which marginal revenue and marginal cost are equal.
2. The profit maximizing output is the one at which the difference
3. At the profit maximizing output, price equals marginal cost.
4. The monopolist's demand curve is the same as the market demand curve.

Correct answer: At the profit maximizing output, price equals marginal cost.

Q6. Vu-Topper RM (1 marks)

In the long run, which of the following is considered a variable cost?

1. All of the given options.
2. Expenditures for raw materials.
3. Expenditures for capital machinery and equipment.
4. Expenditures for wages.

Correct answer: Expenditures for raw materials.

Q7. Vu-Topper RM (1 marks)

Average revenue for a monopolist is: A. Equal to marginal revenue. B. Greater than marginal revenue. C. Less than marginal revenue. D. Greater than price.

Q8. Vu-Topper RM (1 marks)

Due to imposition of a specific tax per unit on a product imposed by the government, consumer surplus will ________ and producer surplus will

A. Increase; increase B. Decrease; increase C. Decrease; decrease

D. Increase; decrease

Q9. Vu-Topper RM (1 marks)

With respect to monopolies, deadweight loss refers to the: A. None of the given options. B. Lost consumer surplus from monopolistic pricing. C. Net loss in consumer and producer surplus due to a monopolist’s pricing strategy/policy. D. Socially unproductive amounts of money spent to obtain or acquire a monopoly

Q10. Vu-Topper RM (1 marks)

Which of the following factors determine the firm's elasticity of demand?

1. Elasticity of market demand.
2. Number of firms.
3. Nature of interaction among firms.
4. All of the given options.

Correct answer: Elasticity of market demand.

Q11. Vu-Topper RM (1 marks)

The monopolist that maximizes profit: A. Does not impose a cost on society because the selling price is above marginal cost. B. Imposes a cost on society because the selling price is above marginal cost. C. Does not impose a cost on society because price is equal to marginal cost. D. Imposes a cost on society because the selling price is equal to marginal cost.

Q12. Vu-Topper RM (1 marks)

Ali knows average total cost and average variable cost for a given level of output. Which of the following costs can not be determined from this information?

1. Variable cost