ECO402 Midterm File 1

ECO402 MIDTERM PAST PAPER · LECTURE=1-18 · Lesson #1

1: The study which deals with the utilization of limited resources in the production of useful goods and services is called as: Select the correct option a. Sociology

b. Political science

c. Economics

d. Geography

Q2. The mathematical representation of economic theory used to make a prediction is called as: Select the

1. Model
2. Formula
3. Identity
4. Equation

Correct answer: Model

Q3. The geographical area which is used by the sellers and buyers in order to purchase or sale their goods and services is known as: Select the correct option

1. None of the given options
2. Locality
3. Industry
4. Market

Correct answer: Market

Q4. Which of the following is a normative statement?

1. Generally quantity demanded tends to decrease due to increase in the price of the

product. b. Earth revolves around the sun.

c. Proper wage rate should be paid to the auto workers to make them an active member of the society. d. Percentage of population engaged in agriculture in Pakistan is falling.

5. Which of the following is/are the area/s of study for the

macroeconomics? Select the correct option

a. Economic growth

b. All of the given options

c. Inflation

d. Unemployment

6. Which of the following is a positive statement? Select the correct

option a. Percentage of population engaged in agriculture in Pakistan is

falling.

b. High wage rate should be paid to the auto workers to make them an active member of the society.

c. The basic rights of the people should be protected through democratic

institutions. d. Population explosion should be controlled.

Lesson #2

1. All of the following are factors of production EXCEPT:

2. The Production Possibility Frontier (PPF) curve shifts outward as a result of: 3. The Production possibility frontier (PPF) curve is bowed out because the resources are: 4. Suppose an organization opens its branch and buys new tables and chairs. These tables and chairs would most likely be which of the following factors of production?

Q5. Suppose an organization opens its branch and hires new members. These new members would most likely be which of the following factors of production?

6. The human effort, physical and mental, used by workers in the production of goods and services is known as labor.
7. The Production Possibility Frontier (PPF) curve shifts inward as a result of a technological innovation.
8. All the machines, buildings, equipment and roads are included in the category of capital.

Lesson #3

Q1. The real price can be calculated by which of the following formula?

2. All of the following are non-price determining variables of demand EXCEPT:

Q3. Which of the following curve shows how much of a good producer are willing to sell at a given price?

4. Changes in quantity supplied are shown by:

5. Supply and demand interacts to determine the market-clearing price.
6. When cost of labor increases, the supply curve shifts to the right.

Lesson #4

Q1. Considering rice as a normal good, if consumers' income increase then the demand curve of rice will: Select the correct option

1. Shift to the right
2. Shift to the left
3. Remain constant
4. Shift to the left initially and then returns to its original position

Correct answer: Shift to the right

Q2. In case of infinitely elastic demand, the demand curve becomes: Select the correct option

1. Horizontal
2. Upward sloping
3. Downward sloping
4. Vertical

Correct answer: Horizontal

3. The supply curve shifts rightward due to improvement in technology. Select the correct

option a. FALSE

b. TRUE

Q4. Income of an individual is non-price determining variable of supply. Select the correct option

1. FALSE
2. TRUE

Correct answer: FALSE

Q5. The supply curve for good X will shift leftward due to: Select the correct option

1. An increase in the cost of the machinery used to produce good X
2. A technological improvement in the production of good X
3. A situation in which quantity demanded for good X exceeds quantity supplied for good X
4. A decrease in the wages of workers employed to produce good X

Correct answer: An increase in the cost of the machinery used to produce good X

Q6. Assume that coffee and milk are complements. When the price of coffee goes up, the demand curve for milk: Select the correct option

1. Shifts to the right
2. Shifts to the left
3. Remains constant
4. Shifts to the right initially and then returns to its original position

Correct answer: Shifts to the left