ECO402 Solved MCQs More Than 150 Set 2

ECO402 Solved MCQs More Than 150

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Q1. Which of the following will cause the demand curve for butter to shift to the left?

An increase in the price of the butter. A decrease in consumers’ incomes. An increase in the price of margarine (a substitute).

2. The slope of the budget line, faced by an investor deciding what percentage of her portfolio to place in a risky asset, increases when the:

Standard deviation of the portfolio gets smaller. Rate of return on the risk-free asset gets larger. Rate of return on the risky asset gets larger. Rate of return on money gets larger.

Q3. Microeconomics is the branch of economics that deals with which of the following topics?

The behavior of individual consumers Unemployment and interest rates The behavior of individual firms and investors

The behavior of individual consumers, firms and investors

4. Jane is trying to decide which courses to take next semester. She has narrowed down her choice to two courses Microeconomics and Macroeconomics. Now she is having trouble. She just cannot decide which of the two courses to take. It’s not that she is indifferent between the two courses, she just cannot decide. An economist would say that this is an example of preferences that:

Are not transitive. Are incomplete. Violate the assumption that more is preferred to less.

5. The law of diminishing returns assumes that:

There is at least one fixed input.

All inputs are changed by the same percentage. Additional inputs are added in smaller and smaller increments.

All inputs are held constant.

6. According to the law of diminishing returns:

The total product of an input will eventually be negative. The total product of an input will eventually decline. The marginal product of an input will eventually be negative. The marginal product of an input will eventually decline.

Q7. Which of the following is true regarding income along a price consumption curve?

Income is increasing. Income is decreasing. Income is constant. The level of income depends on the level of utility

8. The law of diminishing returns refers to diminishing:

Total returns. Marginal returns. Average returns.

9. The function which shows combinations of inputs that yield the same output is

Production function. Production possibilities frontier

10. Moving down along a demand curve for apples:

Consumer well-being decreases. The marginal utility of apples decreases. The marginal utility of apples increases.

11. The concept of a risk premium applies to a person that is:

Risk averse. Risk neutral. Risk loving.

12. The risk premium is the amount of money that a risk-averse person would pay to avoid taking a risk. Technological improvement:

Can hide the presence of diminishing returns. Can be shown as a shift in the total product curve. Allows more output to be produced with the same combination of inputs. All of the given options are true.