1.All the following, except one, are benefits of the perfectly competitive market

system. Which is the exception?

Select one:

a. It is a costless system.

b. It ensures that income is fairly distributed.

c. It is productively efficient.

d. It is allocatively efficient.

2.Suppose both demand and supply increases by the same magnitude? Which of the following statement is not true?

Select one:

a. The change in price is indeterminate.

b. The market will move from one equilibrium to another equilibrium.

c. The quantity traded will increase but there will be no change in price.

d. The quantity traded will definitely increase.

3.Allocative efficiency is absent if price exceeds marginal cost.

Select one:

True

False

4.What will happen to the total product curve after the point of diminishing return has been reached?

Select one:

a. It will start to rise for the first time

b. It will begin to fall

c. It will continue rise until marginal product begins to decline

d. It will continue to rise until marginal product becomes zero.

5.Which of the following is an example of externalities?

Select one:

a. The price of medical care has risen dramatically as a result of the introduction of sophisticated equipment and techniques.

b. There are not enough tickets available to concerts of extremely popular performers.

c. H1n1 flu shot provides widespread benefits to the community as a whole as well as to the individuals who get them.

d.

Extensive decreases in the prices of electronic equipment resulted in large numbers of bankruptcies in the computer industry.

6.David Ricardo says a country will import a good from abroad although it can produce the good more cheaply at home.

Select one:

True

False

7.Cross price elasticity is negative for substitute goods and positive for complementary goods

Select one:

True

False

8.Which of the following statements is correct if a firm's capacity output increases from 300 to 600 and its total costs rise from $40,000 to $78,000?

Select one:

a.The firm is experiencing increasing returns to scale.

b. The firm is experiencing decreasing returns to scale.

c. The firm is experiencing constant returns to scale.

d. The firm's long-run average cost must have decreased but its short-run average cost could have either decreased or increased.

9.What is comparative advantage?

Select one:

a. An economic policy of protecting domestic producers by restricting the importation of foreign products.

b.An advantage in production as a result of possessing better skills, or equipment or resources in comparison to other individuals or countries.

c. The advantage gained from producing something at a lower opportunity cost than other producers are able to.

d. A government regulation which controls how much of a single product can be sold or produced in a competitive market.

10.Which of the following statements is correct regarding an individual firm which obtains its labour in a perfectly competitive labour market?

Select one:

a. It faces a downward-sloping labour demand curve and an upward-sloping labour supply curve.

b. It faces an upward-sloping labour demand curve and a downward-sloping labour supply curve.

c. It faces a horizontal labour demand curve and an upward-sloping labour supply curve.

d. It faces a downward-sloping labour demand curve and a horizontal labour supply curve.