1.If the MU per dollar spent on product A is greater than on product B, then a rational consumer should consume more of product B to compensate.

Select one:

True

False

2.What is the most likely effect of an increase in the demand for a particular type of labour?

Select one:

a.The wage rate for that type of labour will rise, but the quantity hired will remain unchanged.

b. The wage rate for that type of labour will rise, and the quantity hired will also increase.

c. The wage rate for that type of labour will rise, and the quantity hired will decrease.

3.Suppose that average incomes increased from $30,000 to $34,000, and the quantity demanded of a product increased from 45 to 55. What type of product must this be?

Select one:

a. Necessity.

b. Luxury product.

c.Inferior product.

d.Substitute product.

e. Superior product.

4.Assume that Gina is allocating her budget optimally between two products. If the MU of product X is 50 and its price is $10, what must be the price of product Y if its MU is 80?

Select one:

a. $7.50

b. $960

c. $12

d. $12

e. $16

5.A monopolist does not have a supply curve.

Select one:

True

False

6.Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run?

Select one:

a. The greater the product differentiation the lower will be the amount of excess capacity.

b. None of the choices are correct.

c. It operates on the rising portion of its average cost curve because of excess capacity.

d. Excess capacity is lowered as demand becomes less elastic.

7.If the marginal product is declining, which of the following statement is correct?

Select one:

a. Marginal cost must be falling.

b. Average total cost must be falling

c. Average product must be falling.

d. Average product could be rising or falling.

8.What circumstances will lead a country's terms of trade favourable?

Select one:

a. Lower the prices of imports.

b. Higher the prices of exports.

c. Lower the prices of exports.

d. Higher the prices of imports.

e.Lower the price of imports and higher the price of exports

9.For an inelastic demand, price and total revenue move in the same direction.

Select one:

True

False

10.The floor price is always set above the equilibrium price otherwise it would not work

Select one:

True

False