1.What will happen to the total revenue (TR) when price of commodities is decreased, given thatthe demand is elastic?

A.Total revenue will increase

B.Total revenue will remain constant (unaffected)

C.Total revenue will decrease

D.Any of the above can happen

2.Suppose that a firm increase the price of its product by 2 percent and quantity demand subsequently decreases by 3 percent.

A.3%

B.-3%

C.-1.5%

D.1.5%

3.The demand for a commodity today will increase when either of the following circumstances exists?

A.When future price of a commodity is expected to decrease.

B.When income of consumers decrease.

C.When future income of a consumer is expected to increase.

D.When price of its complement good increase

E.None of the above

4.If price of good-x and good-y is birr 4 and birr 2 respectively and further assume that the income of the consumer is birr 160, then which of the following cannot be budget line equation?

A.2X + Y = 80

B.4X + Y = 160

C.X + 0.5Y = 40

D.4X + 2Y =160

Perform the following Questions 5-7 according to the above graph:

5.Total Cost for the firm if it produces 20 units of output is:

A.400

B.360

C.300

D.200

E.460

6.If the firm produces 50 units of output its Total Variable Cost will be:

A.1000

B.900

C.750

D.500

E.1150

7.If the firm produces 50 units of output its Total Fixed Cost will be:

A.250

B.200

C.100

D.150

E.500

8.All of the following short run cost curves have U-shape, except

1. Average total cost
2. Average fixed cost
3. Average variable cost
4. Marginal cost
5. None of the above

9.---------------------is an extra or addition to total output resulting from the employment of one more worker, other things equal,

1. Average product of labor
2. Input ratio
3. Total product of labor
4. Marginal product of labor
5. None of the above

10.For a market to be characterized by monopoly there must be

A.A large number of firms with no one able to influence price

B.Freedom of entry and exit

C.Indistinguishable products being sold

D.A single seller

11.If MR > MC then when an additional unit is sold the firm's

A.Profit will be positive

B.Profit will be negative

C.Profit will increase

D.Profit will decrease

12.Which one of the following is not true about the relationship of short run costs?

A.ATC = AVC + AFC

B.MC =

C.ATC =

D.MC =

13.____________________ are simply similar products that are used for the same purpose and/or consumed to satisfy the same consumption needs

A.Differentiated Products

B.Unique Products

C.Homogenous Products

D.All of the above

14.Which one of the following costs is not example of explicit costs?

A.The payments for wages and salaries

B.Material

C.license fee insurance premium

D.depreciation charge

E.None of the above

15.In _________________ market Structure, firms in the market are simply interdependent or rival to each other.

A.Perfectly competitive

B.Oligopoly

C.Monopoly

D.Monopolistic Competitive