1.Which one of the following is not valid while comparing monopoly with monopsony?

Select one:

a. Monopoly sells a unique product while monopsony buys a sophisticated

input.

b. Monoploy faces a downward sloping demand curve while monopsony faces a horizontal supply curve.

c. Monopoly has to reduce price to sell more while monopsony has to pay higher wages to hire more labor.

d. Monopoly is a single seller in the output market while a monopsony is a single buyer in the input market.

2.Suppose that a country has a comparative advantage in the production of wheat. Which of the following statements is true?

Select one:

a. Specialization is wise only if exchange rates are fixed.

b. Specialization is wise only up to a point because of the law of increasing costs.

c. It must also have an absolute advantage in the production of wheat.

d. The purchasing power parity theory must also be in its favour.

3.The shape of the demand curve facing the perfectly competitive firm is downward sloping

Select one:

True

False

4.Which one of the following statement is the most appropriate?

Select one:

a. Choice causes scarcity which involves opportunity costs

b. Scarcity forces choice which involves opportunity costs

c. Choice causes scarcity which involves increasing costs

d. Scarcity forces choice which involves increasing costs

5.At what point will a competitive firm stop hiring additional labour?

Select one:

a. When the marginal revenue product of labour is just equal to the wage rate.

b. When its total product is maximized.

c. When the marginal revenue product of labour is maximized.

d. When the marginal product of labour is maximized

6. A country has a comparative advantage over another only if it is able to produce all products more cheaply.

Select one:

True

False

7.Sole ownership of a particular resource is an example of what?

Select one:

a. A technical barrier to entry.

b. An economic barrier to entry.

c. A public utility.

d. A natural monopoly.

8. Suppose that the cost of producing 1 unit of wine in Germany is 2 units of rice; in Holland 1 unit of wine costs 4 units of rice. What might be the possible terms of trade between the two countries?

Select one:

a. 1 rice=3/8 wine

b. 1 rice=3 wine

c. 1 wine=1 rice

d. 1 rice=6 wine

9.An additional advantage of quota over tariff is that the benefits are shared between domestic producers and the government.

Select one:

True

False

10.When a perfect competitive firm is in long-run equilibrium:

Select one:

a. MR = MC and minimum ATC > P.

b. P = MC = ATC.

c. MR > MC and P = minimum ATC.

d. P = MC = minimum ATC.