MICROECONOMICS

Question 1: If the demand curve for product A moves to the right, and the price of product B decreases, what can be concluded if the goods have a negative relationship with each other, which means that when product A increases in price, demand for B falls and when product A decrease in price, demand for B increases:

Select one:

a. A&B are substitute goods

b. A&B are complementary goods

c. A is an inferior good, and B is a superior-good

d. Both goods A & B are inferior

Question 2: Which of the options describe the events that would result in a positive demand shift on an ice-cream market (assuming that in this case ice cream is a normal good)?

Select one or more

a. The prices for an alternative treat - frozen yogurt fall significantly

b. To support the recovery from the pandemics, the government decides to issue stimulus checks to all the citizens throughout the next 12 months

c. There is a strong nutritional trend shift among the influencers and mass media that involves not eating ice cream and rather substituting it with frozen berries

d. Because of the investments in infrastructure during the recent years, the number of tourists visiting the country has increased by 1000%

Question 3: Which of the following statements on the discipline of Economics is/are true?

Select one or more:

a. Economics can be described as the science of markets

b. Economics deals with the fair and equal allocation of goods

c. Economist aims at maximizing the profit of individual companies and private entities.

d. Economics is the study of how societies use scarce resources to produce valuable goods and distribute them among different people.

Question 4: Perfect complements will have indifference curves that are:

Select one:

a. L-shaped

b. Horizontal

c. Vertical

d. Concave to the origin

Question 5: Indifference curves are not allowed to intersect within an individual preference system, because... (select the correct statement(s))

Select one or more:

a. .....they are always convex which means people prefer middle solutions over extreme ones

b.......each curve in the system represents exactly one specific level of utility

c......this is against the axiom of transitivity

d......they represent the budget constraint of an individual for different income level

Question 6: A consumer's MRS of Y for X equals 2. Y is on the vertical axis and X is on the horizontal axis. Which of the following statement is TRUE?

1. He will be strictly better off if he purchases an additional unit of X if the price ratio is less than 2
2. He should purchase an additional unit of X as long as the price ratio is greater than 2
3. He is willing to give up 2 X for one additional Y

Select one:

a. Only number 1 is true

b. Only number 2 and 3 are true

c. Only number 3 is true

d. Only number 2 is true

Question 7: In a market economy............(select the correct answer(s))

Select one:

a...........supply and demand determine prices and prices, in turn, allocate the economy's scarce resources

b..........the allocation of scarce resources determines prices and prices, in turn, determine supply and demand

c..........demand determines supply and supply, in turn, determines prices

d..........supply determines demand and demand, in turn, determines prices

Question 8: Which of the following are the characteristics of the hierarchical type of organization (Multiple selection is possible)

Select one or more:

a. Contracting costs are higher than in the Free Market

b. Principal-Agent costs are high

c. Motivational costs are low

d. Long-term contracts are more dominant in this type of organization

e. Information processing and information transfer are exercised through instruction, in a centralized manner

f. Compensation of effort is usually result-oriented (e.g. Bonus system)

Question 9: Which of the options describe the vents that would result in a negative supply shift on an ice cream market?

Select one or more:

a. Due to updated decarbonization laws, the manufacturing is forced to reduce the usage of the robots (reduce automation) and must use more conventional production methods.

b. LVMH has announced that they would venturing into the ice cream business and are going to invest billions into setting up large-scale production during the next 2 years.

c. According to the internal marketing research, the prices for the ice cream are expected to rise significantly in the next period

d. Due to an accident on a critical international cargo route, the prices for input materials such as cream, sugar, and flavoring have risen significantly.

Question 10: It is possible to have an absolute cost advantage and relative cost advantage in a production of a good at the same time

a. True

b. False

Question 11: Globalization can be described as an increasing degree of the international division of labor. It benefits all parties involved according to the Ricardo Model

a. True

b. False

Question 12: The transformation curve is the geographical place of combinations of goods which can be consumed given the utility function

a. True

b. False

Question 13: The supply and demand are defined by the following functions:

Demand: Y(d) = 30 - 0.5x

Supply: Y(s) = 4 + 0.8x

Please calculate consumer surplus using the given information

Select one or more:

a. 200

b. Impossible to determine using given data

c. 160

d. 100

Question 14: Countries A and B are in the process of organizing a cooperative production of the goods C and D. Country A can produce either 40 units of C and 60 units of D a day. Country B can produce 80 units of either C or D a day

Please select statements that are TRUE:

Select one or more

a. In a situation with cooperation, country B should focus on producing D and country A should focus on producing C

b. Country A has an absolute cost advantage over B

c. In a situation with cooperation, country B should focus on producing C and country A on producing D

d. The opportunity cost for producing one unit more of C for countries A and B are 1.5 and 1 respectively

e. Country B has an absolute cost advantage over A

f. The opportunity cost for producing one more unit of C for countries A and B are 2/3 and 1 respectively.