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1. A situation when a person is able and willing to take up a job and gets employed, it is called- a. Employment b. Full Employment c. Under Employment d. Unemployment. 2. A situation when people are engaged in jobs but they do not get these jobs according to their capabilities, efficiency and qualifications, it is called- a. Employment b. Full Employment c. Under Employment d. Unemployment. 3. A situation when the workers are willing to work under any conditions and at any wage rate but they fail to get employment, it is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Cyclical Unemployment d. Frictional Unemployment 4. A temporary unemployment which exists during the period of the transfer of labor from one occupation to another is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Cyclical Unemployment d. Frictional Unemployment 5. When more workers are engaged in a work than actually required to work, it is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Disguised Unemployment d. Frictional Unemployment 6. Who developed the Classical Theory of Income and Employment? a. J. B. Say b. J. S. Mill c. Ricardo d. All of the above. 7. "The supply creates its own demand". This is the famous law of-... a. Market (Say's Law of Market) b. Demand c. Supply d. None of the above. 8. The book General Theory of Employment, Interest and Money was written by--.. a. J. N. Keynes b. J. M. Keynes c. Ricardo d. None of the above. 43 | Page 9. Keynesian theory of employment is based on the concept of--..- a. Aggregate Demand b. Aggregate Supply c. Aggregate Demand and Supply both d. None. 10. The investment which is undertaken independently of the level of income is known as--.- a. Autonomous Investment b. Induced Investment c. Public Investment d. Private Investment 1 1. The components of aggregate demand is/ are--...- a. Household consumption expenditure b. Govt final conspt. expenditure c. Pvt and public invt expenditure d. All 12. Determination equilibrium of an economy can be studied by--- a. Equality of AD and AS b. Equality of saving and investmentSimplified Principles of Microeconomics The Fifth Principle: costs Questions 1. What is meant by a short run in economics? 2. What are the four factors of production? 3. List the price of each of these four factors of production. 4. If the output is zero, what are total costs equal to? 5. If variable costs are zero, what are the outputs equal to? 6. If fixed costs were $78 when the level of output is 3, what would fixed costs be when the level of production is zero? 7. If variable and fixed costs amount to $131 when the level of output is zero, what are the variable costs and what are the fixed costs? 8. When fixed costs for a zero output are $16, what are the total costs and the variable costs? 9. If the level of production is 5, wage costs are $5 and the total costs are $150, what are the fixed costs? 10. Explain how you can control variable costs.Questions 1. Describe in your own words what a marketplace is. 2. What is the market clearing price and quantity? 3. How is equilibrium in the market established? 4. Describe the causation chain when demand is increased. 5. Describe the causation chain when supply is decreased. 6. What are the assumptions that define perfect competition? 7. What are the assumptions that define a monopoly? 8. Which assumption of imperfect competition defines the different forms of monopoly? 9. Describe homogeneous products. 10. List the forms of monopoly. 1 1. List the forms of buyer-side imperfect competition.lified Principles of Microeconomics The Second Principle: desire versus availability tions 8. What is the difference between a movement along the demand curve and a shift in the demand curve? 9. If the weather influences the demand for a product, how would that be represented on a graph? 10. If the price of a product changes, what changes will you observe in the demand curve? 11. You want to buy a ball but you cannot afford it because your income is limited. How would that situation be reflected in the demand curve for the ball? 12. What can cause movement along a demand curve? 13. What is the difference between a change in demand and a change in the quantity demanded? How is this illustrated on a demand curve? 14. What does the Greek capital letter delta (A) mean? 15. What factors can cause shifts in the demand curve?1. Suppose the supply for product A is perfectly elastic. If the demand for this product increases: A. the equilibrium price and quantity will increase; B. the equilibrium price and quantity will decrease; C. the equilibrium quantity will increase but the price will not change; D. the equilibrium price will increase but the quantity will not change. 2. If the coefficient of income elasticity of demand is higher than 1 and the revenue increases, the share of expenditures for commodity X in total expenditure: A. will increase; B. will decrease; C. will remain constant; D. can not be determined 3. If the demand for agricultural products is inelastic: A. as the prices decrease, the revenues earned by producers increase; B. as the prices decrease, the revenues earned by producers decrease; C. rising prices do not lead to differentiation in producers incomes; D. the percentage decrease in prices is lower than the percentage increase in demand. 4. For a rational consumer who has to choose between two goods in the context of budget constraints, the price change of one of the goods, caeteris paribus, will determine: A. a parallel shift of the budget line to the left; B. a change in the slope of the budget line; C. no change in the budget line; D. a parallel shift of budget line to the right. 5. The price of the product A was reduced from 100 to 90 lei and, as a result, the quantity demanded has increased from 70 to 75 units. The demand is: A. inelastic; B. elastic; C. unit elastic; D. can not be determined from the given information. 6. Choose the false statement: A. in general, the demand for necessity goods is less elastic than demand for luxury goods; B. if the price and the producers' income are directly proportional, the demand is elastic; C. after a long period of time since the change in the price of the good A, supply becomes more elastic; B. for a company whose production process involves making two goods, one main and the other secondary, if the price of the main good increases, - caeters paribus - the supply on the secondary good's market will increase (and vice versa).2. Explain the determination of the optimal price and output combina- tion in a situation of monopolistic competition. Use the resulting equilibrium to illustrate the statement that 'production inefficiency is a necessary price to pay for product variety'. Comment on this statement. 3. Assess the contribution of business games to the study of decision- making processes, illustrating your answer by reference to one business game with which you are familiar. "Given that the future is unknown, the best we can do is to estimate the likelihood of future events and then use expected profit as the decision criterion.' Discuss 5. The senior partner in a local accountancy firm is concerned about the error rate amongst assessments issued by her office. A careful check over the past few years enables her to estimate that the error rate has the following probability distribution: Error rate Probability 0.05 0.25 0.10 0.35 0.15 0.25 0.20 0.15 Each error costs f40 because of the labour time involved in reassess- ment. Her firm is just entering the assessment 'season', and is expected to perform 500 assessments over the next few months. One way to reduce the error rate is to send all staff to a one-day training course at the local university - 'Precision in Assessment'. The university claims this would ensure an error rate of 0.05, but she considers that an error rate of 0.10 would be equally likely. The course fee is $700 for all her staff, whilst lost profit from one day's work missed would be f500. Advise her on whether to send staff on the course or not. A careful check of that day's output shows that in ten assessments, two contained errors. Use this information to update the error rate probability distribution and hence determine whether your advice needs amendment. . 'The fitting of mathematical trend curves is by far the easiest and cheapest method of forecasting long-run changes in product demand, and is likely to be just as reliable as any alternative method.' Discuss. 7. An engineering firm has applied for patents on two new products and has just learned that only one application has been successful. Compare and contrast the optimal pricing and promotional strategies for each of these new products.5. If demand is price inelastic, then buyers do not respond much to a change in price b. buyers respond substantially to a change in price, but the response is very slow c. buyers do not respond much to advertising, fads, or general changes in tastes d. the demand curve is very flat 6. According to the graph on the right, the equilibrium price in the market before the tax is imposed is a. $3.50 b. $5.00 c. $6.00 d. $8.00 7. Market failure is the inability of some unregulated markets to allocate resources efficiently b. a market to establish an equilibrium price c. buyers to place a value on the good or service d. buyers to interact harmoniously with sellers in the market Claudia would be willing to pay as much as $100 per week to have her house cleaned. John's opportunity cost of cleaning Claudia's house is $70 per week. Assume Claudia is required to pay a tax of $40 when she hires someone to clean her house for a week. Which of the following is correct? a. Claudia will now clean her own house b. John will continue to clean Claudia's house, but his producer surplus will decline. C. Claudia will continue to hire John to clean her house, but her consumer surplus will decline. Total economic welfare (consumer surplus plus producer surplus plus tax revenue ) will increase. 9. Within a country, the domestic price of a product will equal the world price if a. trade restrictions are imposed on the product b. the country chooses to import, but not export, the product c. the country chooses to export, but not import, the product d. the country allows free trade