Q 1. MCQs[5 Marks ]

1.The price of computer chips used in the manufacture of personal computers has fallen. This will lead to __________ personal computers.

A. a decrease in the supply of

B. a decrease in the quantity supplied of

C. an increase in the supply of

D. an increase in the quantity supplied of

2.When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as

A. price fixing.

B. quantity setting.

C. quantity adjustment.

D. price rationing.

3.The price of an ice cream cone is $1.50 and you buy three ice cream cones per week. If the price of an ice cream cone falls to $1.25 and you still buy three ice cream cones per week, which of the following is (are) correct?

A. The marginal utility of the fourth ice cream cone per week must be worth less than $1.25 to you.

B. The total utility of the four ice cream cones per week must be worth less than $5.75 (=3*$1.50 +$1.25) to you.

C. The total utility of the four ice cream cones per week must be less than $5.00 (3*$1.25+$1.25) to you.

D. None of the above.

4.A consumer will buy more units of a good if the value of the good's

A. total utility is greater than price.

B. marginal utility is less than price.

C. marginal utility is greater than price.

D. total utility is less than price.

5.A utility-maximising consumer changes her spending on goods X and Y until

A. MUx = MUy

B. Px (MUx) = Py(MUy)

C. TUx/Px = TUy/Py

D. MUx (Py) = MUy (Px)

6.A normal rate of profit

A. is the rate of return on investments over the interest rate on risk-free government bonds. B. is the rate that is just sufficient to keep owners or investors satisfied .

C. Means zero return for owners or investors.

D. is the difference between total revenue and total costs.

7.Cyclical unemployment is the

A. portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries.

B. unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.

C. portion of unemployment that is due to seasonal factors.

D. unemployment that occurs during recessions and depressions.

8.Which of the following does not refer to macroeconomics?

A. The study of aggregate level of economic activity.

B. The study of causes of unemployment.

C. The study of causes of inflation.

D. The study of the economic behavior of individual decision-making units such as consumers, resource owners and business firms.

9.A leftward shift of the SRAS curve is a (n):

A. Increase in long-run aggregate supply

B. Decrease in long-run aggregate supply

C. Increase in short-run aggregate supply

D. Decrease in short-run aggregate supply

10.The marginal product of labor is the change in total product from a one-unit increase in

A. the wage rate.

B. both the quantity of labor and the quantity of capital employed.

C. the quantity of labor employed, holding the quantity of capital constant.

D. the quantity of capital employed, holding the quantity of labor constant.