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ECO401 Economics Quiz no 1 Solution Answer

ECO401 QUIZ 1 SOLVED


1. Which policy moves the economy from equilibrium to a state of surplus?

a) Price ceiling

b) Price floor

c) Per unit tax imposed by the government

d) Subsidy given by the government


2. Suppose a good is having elastic demand. If price of a good increase:

a) Quantity demanded of will increase.

b) Quantity supplied of goodwill decrease.

c) Total revenue will increase.

d) Total revenue will decrease.

3. If price elasticity of supply is zero, then the supply curve will be:

a) Upward sloping

b) Downward sloping

c) Vertical

d) Rectangular hyperbola


4. If the demand for a good or service is inelastic then increase in its price:

a) Increases quantity demanded of a good.

b) Decreases quantity supplied of a good. 

c) Increases total revenue.

d) Decreases total revenue.


5. The services of land and capital are exchanged through:

a) Good markets.

b) Factor markets.

c) Product markets.

d) Commodity markets.


6. The minimum wage set by the government is an example of:

a) Free market equilibrium

b) Price celling

c) Price floor

d) Shortages


7. Which of the following is a determinant of quantity supplied?

a) Prices of substitute goods.

b) Tastes.

c) Prices of complimentary goods.

d) Aims of producers.


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8. The services of land and capital are exchanged through.

a) Good markets.

b) Factor markets.

c) Product markets.

d) Commodity markets.


9. When the price of wheat rises by 10% the quantity of wheat purchased falls by 4%. This shows that the demand for wheat is:

a) Perfectly price elastic 

b) Unit price elastic

c) Price elastic

d) Price inelastic


10. Demand tends to be more elastic in the

a) Short run time period

b) Immediate time period

c) Long run time period

d) All of the given options


11. Measurement of elasticities is made in percentage terms because:

a) It is easy to calculate

b) The resulting measure is unit free

c) It gives a more accurate answer

d) The answer is always negative


12. When government sets the price of a good below the equilibrium price, the result will be:

a) A surplus of the good

b) A shortage of the good

c) A decrease in the demand for the good

d) An increase in the supply of the good


13. Suppose the government sets minimum prices of crops to support farmers. This is an example of:

a) Price ceiling

b) Price floor

c) Free market equilibrium

d) Shortages


14. Which of the following is a determinant of quantity supplied?

a) Cost of productions

b) Profitability of alternative goods

c) Aims of productions 

d) All of the given options


15. Points inside the production possibility frontier (PPF) show that:

a) Efficient use of resources

b) Inefficient use of resources

c) Resources are not utilized

d) All of the given options 


16. Normal goods are those goods whose quantity demanded goes up as:

a) Consumer income increases

b) Consumer income decreases

c) Consumer income remains constant

d) Price of goods increases


17. When government gives subsidy to producers on production of a good, supply of that goodwill:

a) Increase

b) Decrease

c) Remain unchanged

d) Be infinite 


18. If an increase in price decreases the total revenue then it shows that demand is:

a) Elastic

b) Inelastic

c) Perfectly inelastic

d) Unit elastic

19. Subcategory of inferior goods is:

a) Giffen goods

b) Normal goods

c) Luxury goods

d) Expensive goods


20. Giffen goods are the subcategory of:

a) Normal goods

b) Inferior goods

c) Luxury goods

d) Expensive goods