TUTOR AYO

ECO121

EXAM PRACTICE QUESTIONS AND ANSWERS 

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 1. ………… is a science that deals with wealth creation through the production of goods and services, their distributions as well as consumption.

 a) Economics

b) Production

c) Consumption

d) Choice

 2. …….. is a group of firms that comes together to make price and output decisions in order to maximize profit.

 a) Organization

b) Cartel

c) Firm

d) Office

3. Oligopoly is a ……… structure where only few firms dominate the large industry with varying degrees of entry barriers based on the industry.

a) market

b) family

c) group

d) company

4. When the quantity demanded is greater than the quantity supply then we have a “shortage” or ‘excess demand’.

TRUE / FALSE

5. …….. to accomplish social goals quickly.

ANS: Ability

6. Expectation of a rise in ……. of goods may force people into panic buying.

a) economy

b) sales

c) amount

d) price

 7.  Which of the following is not a product market and basic economic problems

a) What to produce

b) How much to produce

c) How to produce

d) The name to give the producer

8. The study of individuals, their economic decision-making, and how those decisions intermingle is known as ………

ANS: microeconomics.

9. These are basic types of economic systems except

a) Traditional economy

b) Controlled economy

c) Free market Economy

d) Capitalist Economy

10. Elastic supply will occur when the absolute value of the percentage change

in quantity supplied is larger than the percentage change in ………

 a) supply

b) price

c) demand

d) environment

11. Total utility is the additional satisfaction or utility derived from the consumption of additional units of a product.

TRUE / FALSE

12. The word Monopoly has Greek origin, ‘mono’ in Greek means ……. while ‘polist’ means ‘seller’.

a) more

b) two

c) one

d) none of the above

13. A.V.C means

a) Average Visual Cord

b) Average Variable Cost

c) Average Visual Cost

d) Average Variable Cord

14. ………. will be at equilibrium when quantity supply is equal to quantity demanded.

a) Goods

b) Price

c) Demand

d) Market

15. When a firm ……. competition from other firms in the industry producing the same product, the firm is forced to become a price-taker

a) faces

b) begins

c) started

d) puts

16. ……… demand occurs when the absolute value of the percentage change in quantity demanded is larger than the percentage change in price.

ANS: Elastic

17. Perfectly elastic demand occurs when the quantity demanded drops to

zero with a little ……. change.

a) time

b) positive

c) negative

d) Price

18. Price is the …… factor considered to be a major factor that can affect demand while other factors are held constant.

a) first

b) major

c) last

d) main

19. Foley in what year defined the word “rational” to mean an act that is consistent and influential in achieving some well-defined end.

a) 2002

b) 2004

c) 2003

d) 2001

20.  ………. is the amount of goods or commodities that consumers are willing and able to buy at a given price over a given period of time.

a) Quantity demanded 

b) Demand and supply

c) Monopolist

d) Oligopoly

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21. ………. is not one of the four Factors of Production

a) Demand  

b) Labor

c) Capital  

d) Entrepreneur

22.  …… barrier is anything that can impede the entry of other firms into an industry such that it limits the competition faced by the existing firm in the industry.

ANS: Entry

23.  Market operation obviously depends on interaction ……… demand and Supply

a) in

b) within

c) among

d) Between

24. The overall sum of revenue generated from total product sold (Q x P) is known as

a) Total revenue 

b) Total Variable Cost

c) Average Fixed Cost

d) Total cost

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25. An economic system consists of individuals, institutions and their interaction in the process of answering basic ……… problems.

a) individual

b) government

c) economic

d) Business

26. ………… defined economics “as a science which studies human behavior as a relationship between given ends and scarce means which have alternative uses”.

a) Foley

b) Robbins

c) Adam Smith

d) David Ricardo

27.  If the supply is determined, there is the need to take a decision on what is the required input needed to achieve the supply target.

TRUE / FALSE

28.   A sudden increase in price of a commodity means a reduction in the consumption power of the consumer; as a result of fall in their real income. This situation is referred to as ……

ANS: income effect.

29.  The elasticity of elastic demand product is usually greater than …….

a) other

b) two

c) one

d) demand supply

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30. Demand and supply depends on ……, although their interaction

determines market price.

a) market

b) supply

c) demand

d) Price

30a. ………is the effect of a change in price on quantity demanded as a result of price changes which made them worse off.

ANS:  Income effect 

31.  Duopoly was postulated by …………. almost two centuries ago

a) Adams Smith

b) Augustin Cournot

c) David Ricardo

d) Foley

32.  ……… and ………… (2010) defined a perfect competitive firm that sells identical products sold by others in the industry –homogeneous product.

a) Samuelson and Nordaus

b) Adams and Karl Marx

c) AgustinAugustin and Thomas Malthus

d) J.S. Mill and John Stuart Mill

33.  Cross elasticity of demand is used to measure the percentage change in quantity demanded of one ……… when there is a change in the price of another close product.

a) another

b) product

c) firm

d) quality

34.  Price is not the only determinant of quantity demanded as demand is also affected by many other factors

TRUE / FALSE

35.  The different between the total revenue minus total cost is known as ………

a) Total Variable Cost

b) Average Fixed Cost

c) Total cost

d) Profit

36.  Human wants are unlimited and ever ………. due to ever changing demands and needs for resources which are limited

a) unlimited

b) unsatisfied

c) dynamic

d) all of the above

37.  In a ………. economy, it is the government that makes the economic decision and it is solely done meaning that there are no private sector initiatives.

a) controlled

b) free market

c) fixed

d) limited

38.  Free market economy or market economy is an economic system where the basic …………… are made by the buyers and sellers, individual households and businesses in the economy through the price mechanism.

ANS: economic decisions

39.   ………. Economy economic decision on what to produce; how and where to produce; for whom to produce; is made jointly by the government and the private sectors in the economy.

a) Social

b) Mixed

c) Market

d) Private

40. In our day-to-day life, we are usually faced with one objective or the other that requires …………

a) money

b) help

c) decision making

d) Strength

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41.  Thorough evaluation and rating of goods and services from most valued to least valued is a required step in arriving at a decision of how to produce.

TRUE / FALSE

42. Monopolist is a …………

a) One-man business

b) price maker

c) price taker

d) price changer

43.  Transformation of factor of production into goods and services that are used in satisfying consumer’s want is referred to as ……….

ANS: output

44.  A decrease in demand will lead to a rise in price while an increase in demand usually, will lead to a fall in price.

TRUE / FALSE 

45.  All these are factors affecting the demand except

a) income

b) preference and taste

c) prices of related commodities

d) total deman

46.  ……… as a single seller producing in its industry without any firm producing a close substitute.

a) Quantity demanded 

b) Demand and supply

c) Monopolist

d) Oligopoly

47.  The additional satisfaction or utility derived from consumption of addition units of a product are known as

ANS: Marginal utility

48. The definition given by Lionel Robbins in his book, ……… on Nature and Significance of Economic Science

Ans: An Essay

49.  The elasticity of demand for a unitary elastic product is always ………

a) minus one (-1)

b) plus one (+1)

c) equal one

d) added

50. Opportunity cost is whatever must be ……. up to obtain something.

a) given

b) taken

c) open

d) closed

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