Solved ECO401 Economics Final Term Paper Fall 2009

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Question No: 1 ( Marks: 1 ) - Please choose one
A good for which income and quantity demanded are inversely related is known as:

• Inferior good.
  
• Complementary good.
  
• Normal good.
  
• None of the given options.
  

Question No: 2 ( Marks: 1 ) - Please choose one
Suppose your local public golf course increases the greens fees for using the course. If
the demand for golf is relatively inelastic, you would expect:

• A decrease in total revenue received by the course.
  
• An increase in total revenue received by the course.
  
• No change in total revenue received by the course.
  
• An increase in the amount of golf played on the course.
  

Question No: 3 ( Marks: 1 ) - Please choose one
If the income elasticity of demand for boots is 0.2, a 10% increase in consumer's income
will lead to a:

• 20 percent decrease in the quantity of boots demanded.
  
• 2 percent increase in the quantity of boots demanded.
  
• 0.2 percent increase in the quantity of boots demanded.
  
• 20 percent increase in the quantity of boots demanded.
  

Question No: 4 ( Marks: 1 ) - Please choose one
When the marginal utility of a good is zero, this implies that:

• The consumer would not spend any additional income to buy more of that good. Consumption of additional units would have positive marginal utility.
  
• Total utility is minimized.
  
• Total utility is also zero.
  

Question No: 5 ( Marks: 1 ) - Please choose one
An individual with a constant marginal utility of income will be:

• Risk loving.
  
• Risk neutral.
  
• Risk averse.
  
• Insufficient information for a decision.
  

Question No: 6 ( Marks: 1 ) - Please choose one
At any given point on an indifference curve, the absolute value of the slope equals:

• Unity--otherwise there would be no indifference.
  
• The marginal rate of substitution.
  
• The consumer’s marginal utility.
  
• None of the given options.
  

Question No: 7 ( Marks: 1 ) - Please choose one
If at the profit-maximizing quantity, profits are positive, then:

• Price < Average Total Cost.
  
• Price > Average Total Cost.
  
• Price < Average Variable Cost.
  
• Price = Marginal Cost.
  

Question No: 8 ( Marks: 1 ) - Please choose one
Which of the following is true in long run equilibrium for a firm in a monopolistic
competitive industry?

• The demand curve is tangent to marginal cost curve.
  
• The demand curve is tangent to average cost curve.
  
• The marginal cost curve is tangent to average cost curve.
  
• The demand curve is tangent to marginal revenue curve.
  

Question No: 9 ( Marks: 1 ) - Please choose one
If income elasticity is negative, the good is:

• Normal good.
  
• A substitute good.
  
• A complementary good.
  
• Inferior good.
  

Question No: 10 ( Marks: 1 ) - Please choose one
Welfare economics is the branch of economics which deals with:

• Positive issues.
  
• Normative issues.
  
• Micro issues.
  
• Macro issues.
  

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