ECN 101

1. Suppose the Average Product of Labour (APL) is 20 when 5 units of labour is employed, the
Total product of labour (TPL) will be ___
4
100
20
5
2. ___ is usually below the Marginal Product Curve when it is rising
Average Cost Curve
Average Product Curve
Average Variable cost Curve
Average variable Product Curve
3. In short run production process, the fixed inputs is fully utilized where
The Marginal Product is zero
The marginal product is equal to average product
The marginal product is maximum
4. Excess demand is one of the consequences of
Price ceiling
Price floor
Market price
5. The definite relationship between price and quantity demanded for a commodity is referred
to as
Change in demand
Derived demand
Demand schedule
6. The theory of demand is formulated on the assumptions that the consumers
Are adults, earn income and rational
Are adults, selfish and dependent
Are adults, independent and irrational
7. Price ceiling is also known as
Maximum price
Minimum price
Market price
8. The actual cost of production that appear on the book of account is referred to as ____
Real cost
Implicit cost
Explicit cost
9. Suppose the total cost of producing 100 loaves of bread is N 4000 and total fixed cost is N
1500, then the total variable cost is
N 400
N 2500
N 3900
10. In the short run the cost of fixed inputs is
 Constant at every level of output
Variable
Unstable
11. The value total of goods and services produced in a given country within one year, without
regard to the nationality of the producers is known as
GNP
GDP
NNP
12. Economics is the study of
Production technology
Consumption decisions
How society decides what, how, and for whom to produce
The best way to run society
13. Opportunity cost of a good is
The time lost in finding it
The quantity of other goods sacrificed to get another unit of that good
The expenditure of the good
The loss of interest in using savings
14. A market can accurately be described as
A place to buy things
A place to sell things
The process by which prices adjust to reconcile the allocation of resources
A place where buyers and sellers meet
15. A free market involves
The free provision of product
The subsidizing of products by the government
Market forces of supply and demand
All trade via barter
16. A mixed economy
Has supply but not demand
Has demand but not supply
Has supply and demand
Has market forces and government intervention
17. Normative economics forms:
A positive based on facts
Opinions based on personal values
Positive statements based on values
Opinions based on facts
18. Microeconomics is concerned with
The economy as a whole
The electronics industry
The study of individual economic behaviour
The interactions within the entire economy
19. The demand for a specific car is
More price elastic than market demand for cars in general
Less price elastic than the market demand for cars in general
Perfectly inelastic while the market demand for cars in general is elastic
None of the above
20. Two goods are substitutes when
An increase in the price of one leads to an increase in the quantity demanded of the other
An increase in the price of one leads to a decrease in the quantity demanded of the other
A decrease in the price of one leads to an increase in the quantity demanded of the other
None of the above
21. When the demand is completely price inelastic
Consumers buy a fixed quantity no matter what the price is
Consumers will buy as much as they can at a single price
A small increase in the price will result in a significant fall in quantity demanded
A decrease in the price will result in a significant increase in the quantity demanded
22. Demand is much more price elastic in the long run than in the short run because
It takes time for consumers to change their consumption habits
Technological changes
Of availability of substitutes
All of the above
23. The competitive firm will cease to produce when
Profit is negative
Marginal cost exceeds marginal revenue for greater levels of output
When revenue is less than total cost
When total revenue cannot cover the costs of variable inputs
24. Choice in a command economy are made by
Private business
Assembly line workers
Competition
Government agencies
25. Both parties to a transaction benefit according to
Voluntary exchange
Consumer sovereignty
Fixed income
Command economy
26. North Korea is an example of
Capitalism
A command economy
A market economy
Free enterprise
27. An entrepreneur would most likely have the best chance for success in
A command economy
A traditional economy
 A market economy
Any of the economies
28. The most common form of business organisation in United States is the
Sole proprietorship
Corporations
Cooperative
Partnership
29. For a consumer, the most important reason for a purchase is its
Durability
Color
Entertainment value
Utility
30. A popular model used to illustrates the concept of opportunity is called _______ PPF
31. An economy at its production possibility frontier is operating
With minimum growth
At full potential
On quota-filling production
With high unemployment
32. A risk-taker in search of profit is called a(n)
Entrepreneur
Capitalist
Economist
Conspicuous consumer
33. Durable good intended for final use by individuals are called
Intermediate goods
Producer goods
Capital goods
Consumer goods
34. A great variety of goods and services is characteristic of
A traditional economy
Market economy
A command economy
All economic systems
35. A sole proprietor
Does not have to pay a separate business tax
Is exempt from paying any taxes
Must rely on government subsidies
Has partners in the business
36. Because the demand for local telephone is relatively inelastic
Modest price increase have little or no impact on quantity demanded
The government cannot tax telephone rates
Consumers should make as few long-distances calls as possible
The number of telephones in the home has increased
37. A business raised the price of a product to increased profits, but that total revenues went
down. The demand for the product is
Elastic
Inelastic
Unit elastic
Unable to be determined due to lack of more information
38. If the increase in the price of butter causes a decrease in demand for French pastries
The marginal utility for additional pastries is diminishing
The two goods are substitutes
The demand for pastries is inelastic
The two goods are complement
39. A consumer is less likely to buy more and more units of a product at the same because of
Diminishing marginal utility
Demand elasticity
The substitution effect
The existence of complementary goods
True/false
40. Scarcity as used in Economics means the resources needed to satisfy human want are not
available at all. False
41. A demand for labour is a derived demand. True
42. Asymmetric information exists when the buyers and sellers have an equal amount of
information. False
43. Positive economics examines the outcomes of economic behaviours and ask whether they are
appropriate or not. False
44. A bowed out PPC means the opportunity cost of producing the item located at the horizontal
axis decreases as the economy produces more it. True
45. The area above price but below the demand curve is called _____ consumer surplus
46. Adam smith called price mechanism as _____ invisible hand
47. The JB Say’s law of market is often regards to as _____ supply create its own demand
48. The value of final goods minus cost of intermediate goods purchased by the firm to produce
the final goods equals ___ gross value added