Financial Markets Test with Multiple Choice Questions Essay

Class Test 1 (Sample Items)Choose the most correct response. Record your answer on the mark sense sheet provided. all(prenominal) answer is worth mark. perplexity 1All else comp ar, a binding expenditure floor will cause less of a surplus if(a)both gene run and demand are inelastic(b)both supply and demand are elastic(c)supply is elastic, but demand is inelastic(d)supply is inelastic, but demand is elastic headspring 2The figure shows the market for hold ins before and after an excise tax is introduced. The tax on books is ________, buyers pay ______ of tax per book, and the governments tax tax revenue is ________ a week.(a) $0.40 a book $0.40 $4(b) $1.20 a book $0.80 $128(c) $0.80 a book $1.20 $12(d) $1.20 a book $0.80 $12QUESTION 3If the minimum wage is personate infra the equilibrium wage rate,(a) a labour shortage occurs.(b) there is no change in the quantity of labour employed.(c) the short-run labour supply carouse becomes to a greater extent elastic.(d) a labour surp lus occurs.QUESTION 4If honey is measured on the vertical axis, and jam on the horizontal axis, the peripheral rate of substitution(a) is the rate at which the consumer has to give up honey if more jam is to be bought, given their relative prices. (b) is the rate at which the consumer has to give up jam if more honey is to be bought, given their relative prices. (c) is the rate at which the consumer is willing to give up honey in baseball club to desex more jam, and be as satisfied as he or she was before. (d) is the rate at which the consumer is willing to give up honey in order to get more jam and be get out off than he or she was before.QUESTION 5At the best affordable point(a) the work out line intersects an indifference curve.(b) the fringy rate substitution of x for y is exactly equal to 1. (c) the marginal rate of substitution of x for y is equal to the relative price of x in terms of y (that is, ) (d) the difference between the marginal rate of substitution of x for y and the relative price of x is at a utmost.QUESTION 6Stuart, who loves seafood, says, I cant really tell the difference between Sydney rock oysters and Pacific oysters. They sample equally delicious to me I just buy a dozen of whichever is cheaper every week. In terms of marginal avail theory, Stuart thinks(a) the marginal utility per dollar mark spent on Sydney rock oysters is equal to the marginal utility per dollar spent on Pacific oysters. (b) the marginal utility he gets from Sydney rock oysters is greater than that from Pacific oysters, but Pacific oysters are cheaper. (c) the marginal utility he gets from Pacific oysters is greater than that from Sydney rock oysters, butSydney rock oysters are cheaper. (d) the marginal utility he gets from Sydney rock oysters is equal to that from Pacific oysters, and so whichever oyster has a lower price gives him a higher marginal utility per dollar spent.QUESTION 7According to the marginal utility theory of consumer choice, proportionna l consumers will spend their money with the aim of(a) maximizing the fall utility they get from their bound income. (b) maximizing the marginal utility they get from each good. (c) equalizing the marginal utility they get from different goods. (d) maximizing the amount they save out of their limited income.QUESTION 8A firms production function refers to(a) the maximum quantity of output that it can produce within a given period. (b) the maximum revenue it can earn from various levels of output. (c) the maximum output that can be produced from various quantities of inputs. (d) the minimum monetary value of producing various levels of output.QUESTION 9When marginal cost is rising, average total cost(a) will necessarily be rising.(b) will necessarily be falling.(c) may be rising or falling, depending on whether marginal cost is greater or less than average total cost.(d) may be rising or falling, depending on whether marginal cost is greater or less than average variable cost.QUESTIO N 10Which of the following reflects the law of diminishing marginal rate of substitution? As we continually increase labour one unit at a time,(a) the addition to output will become larger, if capital letter is held constant. (b) the addition to output will become smaller, if capital is held constant. (c) larger reductions in capital will be required to delay output constant. (d) smaller reductions in capital will be required to keep output constant. (e) larger increases in labour will be required to keep output constant.QUESTION 11The least cost technique of producing a given output occurs where the marginal rate of substitution of labour for capital equals the(a) ratio of the quantity of labour used relative to the quantity of capital used.(b) ratio of the price of labour to the price of capital.(c) minimum point on the isoquant line.(d) marginal cost of capital(e) ratio of the marginal cost of capital to the marginal cost of labour.QUESTION 12A perfectly competitive firms supp ly curve is the upward-sloping part of its(a) average product curve, at all points in a higher place the point of minimum average variable cost. (b) marginal cost curve, at all points above the point of minimum average fixed cost. (c) marginal revenue curve, at all points above the point of minimum average revenue. (d) marginal revenue curve, at all points above the point of minimum average total cost. (e) marginal cost curve, at all points above the point of minimum average variable cost.QUESTION 13For the monopolist facing a downwards sloping demand, the marginal revenuenever exceeds the price because(a) the producers of substitutes keep the price low.(b) the monopolist must lower the price in order to sell more during any given period of time. (c) the monopoly will be a large corporation with high fixed costs. (d) the monopoly must accept the marginal revenue set by the market as a whole. (e) the monopoly has low marginal cost relative to a competitive firm.QUESTION 14The circ uit board gives the demand record for water bottled by Wandas Healthy Waters, a single-price monopoly. If the marginal cost is a constant $4 a bottle, Wandas will produce _______ a day and charge ____ a bottle.(a) 3 bottles $7(b) 4 bottles $6(c) 5 bottles $5(d) 1 bottle $9QUESTION 15The table below gives the demand and supply schedule for biscuits. The government now levies a $3 tax on biscuit. As a result, the price of a software of biscuits will increase to ____ and the tax revenue collected is ____.(a) $12 $clx a week(b) $12 $300 a week(c) $13 $160 a week(d) $13 $240 a weekPrice($ per packet)Quantity demanded (packets / week)Quantity supplied(packets / week)QUESTION 16Excess capacity in monopolistically competitive firms is exposit by the fact that(a) each firm faces a demand that is perfectly elastic.(b) each firms builds a huge plant.(c) the existence of slightly differentiated products serving near the same purpose causes a waste of precious natural resources.(d) firms pro duce at an output that is less than the output associated with their minimum average total cost.(e) marginal cost is too high.QUESTION 17When the economic profit is negative in an sedulousness that is monopolistically competitive, then(a) firms will enter the industry and produce better products. (b) firms will exit the industry, and the demand will increase for the products of the firms that remain. (c) firms will exit the industry, and the demand will decrease for those firms that remain in the industry. (d) firms will enter the industry and the demand will become more elastic for those firms that were originally in the industry. (e) the industry will eventually disappear.QUESTION 18If the electricity commission in Queensland practises perfect price discrimination(a) its marginal cost curve and its demand curve are identical.(b) its marginal revenue curve and its demand curve are identical. (c) its marginal revenue curve lies below its demand curve.(d) its marginal revenue curve lies above its demand curve.(e) none of the above.