FINALTERMEXAMINATION.docVIP

FINALTERM EXAMINATION Spring 2010 ECO401- Economics (Session - 1) Ref No: Time: 90 min Marks: 69 Question No: 1 ( Marks: 1 ) - Please choose one Government authorities have managed to reduce the unemployment rate from 8% to 4% in a hypothetical economy. As a result: ? The economys production possibilities curve will shift outward. ? The economys production possibilities curve will become steeper. ? The economy will move downward along its production possibilities curve. ? The economy will move from a point inside to a point closer to its production possibilities curve. Question No: 2 ( Marks: 1 ) - Please choose one Which of the following measures the percentage change in quantity demanded given a percentage change in consumers income? ? Price elasticity of demand. ? Income elasticity of demand. ? Supply price elasticity. ? Cross price elasticity. Question No: 3 ( Marks: 1 ) - Please choose one If the income elasticity of demand for boots is 0.2, a 10% increase in consumers 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 Increase in pension benefits leads to income and substitution effect which: ? Encourage workers to retire later. ? Encourage workers to work more hours. ? Have no effect on incentive to retire. ? Encourage workers to retire earlier. Question No: 5 ( Marks: 1 ) - Please choose one Marginal profit is equal to: ? Marginal revenue minus marginal cost. ? Marginal revenue plus marginal cost. ? Marginal cost minus marginal revenue. ? Marginal revenue times marginal cost. Question No: 6 ( Marks: 1 )