MCQ's of Economics (HELP)

[arvind0708]

MCQ for Economics June 2008 Paper 3 Question 17

17 During a year, a country’s national income in money terms increased by 8 %, prices increased by
4 % and total population increased by 2 %.
What was the approximate change in real income per head?
A a decrease of 2 %
B nil
C an increase of 2 %
D an increase of 4 %

 

[arvind0708]

MCQ for Economics June 2008 Paper 3 Question 23

23 In a banking system, all banks maintain 20 % of deposits as cash.
One bank receives a new cash deposit of $200. Subsequent net withdrawals of cash from the
banking system are zero.
What will be the resulting increase in bank loans and the total increase in bank deposits?
increase in bank loans total increase in deposits
A $160 $200
B $160 $360
C $800 $1000
D $1000 $1000

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 5

5 A firm currently employs 30 workers at a daily wage rate of $40.
It calculates that the marginal cost per day of hiring an additional worker would be $102.
By how much would the daily wage rate have to be increased to attract an extra worker?
A $2 B $42 C $62 D $102

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 8

8 The table shows the production of a firm.
production (tonnes) total cost ($)
0 20
1 30
2 35
3 40
4 45
5 50
What is the average variable cost of producing 5 tonnes of output?
A $4.00 B $5.00 C $6.00 D $10.00

help

 

[arvind0708]

MCQ for Economics Nov 2003 Paper 3 Question 19

13 The table shows the costs of two milk producers.
costs per litre
firm X $9
firm Y $7
The price received by producers is $10 per litre. Both firms have been given quotas allowing
them to produce 200 litres per day. Firm X sells its quota to firm Y.
Assuming constant costs of production and zero costs of entry and exit, what price did firm Y pay
(per day) to buy X’s quota?
A $200
B $600
C $700
D between $200 and $600

help

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 14

14 During a year, a country’s national income in money terms increased by 6 %, prices increased by
4 % and total population increased by 2 %.
What was the approximate change in real income per head?
A a decrease of 2 %
B nil
C an increase of 2 %
D an increase of 4 %

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 16

16 The table shows some data for an economy.
investment
$m
exports
$m
government
expenditure
$m
savings
$m
imports
$m
taxation
$m
national
income
$m
200 100 50 50 120 100 700
200 100 50 60 140 150 800
200 100 50 75 160 200 900
200 100 50 100 180 275 1000
What is the equilibrium level of national income?
A $700 m B $800 m C $900 m D $1000 m

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 18

18 In an economy, the volume of output rises by 3 % in a year, while the quantity of money rises by
5 %.
If the velocity of circulation of money remains the same, what will be the approximate increases in
the money value of national income and the price level?
increase in money
value of national income
increase in price level
A 5 % 2 %
B 5 % 3 %
C 8 % 2 %
D 8 % 3 %

help

 

[arvind0708]

MCQ for Economics Nov 2008 Paper 3 Question 23

23 The natural rate of unemployment in an economy is 5 %.
What will happen if a government persists in trying to achieve a target rate of unemployment of
3 % by expansionary monetary policy?
A an accelerating rate of inflation
B a diminishing rate of inflation
C a high but constant rate of inflation
D a negative rate of inflation

help.

 

[Shahnam]

Re: MCQ for Economics Nov 2008 Paper 3 Question 16

16 The table shows some data for an economy.
investment
$m
exports
$m
government
expenditure
$m
savings
$m
imports
$m
taxation
$m
national
income
$m
200 100 50 50 120 100 700
200 100 50 60 140 150 800
200 100 50 75 160 200 900
200 100 50 100 180 275 1000
What is the equilibrium level of national income?
A $700 m B $800 m C $900 m D $1000 m

injections = investment + export + govt. expenditure
leakages = taxation + imports + saving
where; leakages = injections thats your answer.
correct answer B i.e. $800

 

[Shahnam]

Re: MCQ for Economics June 2007 Paper 3 Question 9

9 The short-run total costs of a firm are given by the formula
SRTC = $(10 000 + 5X2)
where X is the level of output.
What are the firm’s average fixed costs?
A $10 000
B
X
$(10 000 5X ) 2
+
C
X
$10 000
D
X
$(5X 10 000) 2
−
help in calculating it

it is $10,000 because it is fixed and has to be paid whether the business operates or it doesn't.
fixed costs are the expenses incurred irrespective of the output and business operations. examples include; rent and rates, fixed salaries to employess, etc.

 

[Xenon]

8 An economist calculates that a firm has incurred the following costs over the course of a year.
$(000)
wages and salaries 150
opportunity cost of owner's time 40
materials 80
rent 30
marketing fees 20
interest on bank loans 25
interest forgone on finance
provided by owner
15
depreciation 20
What would an accountant calculate to be the total cost incurred by the firm?
A $275 000 B $305 000 C $325 000 D $340 000

how to get the answer.

An accountants view of cost is that they are incurred when firms make any recognised expenditure.
"opportunity cost of owner's time", "interest forgone on finance provided by owner" & depreciation are costs considered by only an economists. the rest only by accountant. Thus ans: B

 

[Xenon]

Re: MCQ for Economics June 2003 Paper 3 Question 24

24 Assuming a constant income velocity of circulation of money, if real output grows by 3 %, and the
rate of growth of the money supply is 10 %, what will be the approximate change in the price
level?
A – 7 % B + 7 % C + 10 % D + 13 %

what calculation need to be done to get the answer.

Try using the quantity theory of money: MV=PT.

 

[Xenon]

Re: MCQ for Economics Nov 2003 Paper 3 Question 6

6 To increase the labour force from 30 to 31 workers, an entrepreneur is forced to increase the
daily wage rate from $40 to $42.
What is the marginal cost of labour per day?
A $2 B $42 C $62 D $102

how to get the answer.

(31 x 42) - ( 30 x 40) = 102
ans : D

 

[Xenon]

Re: MCQ for Economics Nov 2003 Paper 3 Question 9

the wage he could have earned in alternative employment is $30 000.

this the opportunity cost of being self employed and is considered by economists not accountant. ans : 30 000

 

[Xenon]

Re: MCQ for Economics Nov 2005 Paper 3 Question 2

2 The table shows the total utility that an individual derives from consuming different quantities of a
good.
quantity of good
(units)
total utility
(units)
1 20
2 36
3 50
4 62
5 72
6 80
The individual's marginal utility of money is $1 = 2 units of utility.
What is the maximum quantity of the good that the individual will buy when its price is $6?
A 2 units B 3 units C 4 units D 5 units

marginal utility of 4th unit is 12.
total utility gained form spending $6 is 6 x 2 = 12.
ans: C

 

[Xenon]

Re: MCQ for Economics June 2006 Paper 3 Question 9

9 A firm in perfect competition currently sells 100 units at $5 each.
What will be the revenue obtained by the firm if it increases its price to $6?
A zero B $100 C $500 D $600

firms in a perfect competition are price takers and faces a perfectly elastic demand curve. If they increase their prices ], they will lose all there customers and revenue will fall to zero.If they reduce price, they will run out of stock. ans: A

 

[Xenon]

Re: MCQ for Economics Nov 2007 Paper 3 Question 7

7 The table shows a firm’s total and marginal costs.
output total cost ($) marginal cost ($)
1 200 20
2 215 15
3 225 10
4 240 15
5 260 20
What is the average fixed cost of producing 6 units?
A $20 B $30 C $180 D $200

how to get the answer

the MC of 1st unit is 20. Therefore, fixed cost is 200 - 20 =180. AC of 6 units = 180/6 = 30
ans: B

 

[Xenon]

Re: MCQ for Economics June 2008 Paper 3 Question 17

17 During a year, a country’s national income in money terms increased by 8 %, prices increased by
4 % and total population increased by 2 %.
What was the approximate change in real income per head?
A a decrease of 2 %
B nil
C an increase of 2 %
D an increase of 4 %

real income per head is the money income adjusted with price level and then divided with total no. of population.
money income = 8%
price level rise = 4%
population increase = 2%
change in real income per head = 8 - 4 -2 = 2%
thus real income per head rises by 2%
ans: c

 

[Xenon]

Re: MCQ for Economics Nov 2008 Paper 3 Question 8

8 The table shows the production of a firm.
production (tonnes) total cost ($)
0 20
1 30
2 35
3 40
4 45
5 50
What is the average variable cost of producing 5 tonnes of output?
A $4.00 B $5.00 C $6.00 D $10.00

help

the cost incurred when output is zero is the fixed cost which in this case is 20.
At 5 units, variable cost = total cost - fixed cost = 50 -20 = 30
AVC = 30/5 = 6
ans: C