Micro Exam

GABST COLLEGE OF DISTANCE EDUCATION UNIT
MICROECONOMICS (ECON 2161) FINAL EXAM

Name_______________________________ ID.No__________ Department______________Year_____ Term____
Part I: Write True if the statement is correct and False if the statement is incorrect on the space provided (1.5 pt each)
__________ 1. In microeconomics we study an individual, firm and a household.

__________ 2. Technological efficiency is achieved when resources are not wasted in production process.
__________ 3. If demand is price inelastic, then buyers do not respond much to a change in price
__________ 4. A positive gain from business after subtracting expenses is profit.
__________ 5. Market failure is the ability of a market to establish an equilibrium price.
__________ 6. For a monopoly firm, always “Price = average revenue”
__________ 7. If marginal costs are greater than average fixed costs, average fixed costs are rising as production increases.
__________ 8. If average total cost is decreasing in the short run Marginal cost is greater than average total cost
__________ 9. Total fixed cost is the fixed cost per unit of output.
__________ 10. Presence of close substitutes is one of the main features of pure monopoly market.
__________ 11. Presence of government intervention is one of the main features of perfectly competitive market.
__________ 12. Game theory is the theory that examines the choice of optimal strategies in conflict situations.
Part II: Choose the best answer from the given alternatives (1.5 pt.each)
______ 1. A normal good can be defined as one which consumers purchase more of as
A. Prices fall B. Prices rise

C. Incomes fall D. Incomes increase
______ 2. When demand for a good is inelastic, consumer expenditures on the good
A. Increase when price increases B. Decrease when price increases

C. Do not change when price increases D. Are not related to price elasticity of demand
E. Are relatively more elastic
______ 3. A single seller or producer having the control over the market is called as
A. Perfect Competition B. Monopoly
C. Monopolistic Competition D. Oligopoly
______ 4. Change in total costs associated with one more unit of output is known as
A. Total variable cost B. Total fixed cost
C. Total cost D. Marginal cost.
______5. Perfect competition occurs in a market where there are
A. A few firms producing identical goods. B. A few firms producing goods that differ somewhat in quality.
C. Many firms producing identical goods. D. Many firms producing goods that differ somewhat.
_____6. At a firm break-even point, definitely it’s

A. Total revenue equals its total opportunity cost. B. Marginal revenue exceeds its marginal cost.
C. Marginal revenue equals its average variable cost. D. Marginal revenue equals its average fixed cost.
1
_____ 7. Name the market structure in which many companies sell products that are similar but not identical.
A. Monopoly B. Traditional system

C. Oligopoly D. Monopolistic competition
______ 8. The desire to own something and the ability to pay for it called __________.
A. Demand B. Capital
C. Allocation D. Opportunity cost
______ 9. The full-production level of our economy implies .
A. An efficient allocation of our resources B. Zero unemployment
C. Our plant and equipment being operated at 100% capacity D. A high unemployment rate
______ 10. If we are operating inside our production possibilities curve
A. There is a recession going on B. There is NOT a recession going on
C. There is less than full employment D. There is inflation
Part III: Match with best alternatives (1.5 pt.each)

Match- I Match- II
_______1. Marginal Profit A. Price maker
_______2. Marginal Cost B. A good used in conjunction with another good
_______3. Perfect Competition C. Illegal market
_______4. Pure monopoly D. Many buyers and many sellers
_______5. Substitute goods E. When price falls, demand decrease
_______6. Giffen goods F. Extra benefit of adding one unit
_______7. Ceteris paribus G. All else equal
_______8. Complement goods H. Demand increase as income increase
_______9. Normal good I. The highest-valued alternative that we give up to get something
______10. Subsidy J. Cost of producing one more unit
______11. Opportunity cost K. A payment made by the government to a producer
______12. Black market L. Juice and cold drink
Part IV: Fill the space provided (1.5 pt.each)

1. _________________ is goods having negative income elasticity.
2. _________________ is a measure of satisfaction an individual gets from the consumption of the commodities.
3. _________________ is an institution that brings buyers and sellers together.
4. _________________ is the act of creating goods/services which have exchange value for sale.
5. _________________ is a curve that shows all possible efficient combinations of inputs that can yield equal level of output.
6. ___________________________ is the blend of competition and monopoly.
Wishes all the best
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GABST COLLEGE OF DISTANCE EDUCATION UNIT

MICROECONOMICS (ECON 2161) FINAL EXAM

__________ 1. In microeconomics we study an individual, firm and a household.

A. Prices fall B. Prices rise

A. Increase when price increases B. Decrease when price increases

______5. Perfect competition occurs in a market where there are

_____6. At a firm break-even point, definitely it’s

A. Monopoly B. Traditional system

______ 9. The full-production level of our economy implies .

A. An efficient allocation of our resources B. Zero unemployment

______ 10. If we are operating inside our production possibilities curve

A. There is a recession going on B. There is NOT a recession going on

C. There is less than full employment D. There is inflation

Part III: Match with best alternatives (1.5 pt.each)

Part IV: Fill the space provided (1.5 pt.each)

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