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    1. Which of the following events is likely to decrease the quantity of milk demanded (other things equal)?
    a. Decrease in the price of wine
    b. Scientists discovering that drinking milk prolongs one’s life c. Increase in the price of milk
    d. Increase in the number of cows on farms
    2. An increase in supply (with demand remaining unchanged) leads to a 20% decrease in the market equilibrium price and 10% increase in the market equilibrium quantity. Based on this information, we can infer that:
    a. Demand is price elastic b. Demand is price inelastic c. Supply is price elastic
    d. Supply is price inelastic
    3. A consumer has a budget of 10 pounds to spend on pizza and cola. A slice of pizza costs 2 pounds and a can of cola costs 50 pence. Which of the following statements is true?
    a. A bundle consisting of 2 slices of pizza and 10 cans of cola is not affordable
    b. A bundle consisting of 3 slices of pizza and 8 cans of cola is affordable and might be the consumer’s optimal choice
    c. A bundle consisting of 3 slices of pizza and 8 cans of cola is affordable and is the consumer’s optimal choice
    d. A bundle consisting of 4 slices of pizza and 6 cans of cola is affordable
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    ECO1017
    4. Which of the following statements about the short-run cost functions is NOT true?
    a. AFC is a decreasing function of Q
    b. AVC >ATC if MC>ATC
    c. ATC = MC where ATC is at its minimum
    d. MC is an increasing function of Q under diminishing MPL
    5. Unlike a firm on the perfectly competitive market, the monopolist: a. Faces a downward sloping demand curve
    b. Uses MR = MC rule to set profit-maximizing quantity
    c. Maximizes profit rather than minimizing the loss
    d. Is able to obtain short-run economic profit
    6. A per unit tax of 4 pounds leads to a decline in the quantity traded by 10 units. The deadweight loss is:
    a. 40 pounds b. 10 pounds c. 20 pounds d. 400 pounds
    7. Which of the following characterizes both perfectly competitive and monopolistically competitive markets?
    a. Firms face downward sloping demand curves
    b. Firms sell differentiated products
    c. Firms use advertising extensively
    d. In the long-run equilibrium, firms earn zero economic profit
    Page 3 of 9
    ECO1017
    8. A technological change that decreases the marginal product of labour will, other things equal:
    a. Decrease demand for labour and eventually lead to an increase in equilibrium wage
    b. Decrease demand for labour and eventually lead to a decrease in equilibrium wage
    c. Increase demand for labour and eventually lead to an increase in equilibrium wage
    d. Increase demand for labour and eventually lead to a decrease in equilibrium wage
    9. Coase Theorem claims that the market can internalize externalities provided:
    a. Markets are perfectly competitive
    b. Transaction costs are zero, irrespective of how property rights
    are defined
    c. Property rights are well-defined, irrespective of the transaction
    costs
    d. Property rights are well-defined and transaction costs are zero
    10. A Pigouvian tax is used to:
    a. Address the common pool problem
    b. Address negative externalities
    c. Correct for the deadweight loss created by a monopoly d. Tax goods imported into the country
    11. If the nominal interest rate is 10% and the price index rises from
    200 to 210, what is the value of the real interest rate?
    a. 0% b. 20% c. 15% d. 5%.
    Page 4 of 9
    ECO1017
    12. If the reserve ratio is 5% and an extra £1,000 is deposited in the banking system by how much will the money supply increase?
    a. £950
    b. £1,000 c. £5,000 d. £20,000
    13. Which of the following is nearest to the present value of £100 received 3 years from now if the interest rate is 20%?
    a. £69 b. £58 c. £173 d. £120
    14. Which of the following is nearest to the future value of £100 invested for 3 years if the interest rate is 20%?
    a. £69 b. £58 c. £173 d. £120
    15. Which is the most likely short run consequence of an increase in government spending?
    a. Outputfalls,pricelevelunchanged
    b. Outputunchanged,pricelevelfalls
    c. Output rises, price level rises
    d. Outputrises,pricelevelfalls
    Page 5 of 9
    ECO1017
    16. Which of the following is required for sustained growth of per capita GDP?
    a. Largercapitalstock
    b. Improvedtechnology
    c. Higher savings
    d. Increasedworkforce
    17. Which of the following are means by which the Central Bank can reduce the supply of money?
    a. Thepurchaseofsecuritiesfromthege neralpublic
    b. An increase in the legal reserve ratio
    c. A reduction in the rate of interest at which it lends to the banks
    d. Alloftheabove
    18. Monetary neutrality states which of the following?
    a. Moneydoesnotinfluencesrealoutput
    b. Moneyonlyinfluencesrealoutput
    c. Money does not influence the price level
    d. Money does not influence the nominal exchange rate
    19. According to the 2005 UK Labour Force Survey 15,000,000 adults
    were employed in full time jobs, 5,000,000 adults were employed in part time jobs and 10,000,000 adults were unemployed. What was the rate of unemployment?
    a. 33% b. 50% c. 40% d. 10%
    Page 6 of 9
    ECO1017
    20. Assume an economy can be represented by Y = 10 + 0.8×C + G, where Y is income (GDP), G is government spending and C is consumption. If G was to rise from 100 to 200 by how much would the equilibrium value of Y increase?
    a. 500 b. 80 c. 100 d. 200
    Page 7 of 9
    ECO1017
    [turn over]
    Section B Microeconomics.
    21. Explain the welfare impact of international trade on the exporting country. Show on the diagram the welfare gains/losses to producers and consumers as compared to the no-trade situation.
    22. As you increase the price of a good you are selling, your total revenue increases, but your total profit decreases. Supposing that your demand has not changed, what do these two facts imply for the price elasticity of demand and your cost structure?
    23. Explain why accountants in the public sector are often paid less than accountants in the private sector.
    24. Give two examples of excludable but non-rival goods. Should the government provide these goods, and why?
    25. When and how can the firm with market power use first-degree price discrimination?
    Page 8 of 9
    ECO1017
    Section C Macroeconomics
    26. Use Phillips curve analysis to explain why many central banks are independent of government.
    27. Use aggregate demand and supply analysis to show how a reduction in the rate of interest affects output and the price level.
    28. Use IS/LM analysis to show how an increase in government spending influences output and the interest rate.
    29. Discuss ways in which a government could raise the level of real GDP per capita in the long run.
    30. Use diagrams to show why import restrictions do not improve the trade balance.
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    Even just these questions would help so much thank you xxxx

    Section B Microeconomics.

    21. Explain the welfare impact of international trade on the exporting country. Show on the diagram the welfare gains/losses to producers and consumers as compared to the no-trade situation.

    23. Explain why accountants in the public sector are often paid less than accountants in the private sector.

    24. Give two examples of excludable but non-rival goods. Should the government provide these goods, and why?

    25. When and how can the firm with market power use first-degree price discrimination?

    Section C Macroeconomics

    26. Use Phillips curve analysis to explain why many central banks are independent of government.

    27. Use aggregate demand and supply analysis to show how a reduction in the rate of interest affects output and the price level.

    29. Discuss ways in which a government could raise the level of real GDP per capita in the long run.
 
 
 
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