MCQS ECO615 midterm preparation file ZB

In the name of God , Most

Gracious, Most merciful

ECO615
MCQS Midterm preparation file ZB

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MCQS

1. Which of the following is a characteristic of a perfectly competitive market? a) Many buyers and few

sellers

b) Homogeneous products

c) Barriers to entry

d) Product differentiation

Answer: b) Homogeneous products

2. What does the law of demand state? a) As the price of a good increases, the quantity demanded decreases

b) As the price of a good increases, the quantity demanded increases

c) As income increases, demand decreases

d) As the price of a good decreases, the quantity demanded decreases

Answer: a) As the price of a good increases, the quantity demanded decreases

3. The income elasticity of demand for a normal good is: a) Negative

b) Zero

c) Positive

d) Infinity

Answer: c) Positive

4. Which of the following best describes a monopolist’s demand curve? a) Perfectly elastic

b) Perfectly inelastic

c) Downward sloping

d) Vertical

Answer: c) Downward sloping

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Midterm preparation file

5. In the short run, a firm in perfect competition: a) Cannot make a profit

b) Can earn economic profits

c) Always breaks even

d) Always incurs losses

Answer: b) Can earn economic profits

6. Which of the following is an example of a public good? a) A private park

b) National defense

c) A toll road

d) A subscription service

Answer: b) National defense

7. What is the primary objective of a firm in a perfectly competitive market? a) Maximizing revenue

b) Maximizing profit

c) Minimizing cost

d) Maximizing market share

Answer: b) Maximizing profit

8. A negative externality occurs when: a) A third party benefits from a market transaction

b) A third party suffers from a market transaction

c) Market participants face lower costs

d) Market participants are fully informed

Answer: b) A third party suffers from a market transaction

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9. The marginal revenue product (MRP) of labor is the additional: a) Revenue generated from the

additional unit of labor

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b) Cost of hiring an additional worker

c) Total revenue generated by labor

d) Profit from the additional labor

Answer: a) Revenue generated from the additional unit of labor

10. Which market structure is characterized by a few large firms that have market power? a)

Monopoly

b) Perfect competition

c) Oligopoly

d) Monopolistic competition

Answer: c) Oligopoly

11. In a monopolistically competitive market, firms produce: a) Identical products

b) Differentiated products

c) Homogeneous products

d) Non-differentiated products

Answer: b) Differentiated products

12. The price elasticity of demand is defined as: a) The percentage change in price divided by the

percentage change in quantity demanded

b) The percentage change in quantity demanded divided by the percentage change in price

c) The slope of the demand curve

d) The responsiveness of supply to price changes

Answer: b) The percentage change in quantity demanded divided by the percentage change in

price
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13. Which of the following is an example of a natural monopoly? a) A mobile phone provider

b) A public utility company

c) A car manufacturer

d) A retail store

Answer: b) A public utility company

14. If a firm is producing at a level where marginal cost equals marginal revenue, it is: a)

Maximizing profit

b) Minimizing cost

c) In a state of long-run equilibrium

d) Operating at a loss

Answer: a) Maximizing profit

15. Which of the following is true about the supply curve in a perfectly competitive market? a)

It is horizontal

b) It slopes downward

c) It slopes upward

d) It is vertical

Answer: c) It slopes upward

16. In which of the following situations would a firm in a perfectly competitive market

continue to operate in the short run? a) When price is greater than average total cost

b) When price is less than average variable cost

c) When price is equal to marginal cost

d) When price is equal to average fixed cost

Answer: a) When price is greater than average total cost

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17. The concept of "consumer surplus" refers to: a) The total expenditure of consumers

b) The difference between what consumers are willing to pay and what they actually pay

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c) The total utility derived from a good

d) The total cost of producing a good

Answer: b) The difference between what consumers are willing to pay and what they actually pay

18. Which of the following is true of a price ceiling? a) It leads to a market shortage if set below the

equilibrium price

b) It leads to a market surplus if set below the equilibrium price

c) It encourages producers to increase supply

d) It is always set above the equilibrium price

Answer: a) It leads to a market shortage if set below the equilibrium price

19. Which of the following is the most likely consequence of a government-imposed price floor? a) A

shortage of goods

b) A surplus of goods

c) A decrease in supply

d) An increase in demand

Answer: b) A surplus of goods

20. In which market structure do firms face a kinked demand curve? a) Perfect competition

b) Monopoly

c) Oligopoly

d) Monopolistic competition

Answer: c) Oligopoly
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21. If a good has many substitutes, its demand is likely to be: a) Inelastic

b) Elastic

c) Unitary

d) Perfectly elastic

Answer: b) Elastic

22. In the long run, perfectly competitive firms: a) Can earn economic profits

b) Cannot enter or exit the market

c) Earn zero economic profits

d) Make economic losses

Answer: c) Earn zero economic profits

23. What happens when a monopolist maximizes profit? a) Price equals marginal cost

b) Marginal revenue equals marginal cost

c) Total revenue equals total cost

d) Average total cost is minimized

Answer: b) Marginal revenue equals marginal cost

24. The total cost of production consists of: a) Fixed costs only

b) Variable costs only

c) The sum of fixed and variable costs

d) Marginal costs only

Answer: c) The sum of fixed and variable costs

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25. Which of the following best describes an oligopoly? a) A market with many small

firms

b) A market with a single seller

c) A market with a few large firms dominating the industry

d) A market with no barriers to entry

Answer: c) A market with a few large firms dominating the industry

26. When the government imposes a tax on a good, the price paid by consumers

generally: a) Decreases

b) Remains the same

c) Increases

d) Becomes unpredictable

Answer: c) Increases

27. Which of the following would cause a shift in the supply curve? a) A change in

consumer preferences

b) A change in the price of the good

c) A change in production technology

d) A change in income

Answer: c) A change in production technology

28. A firm in a perfectly competitive market is producing at a point where marginal cost

equals price. What is the firm's economic profit? a) Zero, in the long run

b) Positive, in the short run

c) Negative, in the short run

d) Positive, in the long run

Answer: a) Zero, in the long run

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29. Which of the following best describes the marginal cost curve in the short run? a) It is upward sloping

b) It is downward sloping

c) It is horizontal

d) It is vertical

Answer: a) It is upward sloping

30. The concept of “deadweight loss” refers to: a) The loss in consumer surplus only

b) The loss in total surplus due to market inefficiencies

c) The additional cost imposed by government regulation

d) The increase in producer surplus due to price floors

Answer: b) The loss in total surplus due to market inefficiencies

31. What is the primary difference between monopolistic competition and perfect competition? a) The

number of firms in the market

b) The level of product differentiation

c) The existence of barriers to entry

d) The pricing behavior

**Answer: b) The level of

32. Which of the following is true about the long-run equilibrium in a monopolistically competitive

market? a) Firms can earn economic profits in the long run

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33. The demand curve for a perfectly competitive firm is: a) Upward
sloping
b) Downward sloping
c) Perfectly elastic
d) Perfectly inelastic
Answer: c) Perfectly elastic

34. Which of the following is true about the price elasticity of supply? a)
It measures how much the quantity supplied changes in response to a
change in price
b) It is always greater than 1
c) It is the same for all goods
d) It is unaffected by time periods
Answer: a) It measures how much the quantity supplied changes in
response to a change in price

35. If the price of a good rises and its total revenue increases, the
demand for that good is: a) Elastic
b) Inelastic
c) Unitary elastic
d) Perfectly inelastic
Answer: b) Inelastic

36. Which of the following is not a feature of an oligopoly market

structure? a) Few firms dominate the market
b) High barriers to entry
c) Homogeneous products
d) Interdependence among firms
Answer: c) Homogeneous products
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37. In a perfectly competitive market, firms: a) Have market power to set prices

b) Can freely enter and exit the market

c) Sell differentiated products

d) Have large market share

Answer: b) Can freely enter and exit the market

38. The marginal product of labor is defined as: a) The total output produced by labor

b) The additional output from hiring one more worker

c) The total cost of hiring labor

d) The average amount of labor needed to produce a good

Answer: b) The additional output from hiring one more worker

39. A monopolist maximizes its profit by producing at the point where: a) Marginal cost equals price

b) Marginal revenue equals marginal cost

c) Average cost equals price

d) Total cost is minimized

Answer: b) Marginal revenue equals marginal cost

40. Which of the following is a characteristic of public goods? a) Non-rivalrous and non-excludable

b) Rivalrous and excludable

c) Non-rivalrous and excludable

d) Rivalrous and non-excludable

Answer: a) Non-rivalrous and non-excludable

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41. The efficient level of output in a competitive market occurs when: a)

Price equals average total cost
b) Marginal cost equals marginal revenue
c) Marginal cost equals price
d) Price equals marginal revenue
Answer: c) Marginal cost equals price

42. Which of the following best describes the demand curve for a
monopolist? a) It is perfectly elastic
b) It is downward sloping
c) It is upward sloping
d) It is vertical
Answer: b) It is downward sloping

43. Which of the following factors will cause a shift in the demand curve
for a good? a) A change in the price of the good
b) A change in consumer income
c) A change in the number of firms in the market
d) A change in the price of related goods
Answer: b) A change in consumer income

44. In an oligopoly, firms typically compete on the basis of: a) Price alone
b) Product quality and advertising
c) Quantity only
d) Innovation and technology only
Answer: b) Product quality and advertising
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Midterm preparation file
45. A firm's average total cost (ATC) is U-shaped because: a) Marginal cost is always increasing

b) Marginal cost initially decreases and then increases

c) Average fixed cost is constant

d) Marginal cost equals average total cost

Answer: b) Marginal cost initially decreases and then increases

46. Which of the following is most likely to be a characteristic of a natural monopoly? a) The firm has a declining

average total cost curve over a large range of output

b) The firm faces many competitors in the market

c) There are no barriers to entry

d) The firm produces differentiated products

Answer: a) The firm has a declining average total cost curve over a large range of output

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MCQS Midterm preparation file

Passing criteria of this course

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Passing Criteria for a Course:

The passing criteria is defined in such a way that it ensures the

student shall be consistent in his studies
throughout the semester.
Therefore, for passing a course/subject, student shall fulfill the
following:
a) Secure minimum 20% score in Formative Assessments/Mid
terms
b) Secure minimum 20% score in Final Term Examinations.
c) Secure at least 40% marks in aggregate while fulfilling the
above requirements
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MCQS Midterm preparation file

Course Selection and Credit Hours

Q: How do I select courses when the course selection is open?

A: Follow these steps:
1. Check the credit hours allowed by your university (e.g., 21, 18, or 15
credit hours).
2. Each subject typically has 3 credit hours.
3. Divide the total allowed credit hours by 3 to determine how many
subjects you can select.
Examples:
21 credit hours = 7 su18 credit hours = 6 subjects
15 credit hours = 5 subjects
Remember, the university may allow different credit hours for each
student, so check your specific allowance.
By following these steps, you can make informed decisions during
course selection and manage your credit hours
effectively.

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Advice
Hmaesha relax ho ke parha kryn panic mat hua kryn apky
parents ky bohat khawab hoty hn wo pura krny ki puri koshish
kea kryn kbi b ksi pe depend na kea kryn apko bs ak insan
success kr saqta ha or wo insan ap khud hn apky elawa koi nahe
ap bs koshish kryn Allah pak pe strong yakeen rakha kryn or
mehnat krke sb Allah ke hawaly kr dea kryn everything is
possible be brave be strong stay blessed
Hum insan hamesha moat se darty or bhagty hn or moat se
bachny ki koshish krty hn jabke moat ny ana hi ana ha hum
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moat se nahe bach saqty humy jahanam se bachny ki koshish
krni chaheay hum jahanam se bach saqty hn
Insan ko 3 chezo se dar lagta ha Moat Risk/Dolat Ezat Shohrat
Fame

Moat
Humy pta hona chaheay Moat tab ani ha jab Allah
chahy us se pehly puri dunya bi ak tararf ho ke apko
marna chahy to apka kuch nahe beggar saqti

Risk/Dolat
Risk Dolat sb Allah pak ke hath m ha puri dunya ak
taraf b ho jay na apsy apka risk cheen saqti ha na de
saqti ha Ye sirf ALLAh pak ky hath m ha

Izat Zilat shohrat Fame

Izat Zilat Sirf Allah de saqty hn puri dunya mel ke b
apko zra brabr b demage nahe kr saqti Agr ALLAH
Apko izat dena chahay to puri dunya ak tararf ho ke
b apko 1% b nuksan nahe pohancha saqti
Phr Dar ks bat ka ???????????????
Be brave be strong Just put your trust To ALLAH
Hamesha Confident or himat se raho kbi ksi k samne
mat jhuko puri dunya mel k b apka kuch b nahe
beggar saqti
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Hum puri Koshish kr rhy hn k hum sb Mel k Quran ki
translation or most important topics ko maximum share kry with
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