McqMate
| 1. |
A pure private good is |
| A. | nonrival in consumption and subject to exclusion. |
| B. | rival in consumption and subject to exclusion. |
| C. | rival in consumption and not subject to exclusion. |
| D. | all of the above |
| Answer» B. rival in consumption and subject to exclusion. | |
| 2. |
The M RTS L,K between any two inputs be equal in the production of all commodities. 3. The MRPTx,y be equal to the MRSx,y for any two goods. |
| A. | condition 1&2 are satisfied |
| B. | condition 1 &3 are satisfied |
| C. | condition 2 &3 are satisfied |
| D. | condition 1, 2 &3 are satisfied |
| Answer» D. condition 1, 2 &3 are satisfied | |
| 3. |
Points outside the production possibility frontier are |
| A. | producable. |
| B. | endowment points. |
| C. | consumer equilibrium points. |
| D. | unattainable. |
| Answer» D. unattainable. | |
| 4. |
Positive economics |
| A. | does not depend on market interactions. |
| B. | only looks at the best parts of the economy. |
| C. | examines how the economy actually works (as opposed to how it should work). |
| D. | is very subjective. |
| Answer» C. examines how the economy actually works (as opposed to how it should work). | |
| 5. |
The Coase theorem has problems because |
| A. | generally, bargaining costs are not zero. |
| B. | individuals are not concerned with others. |
| C. | markets always exist. |
| D. | all of the above. |
| Answer» A. generally, bargaining costs are not zero. | |
| 6. |
The marginal rate of substitution is |
| A. | the slope of the pareto curve. |
| B. | the slope of the contract curve. |
| C. | the slope of the utility possibilities curve. |
| D. | the slope of the indifference curve. |
| Answer» D. the slope of the indifference curve. | |
| 7. |
The slope of the production possibilities curve is the |
| A. | marginal rate of substitution. |
| B. | contract curve. |
| C. | marginal rate of transformation. |
| D. | offer curve. |
| Answer» C. marginal rate of transformation. | |
| 8. |
The First Fundamental Theorem of Welfare Economics requires |
| A. | producers and consumers to be price takers. |
| B. | that there be an efficient market for every commodity. |
| C. | that the economy operate at some point on the utility possibility curve. |
| D. | all of the above. |
| Answer» D. all of the above. | |
| 9. |
Market failure can occur when |
| A. | monopoly power exists in the market. |
| B. | markets are missing. |
| C. | consumers can influence prices. |
| D. | all of the above. |
| Answer» D. all of the above. | |
| 10. |
A public good is |
| A. | a good that the public must pay for. |
| B. | nonrival in consumption. |
| C. | more costly than a private good. |
| D. | paid for by the government. |
| Answer» B. nonrival in consumption. | |
| 11. |
Movement from an inefficient allocation to an efficient allocation in the Edgeworth Box will |
| A. | increase the utility of all individuals. |
| B. | increase the utility of at least one individual, but may decrease the level of utility of another person. |
| C. | increase the utility of one individual, but cannot decrease the utility of any individual. |
| D. | decrease the utility of all individuals. |
| Answer» B. increase the utility of at least one individual, but may decrease the level of utility of another person. | |
| 12. |
Points on the utility possibility frontier are |
| A. | inefficient. |
| B. | points of incomplete preferences. |
| C. | not producible. |
| D. | pareto efficient. |
| Answer» D. pareto efficient. | |
| 13. |
Market mechanisms are unlikely to provide |
| A. | prices. |
| B. | nonrival goods efficiently. |
| C. | supply and demand. |
| D. | none of the above. |
| Answer» B. nonrival goods efficiently. | |
| 14. |
Public goods can be |
| A. | provided privately. |
| B. | provided publicly. |
| C. | subject to free rider problems. |
| D. | all of the above. |
| Answer» D. all of the above. | |
| 15. |
Externalities can be positive because |
| A. | marginal damages do not last over time. |
| B. | utility can be impacted positively as well as negatively. |
| C. | there is no concept for marginal benefit. |
| D. | positive externalities are subsidies. |
| Answer» B. utility can be impacted positively as well as negatively. | |
| 16. |
A Pigouvian subsidy |
| A. | cannot exist with externalities. |
| B. | is the same thing as a pigouvian tax. |
| C. | is measured in terms of pigouvian dollars. |
| D. | moves production to the socially optimal level of output |
| Answer» D. moves production to the socially optimal level of output | |
| 17. |
Which method can help in obtaining a welfare improvement if externalites exist? |
| A. | pigouvian taxes |
| B. | regulation |
| C. | assigning property rights and permitting bargaining |
| D. | all of the above |
| Answer» D. all of the above | |
| 18. |
Marginal damages |
| A. | must always be considered in social marginal costs. |
| B. | must not be considered in social marginal costs. |
| C. | must sometimes be considered in social marginal costs. |
| D. | have nothing to do with social marginal costs. |
| Answer» A. must always be considered in social marginal costs. | |
| 19. |
In a public goods context, it is difficult to measure impact on real income because |
| A. | public goods are generally free to the public. |
| B. | they make up a small percentage of total gdp. |
| C. | it is hard to measure how people value the public good. |
| D. | inflation decreases the value of the good. |
| Answer» C. it is hard to measure how people value the public good. | |
| 20. |
According to the required reading from the 2003 Washington Post, a recent study by the U.S. Office of Management and Budget found that |
| A. | the benefits of tough new clean-air regulations in the past decade were five to seven times greater than their costs |
| B. | the most efficient way to control pollution is through pigouvian taxes |
| C. | the 1990 clean air act has not affected the problem of acid rain |
| D. | environmentalists are generally supportive of cost-benefit calculations in assessing |
| Answer» A. the benefits of tough new clean-air regulations in the past decade were five to seven times greater than their costs | |
| 21. |
impossibility theorem was propounded by |
| A. | hicks |
| B. | arrow |
| C. | kaldor |
| D. | scitovsky |
| Answer» B. arrow | |
| 22. |
According to a required reading from the 2003 Economist, the biggest problem facing Indonesia’s economy is |
| A. | terrorism |
| B. | an organic approach to public policy questions |
| C. | inadequate rule of law |
| D. | geographical (e) hobbits |
| Answer» C. inadequate rule of law | |
| 23. |
According to a required reading by P.J. O’Rourke, which of the following statements is false? |
| A. | in most of the world, food production has well outpaced the growth of population |
| B. | democracy may be able to help prevent famines from occurring |
| C. | in countries experiencing famine, security and order must be established before the famine can be contained |
| D. | famines are mainly caused by natural disasters or pestilence |
| Answer» D. famines are mainly caused by natural disasters or pestilence | |
| 24. |
According to a required reading by P.J. O’Rourke, which of the following statements is false? |
| A. | the pesticide ddt may have done more good than harm in some countries before it was banned |
| B. | despite their other problems, eastern european countries did a good job protecting the environment during the communist era |
| C. | the costs of environmental regulation exceed their benefits |
| D. | recycling is an economically inefficient way of reducing the human impact on the environment |
| Answer» B. despite their other problems, eastern european countries did a good job protecting the environment during the communist era | |
| 25. |
The assigned Washington Post Op-Ed by Daniel Chirot can be interpreted as asserting that |
| A. | inadequate education and lack of knowledge of history in the population is why saddam hussein’s government succeeded in ruling iraq for so long |
| B. | the right way to think about saddam hussein’s government is basically as if he were the head of a mafia organization |
| C. | saddam hussein’s government could be described as adhering to an organic philosophy |
| D. | the biggest problem in iraq under saddam hussein was a lack of rule of law |
| Answer» C. saddam hussein’s government could be described as adhering to an organic philosophy | |
| 26. |
If, for John’s current intertemporal consumption pattern (satisfying his intertemporal budget constraint), his marginal rate of intertemporal substitution is 1 and the real rate of interest is positive, then... |
| A. | the interest rate will fall to zero. |
| B. | john could increase his lifetime utility by consuming more today. |
| C. | john could increase his lifetime utility by consuming less today. |
| D. | john is necessarily a borrower. |
| Answer» C. john could increase his lifetime utility by consuming less today. | |
| 27. |
There are strong theoretical reasons to expect that changes in wealth are responsible for changes in consumption. Nonetheless, one reason that we observe a tight link between consumption and disposable income is... |
| A. | credit rationing which changes the intertemporal budget constraint for borrowers. |
| B. | households attempt to smooth their consumption. |
| C. | household saving provides a buffer between income and expenditure. |
| D. | ricardian equivalence. |
| Answer» A. credit rationing which changes the intertemporal budget constraint for borrowers. | |
| 28. |
The accelerator principle states: |
| A. | if an increase in the growth of output is expected, investment will increase. |
| B. | if an increase in investment is expected, output will increase. |
| C. | if an increase in the growth of investment is expected, output will increase. |
| D. | small swings in investment are associated with large swings of output. |
| Answer» A. if an increase in the growth of output is expected, investment will increase. | |
| 29. |
In the case of a negative externality, the social marginal cost will |
| A. | exceed the private marginal cost. |
| B. | be equal to private marginal cost. |
| C. | fall short of private marginal cost. |
| D. | bear no significant relation to private marginal cost. |
| Answer» A. exceed the private marginal cost. | |
| 30. |
A perfectly competitive steel mill that produces large amounts of pollution (a negative externality) will, from a social point of view |
| A. | produce too little steel |
| B. | produce the socially optimal quantity of steel. |
| C. | produce too much steel. |
| D. | produce too much steel only if it installs pollution control equipment. |
| Answer» C. produce too much steel. | |
| 31. |
Each of the following provides incentives to reduce a negative externality except: |
| A. | a merger with affected firms. |
| B. | subsidizing consumption of the good being produced. |
| C. | bargaining among firms. |
| D. | taxation of the externality. |
| Answer» B. subsidizing consumption of the good being produced. | |
| 32. |
To reach an economically efficient output level, the size of an excise tax imposed on a firm generating a negative externality should be |
| A. | the firm’s marginal cost. |
| B. | the social marginal cost. |
| C. | the difference between the social marginal cost and the firm’s marginal cost. |
| D. | the sum of the social marginal cost and the firm’s marginal cost. |
| Answer» C. the difference between the social marginal cost and the firm’s marginal cost. | |
| 33. |
In perfect competition, environmental externalities need not distort the allocation of resources providing |
| A. | transactions costs are zero. |
| B. | average costs are constant for all output levels. |
| C. | firms install pollution control equipment. |
| D. | the government sets realistic pollution standards. |
| Answer» A. transactions costs are zero. | |
| 34. |
In drilling a new oil well in an existing oil field, the fact that output on existing wells is reduced means that |
| A. | existing wells have negatively sloped marginal cost curves. |
| B. | existing wells and new wells are owned by different people. |
| C. | existing wells and new wells are owned by the same people. |
| D. | there is a discrepancy between private and social marginal costs. |
| Answer» D. there is a discrepancy between private and social marginal costs. | |
| 35. |
Bargaining costs are generally high in cases involving environmental externalities because |
| A. | there are strong incentives to be a free rider. |
| B. | many individuals may be affected by the externalities. |
| C. | it is difficult to measure the costs of the externalities. |
| D. | all of the above. |
| Answer» D. all of the above. | |
| 36. |
Externalities between two firms can be “internalized” if: I. The two firms merge. II. Bargaining costs are zero. III. The externalities affect each firm equally. IV. Marginal costs for both firms are constant. Which statement(s) correctly complete(s) the sentence? |
| A. | only ii. |
| B. | all except iii. |
| C. | i and ii, but not iii and iv. |
| D. | i and iv, but not ii and iii. |
| Answer» C. i and ii, but not iii and iv. | |
| 37. |
Common property |
| A. | is owned by specific people. |
| B. | is inexhaustible. |
| C. | refers strictly to land resource. |
| D. | refers to goods “owned” by society at large and freely usable by anyone. |
| Answer» D. refers to goods “owned” by society at large and freely usable by anyone. | |
| 38. |
Which best describes consumer surplus? |
| A. | the price consumers are willing to pay for a unit |
| B. | the cost of providing a unit |
| C. | the profits made by a firm |
| D. | the difference between the price a consumer pays for an item and the price he/she is willing to pay for it |
| Answer» D. the difference between the price a consumer pays for an item and the price he/she is willing to pay for it | |
| 39. |
Which of the following statements is NOT true? In the free market changes in the price of a product: |
| A. | can act as a signal to producers |
| B. | can provide an incentive to reallocate resources |
| C. | can act as a rationing device |
| D. | are set by the government |
| Answer» D. are set by the government | |
| 40. |
Community surplus equals: |
| A. | producer surplus minus consumer surplus |
| B. | profits plus utility |
| C. | total utility minus plus profit |
| D. | consumer surplus plus producer surplus |
| Answer» D. consumer surplus plus producer surplus | |
| 41. |
Monopoly power in a market is likely to: |
| A. | increase consumer surplus |
| B. | increase community surplus |
| C. | lead to higher producer surplus |
| D. | lead to lower prices and lower output |
| Answer» C. lead to higher producer surplus | |
| 42. |
A negative production externality means: |
| A. | the social marginal cost is greater than the private marginal cost |
| B. | the social marginal benefit is greater than the private marginal cost |
| C. | the social marginal cost is greater than the private marginal benefit |
| D. | the social marginal cost is less than the private marginal cost |
| Answer» A. the social marginal cost is greater than the private marginal cost | |
| 43. |
A positive consumption externality occurs when: |
| A. | the social marginal cost is greater than the private marginal cost |
| B. | the social marginal benefit is greater than the private marginal benefit |
| C. | the social marginal cost is greater than the private marginal benefit |
| D. | the social marginal cost is less than the private marginal cost |
| Answer» B. the social marginal benefit is greater than the private marginal benefit | |
| 44. |
A merit good: |
| A. | is a public good |
| B. | involves a negative externality |
| C. | is overprovided in the free market |
| D. | is under provided in the free market |
| Answer» D. is under provided in the free market | |
| 45. |
A demerit good: |
| A. | is a public good |
| B. | involves a positive externality |
| C. | is overprovided in the free market |
| D. | is under provided in the free market |
| Answer» C. is overprovided in the free market | |
| 46. |
A public good will probably: |
| A. | be expensive in a free market |
| B. | be overprovided in the free market |
| C. | not be provided in the free market |
| D. | has no opportunity cost |
| Answer» C. not be provided in the free market | |
| 47. |
Asymmetric information occurs when: |
| A. | information is free |
| B. | buyers and sellers have access to different information |
| C. | community surplus is maximized |
| D. | community surplus is minimized |
| Answer» B. buyers and sellers have access to different information | |
| 48. |
A situation where people who have taken out insurance behave more recklessly as a result is known as: |
| A. | asymmetric information. |
| B. | bad luck. |
| C. | adverse selection. |
| D. | moral hazard. |
| Answer» D. moral hazard. | |
| 49. |
An insurance company can protect itself from moral hazard by: |
| A. | monitoring. |
| B. | imposing an ‘excess’. |
| C. | holding liquid assets |
| D. | diversification |
| Answer» B. imposing an ‘excess’. | |
| 50. |
Taking into account the utility of all persons in society is referred to as |
| A. | a utilitarian social welfare function. |
| B. | equalizing social welfare function. |
| C. | an in-kind transfer. |
| D. | a pareto equilibrium. |
| Answer» A. a utilitarian social welfare function. | |
| 51. |
When the average buyer of an insurance policy is likely to have higher risk than others in his class, this is known as |
| A. | adverse selection. |
| B. | moral hazard. |
| C. | asymmetric information. |
| D. | an hmo. |
| Answer» A. adverse selection. | |
| 52. |
Health care markets may be inefficient because of |
| A. | poor information (‘ignorance’). |
| B. | adverse selection. |
| C. | moral hazard. |
| D. | all of the above. |
| Answer» D. all of the above. | |
| 53. |
The government can address by providing universal health insurance coverage and charging uniform premiums. |
| A. | expected utility |
| B. | asymmetric information |
| C. | commodity egalitarianism |
| D. | adverse selection |
| Answer» D. adverse selection | |
| 54. |
When people behave in ways that involve increased risk because they have insurance, this is known as |
| A. | adverse selection. |
| B. | moral hazard. |
| C. | asymmetric information. |
| D. | a hmo. |
| Answer» B. moral hazard. | |
| 55. |
Which of the following is not an assumption used in class for reaching the conclusion, using utilitarian reasoning, that income should be divided equally: |
| A. | everybody has the same utility function |
| B. | there is a fixed amount of income to be divided |
| C. | marginal utility is a diminishing function of income |
| D. | some people are more productive than others |
| Answer» D. some people are more productive than others | |
| 56. |
In the economic analysis of the market for new drugs, it is critical to take into account |
| A. | inefficiency from monopoly power granted by patents |
| B. | inequity generated by drug makers charging more than a medication costs to make |
| C. | incentives for innovation by inventing new drugs |
| D. | all of the above |
| Answer» D. all of the above | |
| 57. |
Suppose that you have complete health insurance that covers all expenses. You will use medical care up to the point where your: |
| A. | total benefits equal the costs of providing the medical care. |
| B. | marginal benefit is zero. |
| C. | marginal benefit is equal to the marginal cost of the medical care. |
| D. | marginal benefit is equal to the total costs of providing the medical care. as |
| Answer» B. marginal benefit is zero. | |
| 58. |
If the government subsidizes the health insurance costs of individuals because individuals do not sufficiently realize the importance of having health insurance, which of the following justifications for government intervention is being used? |
| A. | high administrative costs |
| B. | redistribution |
| C. | ignorance |
| D. | externalities |
| Answer» C. ignorance | |
| 59. |
Which of the following is a reason why employers are the predominant source of insurance? |
| A. | insuring at the firm level reduces the extent to which insurance has moral hazard effects. |
| B. | insuring at the firm level allows insurers to create large insurance pools with a predictable distribution of medical risk. |
| C. | employee compensation in the form of medical expenditures is not taxed. |
| D. | both b and c are correct. |
| Answer» D. both b and c are correct. | |
| 60. |
Adverse selection can occur when |
| A. | all persons involved in a transaction have full information. |
| B. | one person has information not available to others. |
| C. | post-agreement incentives result in workers shirking. |
| D. | nobody has any information about a particular product. |
| Answer» B. one person has information not available to others. | |
| 61. |
Adverse selection occurs when |
| A. | a person takes more risks that are not known to the life insurance company because he has life insurance. |
| B. | a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company. |
| C. | a person is a risk lover. |
| D. | pregnant women with health insurance make more doctor visits than uninsured pregnant women. |
| Answer» B. a person buys life insurance because he has a risky lifestyle that is not known to the life insurance company. | |
| 62. |
Adverse selection occurs when there is |
| A. | full information. |
| B. | an unobserved behaviour. |
| C. | an unobserved characteristic. |
| D. | a worker who shirks because his boss does not watch him. |
| Answer» C. an unobserved characteristic. | |
| 63. |
If reckless drivers are more likely to buy automobile insurance than safe drivers are, |
| A. | a moral hazard has occurred. |
| B. | adverse selection has occurred. |
| C. | the market for insurance is efficient. |
| D. | then automobile insurance will be fairly priced. |
| Answer» B. adverse selection has occurred. | |
| 64. |
An individual is willing to pay something for information because |
| A. | information is costly. |
| B. | it is always better to know than not to know. |
| C. | this allows him or her to increase utility. |
| D. | information is a public good. |
| Answer» C. this allows him or her to increase utility. | |
| 65. |
An individual will not choose to acquire all available information because |
| A. | that would maximize utility given his or her budget constraint. |
| B. | that would violate the assumption of risk aversion. |
| C. | there are increasing returns to additional information. |
| D. | there are decreasing marginal costs to acquiring information. |
| Answer» A. that would maximize utility given his or her budget constraint. | |
| 66. |
Adverse selection arises because |
| A. | insurance buyers have more information than insurance sellers. |
| B. | insurance sellers have more information than insurance buyers. |
| C. | individuals can select which insurance company to patronize. |
| D. | insurance companies can exercise too much control over who they insure. |
| Answer» A. insurance buyers have more information than insurance sellers. | |
| 67. |
Adverse selection in competitive insurance markets harms |
| A. | high risk individuals. |
| B. | low risk individuals. |
| C. | owners of insurance companies. |
| D. | everyone. |
| Answer» B. low risk individuals. | |
| 68. |
One way the “lemons problem” in the used-car industry can be mitigated is by |
| A. | raising the price of used cars. |
| B. | hiring auto experts to sell used cars. |
| C. | requiring sellers to guarantee trouble-free cars. |
| D. | allowing owners to trade in their own cars when they purchase a used car. |
| Answer» C. requiring sellers to guarantee trouble-free cars. | |
| 69. |
An example of adverse selection is |
| A. | purchasing a new car sight unseen based on the recommendation of a neighbour. |
| B. | high health insurance premiums resulting from the poor health of people who buy policies. |
| C. | suppliers who charge more for better quality clothing than for lower quality clothing. |
| D. | being talked into buying a low-quality item because the price is lower. |
| Answer» B. high health insurance premiums resulting from the poor health of people who buy policies. | |
| 70. |
If markets are perfect, a rational actor may reasonably conclude from the high price of a good that the good |
| A. | is produced by a monopoly. |
| B. | is of better quality. |
| C. | has a greater demand for it. |
| D. | is not known about by other consumers. |
| Answer» B. is of better quality. | |
| 71. |
In volatile markets, “speculators” would be expected to provide some stability because |
| A. | they will be required to do so by the government. |
| B. | they will use current price moves to predict future moves. |
| C. | they will buy when price is below equilibrium and sell when it is above equilibrium. |
| D. | they will buy when price is above equilibrium and sell when it is below equilibrium. |
| Answer» C. they will buy when price is below equilibrium and sell when it is above equilibrium. | |
| 72. |
A market participant who obeys the principles of rational expectations will base his or her expectations of market price on |
| A. | all possible information about supply and demand curves. |
| B. | all possible information about the history of price movements. |
| C. | rational behaviour by other market participants. |
| D. | rational behaviour by government regulators. |
| Answer» A. all possible information about supply and demand curves. | |
| 73. |
The “lemons model” predicts quality deterioration in the used car market because |
| A. | used cars require increasing maintenance. |
| B. | suppliers and demanders have different information about cars’ quality. |
| C. | used cars are generally of a lower quality than new cars. |
| D. | people will usually buy new cars if they are available. |
| Answer» B. suppliers and demanders have different information about cars’ quality. | |
| 74. |
The standard economic model assumes people are |
| A. | rational |
| B. | boundedly rational |
| C. | altruistic |
| D. | emotional |
| Answer» A. rational | |
| 75. |
What is the methodology of positive economics |
| A. | models should say what it is optimal for a person to do |
| B. | models should be as realistic as possible |
| C. | models should be judged on their assumptions |
| D. | models should be judged on their ability to predict |
| Answer» D. models should be judged on their ability to predict | |
| 76. |
The standard economic model assumes people are |
| A. | kind |
| B. | boundedly rational |
| C. | fair |
| D. | selfish |
| Answer» D. selfish | |
| 77. |
Which of the following statements is correct about behavioural economics |
| A. | it builds upon the standard economic model |
| B. | it does not use the methodology of positive economics |
| C. | it rejects the standard economic model |
| D. | it is the same as economic psychology |
| Answer» A. it builds upon the standard economic model | |
| 78. |
What is a Nash equilibrium |
| A. | a strategy for each player such that total payoffs are maximized |
| B. | a strategy for a person such that the person maximizes payoff given the strategies of others |
| C. | a strategy that maximizes payoff |
| D. | a strategy for each person such that everyone maximizes payoff given the strategies of others |
| Answer» A. a strategy for each player such that total payoffs are maximized | |
| 79. |
An outcome is Pareto efficient if |
| A. | no person can be made better off without making someone worse off |
| B. | everybody can be made better off |
| C. | at least one person can be made better off |
| D. | every person maximizes payoff given the payoff of others. |
| Answer» A. no person can be made better off without making someone worse off | |
| 80. |
The permanent increment to future consumption expressed as a fraction of the initial consumption forgone is..... |
| A. | rate of return |
| B. | perpetual rate of return |
| C. | expected return |
| D. | all the above |
| Answer» B. perpetual rate of return | |
| 81. |
Diversifiable risk can be eliminated by |
| A. | investing in many projects. |
| B. | by holding the stocks of many companies. |
| C. | both a and b |
| D. | none of them |
| Answer» C. both a and b | |
| 82. |
Non diversifiable risk affects I. the opportunity cost of capital II. should enter into the risk premium |
| A. | only i |
| B. | only ii |
| C. | both i &ii |
| D. | none of them |
| Answer» C. both i &ii | |
| 83. |
Several combination of commodities x and y that the economy can produce by fully utilizing all of the fixed amounts of labour and capital with the best technology available is depicted by I. production possibility frontier II. transformation curve III. production possibility curve |
| A. | both i & ii |
| B. | both ii & iii |
| C. | both i & iii |
| D. | all the above |
| Answer» D. all the above | |
| 84. |
Who opined that economic growth meant bringing W closer to W* |
| A. | walras |
| B. | adamsmith |
| C. | bentham |
| D. | pareto |
| Answer» B. adamsmith | |
| 85. |
Who argued that welfare is improved when ‘the greatest good (is secured) for the greatest number’ |
| A. | walras |
| B. | adamsmith |
| C. | bentham |
| D. | pareto |
| Answer» C. bentham | |
| 86. |
Which criterion refers to economic efficiency which can be objectively measured |
| A. | ‘cardinalist’ criterion |
| B. | bentham’s criterion |
| C. | the pareto-optimality criterion |
| D. | the kaldor-hicks ‘compensation criterion’ |
| Answer» C. the pareto-optimality criterion | |
| 87. |
The sum of forgone interest and depreciation costs the machine’s owner must pay is the |
| A. | competitive rental rate |
| B. | capital asset pricing |
| C. | risk premium |
| D. | all of the above |
| Answer» A. competitive rental rate | |
| 88. |
The marginal conditions must be satisfied for the attainment of a Pareto-efficient situation in an economy : |
| A. | efficiency in exchange |
| B. | efficiency of production |
| C. | efficiency in the product-mix, or composition of output |
| D. | all the above |
| Answer» D. all the above | |
| 89. |
Points where the slopes of the isoquants are equal |
| A. | indifference curve |
| B. | contract curve |
| C. | production possibility curve |
| D. | edgewoth box |
| Answer» B. contract curve | |
| 90. |
The set of all Pareto efficient allocations in an Edgeworth box diagram is called the |
| A. | indifference curve |
| B. | contract curve |
| C. | production possibility curve |
| D. | edgewoth box |
| Answer» B. contract curve | |
| 91. |
A scientific paper titled “The Tragedy of the Commons” was written by |
| A. | walras |
| B. | kaldor |
| C. | garrett hardin |
| D. | pareto |
| Answer» C. garrett hardin | |
| 92. |
A negative externality from consumption occurs if there is a |
| A. | bandwagon effect |
| B. | snob effect |
| C. | veblen effect |
| D. | all the above z |
| Answer» B. snob effect | |
| 93. |
The tragedy of the commons results in |
| A. | overconsumption |
| B. | under investment |
| C. | depletion of the resource |
| D. | all the above |
| Answer» D. all the above | |
| 94. |
An important mechanism through which sellers and buyers deal with the problem of asymmetric information is |
| A. | market signalling |
| B. | insurance markets |
| C. | moral hazard |
| D. | principal-agent problem |
| Answer» A. market signalling | |
| 95. |
The concept of market signalling was first developed by |
| A. | michael spence |
| B. | kaldor |
| C. | garrett hardin |
| D. | pareto |
| Answer» A. michael spence | |
| 96. |
Non diversifiable risk arises because |
| A. | a firm’s profits tend to depend on the overall economy |
| B. | a firm’s profits tend to depend on that firm only |
| C. | both a & b |
| D. | none of them |
| Answer» C. both a & b | |
| 97. |
The risk premium for a capital investment by comparing the expected return on that investment with the expected return on the entire stock market is measured by |
| A. | diversifiable risk |
| B. | non diversifiable risk |
| C. | capital asset pricing model |
| D. | none of the above |
| Answer» C. capital asset pricing model | |
| 98. |
The quantity of present goods that must be forgone to increase future consumption by 1 unit is called |
| A. | the relative price of future goods |
| B. | indifference curve |
| C. | production possibility curve |
| D. | contract curve |
| Answer» A. the relative price of future goods | |
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