PPSC Economics Chapter 1 Basic Economics With Answers

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PPSC Economics Chapter 1 Basic Economics

Sr. # Questions Answers Choice
1 Which of the following best defines price discrimination. Charging different prices on the basis of race Charging different prices for goods with different costs of production Charging different prices based on cost of service differences. Selling a certain product of given quality and cost per unit at different prices to different buyers
2 Japan's low interest rates in the mid 80's were due to. High rates of domestic savings. A decrease in Japan's exports Increases in the U.S. deficit High rates of domestic spending in Japan
3 Sales taxes are generally considered to be. Proportional taxes Regressive taxes Progressive taxes Indirect taxes
4 The diamond water paradox can be explained by suggesting that the price of a product is determined by. Consumer incomes Its marginal utility Consumer surplus Diminishing marginal utility
5 Economists use the term marginal utility to mean. Additional satisfaction gained divided by additional cost of the last unit. Additional satisfaction gained by the consumption of one more unit of a good Total satisfaction gained when consuming a given number of units. The process of comparing marginal units of all goods which could be purchased
6 Economists use the term utility to mean The value of a product before it has been advertised The satisfaction a consumer obtains from a good or service any characteristic of a good or service which cannot be measured The contribution a good or service makes to social welfare
7 If the "Regulated -market" price is below the equilibrium price. The quantity demanded will be greater than quantity supplied Demand will be les than supply Quantity demanded will be less than quantity supplied Quantity demanded will equal quantity supplied
8 What is the effect of imposing a fixed per unit tax on a good on its equilibrium price and quantity. Price falls, quantity rises Price rises, quantity falls Both price and quantity fall Both price and quantity rise
9 Equilibrium in the market for good A obtains. When there is no surplus or shortage prevailing in the market Where the demand and supply curves for A intersect When all of what is produced of A is consumed All of the above
10 Which of the following is necessary for a natural monopoly. Economies of scale A high proportion of the total cost is the cost of capital goods The market is very small All of the above
11 The concept of "Interdependence of markets" can refer to the interdependence between. Two or more factor markets Goods and factor markets Goods markets All of the above
12 Laboratory experiments cannot be performed in economics because. Of resource scarcity Economics is a natural science Of the difficulty of distinguishing between normative and positive statements. Economics is a social science
13 What lies is at the heart of the allocation of goods and services in a free market economy. Concerns of equity or equal distribution among individuals. The order or command of the ruling government or dictator The wishes of consumers in the market The price mechanism
14 Capital, as economists use the term. Is the money the firm spends to hire resources Is money the firm raises from selling stock Refers to the process by which resources are transformed into useful forms Refers to things that have already been produced that are in turn used to produce other goods and services.
15 Compared to the case of perfect competition, a monopolist is more likely to Charge a higher price Produce a lower quantity of the product Make a greater amount of economic profit All of the above
16 In order to maximize profits a monopoly company will produce that quantity at which the. Marginal revenue equals average total cost Price equals marginal revenue Marginal revenue equals marginal cost total revenue equals total cost
17 The length of a business cycle would be measured from Peak t trough Trough to peak Peak to Peak The slump to the expansion
18 When referring to economic growth we normally refer to. Growth in actual real per capita output Growth in potential real per capita output Growth in actual nominal per capita output Growth in potential real per capita output
19 In pure monopoly what is the relation between the price and teh marginal revenue. The price is greater than the marginal revenue The price is les than the marginal revenue There is no relation They are equal
20 Which of the following is a characteristic of pure monopoly. one seller of the product Low barriers to entry Close substitute products Perfect information
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