TMA4/ECO231

TMA Quiz Questions TMA: TMA4/ECO231 Matric Number:  SCORE=10.00 ECO231 - Micro Economic Theory I Mr. Adedeji Abiodun Liadi (aliadi@noun.edu.ng ) 1 Which of the following are assumptions of the model of perfect competition many buyers and sellers homogeneous goods perfect knowledge all of the above 2 Oligopoly is characterized by many sellers and differentiated products few sellers one seller and homogeneous products blocked entry 3 There are many models of oligopoly because there are many writers on the same subject the results of the model change dramatically depending on the number of firms many assumptions about the behavior of rivals are plausible the product may be differentiated or homogeneous 4 When oligopolists collude the results are generally greater output and higher price greater output and lower price smaller output and lower price smaller output and higher price 5 Which of the following constitutes an obstacle to collusion among oligopolists? a general business recession a small number of firms in the industry a homogeneous product the patent laws 6 Which of the following methods is not employed in microeconomics model comparative statics mathematics dissection 7 Which of these is not the property of indifference curves positive slope not intersecting satisfaction increasing to the northeast a change in income will shift the budget line 8 Which of these is not the property of budget line negative slope linear for constant prices diminishing marginal rate of substitution a shift to the northeast as the size of the budget line increases 9 The statement C = D = 10 utils implies an ordinal measure of utility only a cardinal measure of utility only an ordinal and a cardinal measure of utility none of the above 10 The relationship between wages and leisure time for a worker is direct indirect complimentary zero 11 Suppose a consumer has an income of N8, the price of bread is N1, and the price of butter is N.50k. which of the following combinations is on the consumer’s budget line? 8bread and 1butter 7bread and 1 butter 6bread and 6butter 5bread and 6butter 12 If a consumer has an income of N100, the price of bread is N10, and the value of butter is N20, the maximum quantity of bread the consumer is able to buy is 5 10 20 30 13 When the income of a consumer is N20, the price of bread is N5, the price of butter is N2, and the quantity of bread is measure horizontally, the slope of the budget line is 0.4 2.5 4 10 14 A strategic move refers to all the following except a Nash equilibrium making a credible threat adopting policies to deter entrance into the market making a preventive investment 15 If an oligopolist incurs losses in the short run, then in the long run the oligopolist will go out of business the oligopolist will stay in business the oligopolist will break even any of the above is possible 16 Which would be most characteristic of oligopoly? easy entry into the industry a few large producer product standardization no control over price 17 Which of the following contributes to the existence of oligopoly in an industry? low barriers to entry standardized products economies of scale elastic demand 18 In indifference curve analysis, the consumer will be in equilibrium at the point where the indifference curve is concave to the origin budget line crosses the vertical axis two indifference curves intersect and are tangent to the budget line budget line is tangent to the highest attainable indifference curve 19 If a consumer is initially in equilibrium, a decrease in money income will move the consumer to a new equilibrium on a lower indifference curve move the consumer to a new equilibrium upon a higher indifference curve steeper move the slope of the consumer’s indifference curves steeper have no effect on the equilibrium position 20 Which would be defining characteristics of pure monopoly? the firm does no advertising and it sells a standardized product no close substitutes for the product exist and there is one seller the firm can easily enter into or exit from the industry and profits are guaranteed the firm holds a patent and is technologically progressive