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Instruction: Write TRUE If The Statement Is Correct and FALSE Otherwise On The Space Provided. (

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15 views3 pages

Instruction: Write TRUE If The Statement Is Correct and FALSE Otherwise On The Space Provided. (

Uploaded by

mengeshaawoke663
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS


DEPATRMENT OF ECONOMICS
Midterm exam on the course introduction to Economics AC year: 2016/17
Target group: 3rd year Geology Students Total weight: 25%
Prepared by department of Economics Time allowed: 1:00 hour
PART I. TRUE/FALSE ITEM

Instruction: Write TRUE if the statement is correct and FALSE otherwise on the space
provided. (1.5pt. each)

1. For any price above equilibrium price there will be surplus.


2. The change in price of the good causes shift in its demand curve.
3. The more substitutes available for good X, the higher its price elasticity of demand will be.
4. No economy in the real world has all the characteristics of pure market/ capitalism economic
system.
5. The problem “how to produce” is indicates choice among alternative commodities.
6. The demand curve of highly addictive commodities, such as drug tends to be horizontal.
7. The direction of movement along PPF shows choice of the nation among the two goods.
PART II: MULTIPLE CHOICES:

Instruction: Choose the best alternative among given and write your choice on the answer sheet
provided (1.8 pts.)
1. Points of production mix that lies outside production possibility frontier are
A. Efficient but not feasible D. Not feasible
B. Efficient and feasible E. Not efficient
C. Feasible but not efficient
Case1: Suppose a student revealed her demand for coffee as X d=25−0.5 Pc where X dis her weekly
consumption of coffee. Given this calculate her price elasticity of demand in absolute value
when price of coffee per cup is 5 birr, answer question number 2 and 3 below
2. Find price elasticity of demand
A. 0.5 C. 1.32 E. None
B. 2.25 D. 0.11
3. An equal percentage increase in market supply and a decrease in market demand will result in
A. A decrease in equilibrium price, and an increase in equilibrium quantity
B. A decrease in equilibrium price, and fixed equilibrium quantity
C. An increase in equilibrium quantity while the equilibrium price remains constant.
D. A decrease in equilibrium price and quantity E. None

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BAHIR DAR UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPATRMENT OF ECONOMICS
Case 2: Suppose that a market demand and supply for a certain product are given as Q d =220−5 p and
Qs =−20+3 p respectively. Given this information answer question number 7 to 9.
4. The equilibrium price and quantity, respectively is:
A. 30 and 70 C. 47.5 and 11.67
B. 11.67 and 47.5 D. 31 and 9 E. None
5. What is the nature of demand at equilibrium?
A. Demand is in elastic C. Demand is perfect in elastic
B. Demand is elastic D. Demand is unitary elastic
6. What is firm’s role in two sector circular flow of economic activities?
A. Selling products in input market to households
B. Selling resources in input markets
C. Purchasing resources in input markets
D. Paying income tax for the government E. All are correct
7. Mental and physical contribution of human beings in the production of goods and service is………

A. land C. Capital
B. labor D. Entrepreneurial skill

8. If the market for pencil clears, then we know


A. That everyone who wanted to buy pencil can
B. That everyone who wanted to sell pencil can
C. That everyone who wanted to sell or buy pencil at equilibrium price can.
D. that the market is not in equilibrium
9. Which decision making unit is more active in pure market economy?

A. Firms C. Government E. A and B


B. Households D. A and C

10. Select the incorrect statement from the following choices.


A. Scarcity is the cause to the existence of choice.
B. The product with zero opportunity cost is called non-scarce.
C. The reward to entrepreneurship is wage.
D. Oil gas is one of the scarce resources.
E. All are correct answers.

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BAHIR DAR UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPATRMENT OF ECONOMICS

ANSWER SHEET

Name __________________________Id No. __________________Dep’t __________ Section

If you are adding the course please write your Tel No. __________________and Year ___.

PART I: TRUE/FALSE ITEMS

1. ______________ 4. ______________ 7. ______________


2. ______________ 5. ______________
3. ______________ 6. ______________

PART II: MULTIPLE CHOICES

2. __________ 4. __________ 7. _________ 10._________


2. ___________ 5. __________ 8. _________
3. ___________ 6. __________ 9._________

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