OROMIA EDUCATION BUREAU

GRADE 10 ECONOMICS FINAL EXAM FOR BOARDING AND NON-BOARDING

(SPECIAL) SCHOOLS, JANUARY 2016/2024.

TIME ALLOWED: 1:15’

GENERAL DIRECTIONS

THIS BOOKLET CONTAINS ECONOMICS FINAL EXAM FOR GRADE 10. IN THIS
EXAM THERE ARE TOTAL OF 60 MULTIPLE CHOICES QUESTIONS.

THERE IS ONLY ONE BEST ANSWER FOR EACH QUESTION. CHOOSE THE BEST
ANSWER FROM THE SUGGESTED OPTIONS AND WRITE THE LETTER OF YOUR
CHOICE ON THE ANSWER SHEET PROVIDED.

YOU WILL BE ALLOWED TO WORK ON THE EXAM FOR 75 MINUTES. WHEN TIME
IS CALLED, YOU MUST IMMEDIATELY STOP WORKING, PUT YOUR PEN/PENCIL
DOWN, AND WAIT FOR FURTHER INSTRUCTIONS.

ANY FORM OF CHEATING OR AN ATTEMPT TO CHEAT IN THE EXAM WILL RESULT

IN AN AUTOMATIC DISMISSAL FROM THE EXAM HALL AND CANCELLATION OF
YOUR SCORE.

PLEASE MAKE SURE THAT YOU HAVE WRITTEN ALL THE REQUIRED
INFORMATION ON THE ANSWER SHEET BEFORE YOU START TO WORK ON THE
EXAM.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

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Choose the best answer and write the letter of your choice on the answer sheet provided

1. The consumers’ satisfaction or pleasure derived from the consumption of a good or

service is:
A. Usefulness
B. Utility
C. Marginal utility
D. Utility of money
2. In their buying decision consumers always try to maximize their satisfaction given their
limited income or budget, this is the assumption that:
A. Utility is subjective
B. Consumer derive different utility at different point in time
C. Consumers are rational
D. Constant marginal utility of money
3. Whenever Gemechu goes to the café he always prefer coffee to tea, this shows:
A. Consistency of choice
B. Rationality of consumers
C. Utility measurement units are different
D. Diminishing marginal utility
4. Which assumption is mainly differentiates the cardinal utility theory from the ordinal
utility theory?
A. Total utility depends on amount of goods consumed
B. Utility is cardinally measurable
C. Rationality of consumers
D. Utility is subjective
5. The additional utility that a consumer gets by consuming one more unit of a good/service
is:
A. Total utility C. Marginal utility
B. Total satisfaction D. Diminishing marginal utility
6. Which of the following is NOT TRUE about cardinal utility theory?
A. Utility can be measured using monetary units
B. Utility can be measured with subjective unit called “utils”
C. Consumers are able to compare utility of various basket of goods
D. Consumers are unable to rank the various baskets of goods and services using
cardinal utility approach.
7. If three bundle of goods (A, B and C) are given to a consumer for preference. If bundle A
is preferred to bundle B and B is preferred to C, then bundle A is preferred to bundle C,
this shows:
A. Rationality of consumer C. Transitivity of choices
B. Consistency of choices D. Diminishing marginal utility

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Suppose a consumer consumed different quantity of apple (QA) and derived the following total
utility (TUA) as given below:

Quantity of apple(QA) 0 1 2 3 4 5
consumed (in unit)
Total Utility (TUA) 0 6 10 12 12 11

Answer question number 8 and 9 based on the information given above

8. The marginal utility of the second apple consumed is;

A. 4 B. 6 C. 10 D. 2
9. Which of the following is TRUE about the consumption of apple given above?
A. Marginal utility is zero when the consumer consumes the 5th unit of apple
B. The consumer’s marginal utility is positive up to the 5th apple consumed
C. The maximum marginal utility obtained is 6 in this consumption schedule
D. There is no law of diminishing marginal utility in the consumption of apple given
above
10. For a consumer consuming different goods and services, at his/her optimal consumption
bundle:
A. Consumer’s total utility is at its maximum
B. The marginal utility of all goods consumed is equal
C. The price of all goods consumed is equal
D. The marginal utility per Birr spent is equal for all goods consumed
11. Suppose a consumer has budget (I) for consumption of commodity X, and the consumer
uses his/her entire budget for purchase of this commodity. If price of the commodity is
Px, then consumers budget or price line is given by:
A. C.
B. D.
12. For a consumer consuming a good, if total utility derived from this good is decreasing
then,
A. Marginal utility is increasing
B. Marginal utility is positive but is decreasing
C. Marginal utility is negative
D. Marginal utility is zero
13. In consumption decision of a single commodity, a consumer reaches at his/her
consumption equilibrium when;
A. Marginal utility is equal to commodity price
B. Marginal utility is greater than commodity price
C. Marginal utility is less than commodity price
D. Total utility is equal to commodity price

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14. According to the ordinal utility theory,
A. Utility can be measured objectively
B. Consumers are able to rank commodities in the order of their preference
C. Consumers are able to express utility in absolute term
D. It is possible to measure utility difference of two bundles of goods
15. Which one of the following best explains a market?
A. It is a place which brings buyers and sellers together
B. It is the system in which sellers determine price
C. It is a place, condition or mechanism which brings together buyers and sellers to
exchange their goods and services
D. It is the system in which buyers determine the amount of goods sold
16. The different quantity of goods or services that consumers are willing and able to buy at
different price level in a given period of time is known as;
A. Choice
B. Demand
C. Supply
D. Preference
17. Suppose Ayana wants to buy 10kg of sugar for his monthly family consumption. If price
of sugar is Birr25/Kg and Ayana’s monthly budget for sugar is only Birr 200, then
Ayana’s actual sugar demand given his budget and price of sugar is:
A. 10kg B. 20kg C. 8kg D. 25kg
18. Consumers’ demand of a commodity can be expressed in the form of;
A. Demand schedule
B. Demand function
C. Demand curve
D. All of the above
19. As price of a given commodity increases consumers’ real purchasing power of their
income decreases. Therefore, they tend to buy less of that commodity, this is mainly
because of;
A. Income effect
B. Substitution effect
C. Utility change effect
D. Marginal rate of substitution effect

20. Which of the following factor result in change in quantity demanded?

A. Price of the good
B. Price of substitute goods
C. Price of complementary goods
D. Income of the consumer

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21. As price of a given commodity increases, other things being held constant, consumers
shift to its substitutes and reduce consumption of expensive commodity , this is because
of;
A. Income effect
B. Substitution effect
C. Income and substitution effect
D. Neutrality of money
22. __________ refers to the total quantity that all the consumer of a commodity are willing
and able to buy at a given price over a specified period of time
A. Market demand
B. Individual demand
C. Market supply
D. Individual supply
23. Which of the following is TRUE about demand of a given good, other things being held
constant?
A. For normal goods, increases in consumer income result in decrease in demand of
the good
B. Increase in price of a good result in decrease in demand of its substitute good
C. Decrease in price of good result in increase in demand of its complementary
good
D. Prices of related goods do not affect demand
24. The rate at which a consumer is willing to substitute one commodity for another so that
his/her total utility remains the same is,
A. Marginal rate of substitution
B. Diminishing marginal utility
C. Complementary effect
D. Consistency of preferences
25. Suppose that when the price of good Z goes up then the demand for good Y goes down.
Therefore, we can say that the two goods are:
A. Substitute goods
B. Unrelated goods
C. Perfect substitute goods
D. Complementary goods

26. The goods or services that producers produce and make available for sale in a given
period of time at given prices is known as:
A. Supply
B. Demand
C. Consumption
D. Surplus

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27. Suppose there are 50 suppliers of wheat in a market and they have almost the same
supply function of: , where is the quantity supplied of wheat in kg
and P is price of wheat in Birr. Which of the following is TRUE about the supply of
wheat?
A. Each producer supplies 3,300kg if the price of wheat is Birr 340/kg
B. The aggregate market supply function of wheat is: 0
C. Producers do not supply wheat if price is less than or equal to Birr 20/kg
D. Price does not affect quantity supplied of wheat
28. As price of a given product increases, other things affecting supply being held constant, a
producer tend to produce and supply more of that product, this is commonly known as;
A. Change in supply
B. Change in quantity supply
C. Aggregate supply
D. Shift of the supply curve
29. _________is the graphical representation of supply schedule
A. Supply equation
B. Market supply schedule
C. Aggregate supply function
D. Supply curve
30. The two most important market forces that determine price and quantity are:
A. Equilibrium price and equilibrium quantity
B. Demand and supply
C. Shortage and surplus
D. Market clearing price
31. The price level at which the market reaches at equilibrium is:
A. Market clearing price
B. Equilibrium price
C. Suppliers price
D. A and B
32. Excess demand occurs in a good or service market when:
A. Quantity demanded is greater than quantity supplied
B. Quantity supplied exceeds the quantity demanded
C. Quantity demanded is equal to quantity supplied
D. There is surplus in a market

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Suppose the demand and supply function of ice cream is given by:

Where are quantity demanded and quantity supplied of ice cream respectively and P
is price of ice cream in Birr. Answer question number 33 and 34 based on the demand and
supply functions given above,
33. The market equilibrium price of ice cream is:
A. Birr 10 B. Birr 100 C. Birr 20 D. Birr 12
34. The equilibrium quantity of ice cream in the market is:
A. 50 units B. 100 units C. 25 units D. 500 units
35. When price of a good or service is above its equilibrium price;
A. There is shortage in the market
B. There is surplus in the market
C. Price tend to be stable
D. Price tend to rise up
36. In a market price and quantity are at their equilibrium, suppose demand increased
because of increase in consumers’ income, other things being held constant, this leads to:
A. A rise in both equilibrium price and equilibrium quantity
B. A decrease in both equilibrium price and equilibrium quantity
C. A rise in equilibrium price but a decrease in equilibrium quantity
D. A rise in equilibrium quantity but a decrease in equilibrium price
37. Which factor increases supply or shifts supply curve to the right?
A. Increase in cost of production
B. Decrease in number of suppliers
C. Improvement in technology
D. Increase in profit tax
38. ________ is the measure of responsiveness or sensitivity of one variable with respect to
change in its determinates
A. Elasticity C. Factor substitution
B. Rate of substitution D. Diminish marginal utility
39. Types of elasticity which measures the elasticity of a good at some specific point is:
A. Point elasticity C. Average elasticity
B. Arc elasticity D. Average cross elasticity
40. When price elasticity of demand for a commodity is greater than one, the commodity is
said to be,
A. Unitary elastic C. Price inelastic
B. Price elastic D. Perfectly price inelastic

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41. Commodities price elasticity of demand depends on:
A. Nature of the commodity
B. Availability of close substitutes
C. Proportion of income spent on the commodity
D. All of the above
42. Types of elasticity which measures the responsiveness of the quantity demanded of a
commodity with respect to change in price of other commodities is;
A. Price elasticity of demand
B. Income elasticity of demand
C. Cross price elasticity of demand
D. Price elasticity of supply
43. For which types of commodity do sellers make the advantage of increasing sales volume
or revenue by reducing price?
A. Price elastic C. Unitary elastic
B. Price inelastic D. Perfectly price inelastic
44. Supply is to supplier as demand is to__
A. Producer C. Seller
B. Consumer D. provider
45. The process of transforming inputs into outputs is;
A. Consumption C. Utility
B. Production D. Profit
46. In production process, short run refers to the period of:
A. One year C. At least one input is fixed
B. Less than five years D. All inputs are variable
47. In short run production function which stage is increasing returns stage,
A. Stage I C. Stage III
B. Stage II D. Stage I and II
48. Increasing the amount of the variable factor(inputs) with fixed factors(inputs) eventually
result in,
A. Increasing marginal productivity
B. Diminishing marginal productivity
C. Increase in average productivity
D. Increase in total productivity
49. In the short run production, stage II is considered to be a rational stage and therefore,
producers should produce in this stage. This is because in stage II
A. There is excess capacity of fixed inputs
B. More variable inputs are used beyond the capacity of fixed inputs
C. Fixed and variable inputs are at the right proportion
D. Marginal product is decreasing

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50. In production process, if we increase all inputs by the same factor (say “M”) the output
also increases by the same factor (M). This type of production function exhibits:
A. Constant returns to scale C. Increasing returns to scale
B. Decreasing returns to scale D. It is not possible to determine
51. Which one of the following is related to long run production function?
A. Fixed inputs
B. Stages of production
C. Diminishing marginal productivity
D. Returns to scale
52. Which of the following is TRUE about properties of isoquants?
A. Isoquants cross each other
B. Isoquants are concave to the origin
C. Isoquants are downward sloping
D. The further an isoquant lays away from the origin the lower is the level of output
53. In the short run firms do not change some of their costs, these costs are:
A.
B. Fixed costs D. Total costs
C. Variable costs E. Marginal costs

Suppose short run cost structure of a firm is given as follows, where TFC is total fixed cost, TVC
is total variable cost and TC is total cost (all costs are in Birr)

Output produced 0 1 2 3 4 5 6 7
(Q)
TFC(in Birr) 200 200 200 200 200 200 200 200
TVC (in Birr) 0 30 56 75 85 90 100 130
TC (in Birr) 200 230 256 275 285 290 300 330

Based on the above costs of the firm, answer question number 54 and 55

54. Marginal cost of producing the 3rd output of the firm is:
A. Birr 19
B. Birr 10
C. Birr 25
D. Birr 91.67
55. Which of the following is TRUE about the above firm’s cost?
A. When the firm produces 5 units of outputs the average total cost is Birr 18
B. When the firm produces 4 units of outputs average variable cost is Birr 30
C. Average fixed cost is Birr 40 when the firm produces 5 units of output.
D. Fixed cost declines as the firm produces more outputs

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56. Which of the following is NOT TRUE about short run cost structure?
A.
B. ATC=AFC+AVC
C. ⁄
D. ⁄
57. Identify the cost that is variable over the short run
A. Depreciation cost
B. Raw material cost
C. Interest payment for loan capital
D. Salaries of administrative staff
58. Type of short run cost which decreases as quantity of output increases is:
A. Average variable cost
B. Average total cost
C. Average fixed cost
D. Marginal cost
59. Which of the following is TRUE?
A. Total cost is the product of total fixed cost and total variable cost
B. The minimum total cost is the variable cost
C. The difference between total cost and total variable cost is the fixed cost
D. The magnitude of fixed cost depends on the level of output
60. A firm has an average total cost of Birr 5 and an average variable cost of Birr 4.5 at
certain level of output. If the firm has fixed cost of Birr 350, then its level of output
is_____
A. 700units
B. 175units
C. 400units
D. 125units

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