1. If the correlation between two variables is -1 and 0, then the covariance between them is a) Positive c) Zero b) Negative d) None of all
2. A fall in demand for the product of a monopolized industry is predicted to lead to a) a fall in price c) a decrease in the number of firms in the long run b) a decrease in the output of each firm d) None of the above answers is satisfactory
3. The theory of price discrimination predicts that in comparison to single-price monopoly
a) output will increase, and average revenue will decrease c) output will decrease, and average revenue will decrease b) output will increase, and average revenue will increase d) output will decrease, and average revenue will increase
4. Among the essential aspects of oligopoly is i) Excess capacity ii) Non-price competition iii) A large number of firms iv) Mutual recognition of interdependence a) Both i) and ii) are satisfactory c) Only iv) b) Both ii) and iii) are satisfactory d) None of the above is satisfactory
5. A monopolist practicing third degree discrimination faces the following demand functions in the two markets: P1 = 100 – 0.5 Q1 and P2 = 100 – 4 Q2 while he faces a constant marginal cost of production (Pi and Qi refer to price and quantity in market i). Profit maximization will imply
a) P1 > P2 c) P1 = P2 b) P1 < P2 d) Relation between P1 and P2 cannot be determined without knowing the exact cost function
6. Which one of the following would best indicate the economic growth?
An index of
a) Real national output c) Export volumes b) Share prices d) Manufacturing output
7. Last year a ₤400 million tax increase was accompanied by a ₤600 million decrease in consumer spending. One reason why spending decreased by more than taxes were increased is that:
a) the tax increase raised interest rates which in turn depressed consumer borrowing. c) reduced spending by those with lower take-home pay led to decreased income and spending by others. b) the tax increase induced fewer transfer payments which in turn deterred consumer spending. d) higher taxes required higher government spending which in turn discouraged private spending.
8. An increase in the use of quotas is expected to:
a) reduce the country’s current account balance, if other governments do not retaliate. b) increase the country’s current account balance, if other governments do not retaliate. c) have no impact on the country’s current account balance governments retaliate. unless other d) increase the volume of a country’s export with other countries.
9. To test the significance of an entire regression we use
a) F-test c) The exponential distribution b) Chi-square test d) t-test
10. Four Indian and three American students have to stand in a row for a photograph. If they choose their position at a random. What is the probability that Americans are at extremes.
a) 1/7 c) 2/7 b) 4/35 d) 2/9
"Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth."
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