Micro Economics Theory Applications II Set 4
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This set of MicroEconomics, Theory and Applications 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics Theory Applications II Set 4
Q1 | The standard economic model assumes people are
- kind
- boundedly rational
- fair
- selfish
Q2 | Which of the following statements is correct about behavioural economics
- it builds upon the standard economic model
- it does not use the methodology of positive economics
- it rejects the standard economic model
- it is the same as economic psychology
Q3 | What is a Nash equilibrium
- a strategy for each player such that total payoffs are maximized
- a strategy for a person such that the person maximizes payoff given the strategies of others
- a strategy that maximizes payoff
- a strategy for each person such that everyone maximizes payoff given the strategies of others
Q4 | An outcome is Pareto efficient if
- no person can be made better off without making someone worse off
- everybody can be made better off
- at least one person can be made better off
- every person maximizes payoff given the payoff of others.
Q5 | The permanent increment to future consumption expressed as a fraction of the initialconsumption forgone is.....
- rate of return
- perpetual rate of return
- expected return
- all the above
Q6 | Diversifiable risk can be eliminated by
- investing in many projects.
- by holding the stocks of many companies.
- both a and b
- none of them
Q7 | Non diversifiable risk affects I. the opportunity cost of capital II. should enter into the risk premium
- only i
- only ii
- both i &ii
- none of them
Q8 | Several combination of commodities x and y that the economy can produce by fully utilizingall of the fixed amounts of labour and capital with the best technology available is depicted by I. production possibility frontier II. transformation curve III. production possibility curve
- both i & ii
- both ii & iii
- both i & iii
- all the above
Q9 | Who opined that economic growth meant bringing W closer to W*
- walras
- adamsmith
- bentham
- pareto
Q10 | Who argued that welfare is improved when ‘the greatest good (is secured) for the greatestnumber’
- walras
- adamsmith
- bentham
- pareto
Q11 | Which criterion refers to economic efficiency which can be objectively measured
- ‘cardinalist’ criterion
- bentham’s criterion
- the pareto-optimality criterion
- the kaldor-hicks ‘compensation criterion’
Q12 | The sum of forgone interest and depreciation costs the machine’s owner must pay is the
- competitive rental rate
- capital asset pricing
- risk premium
- all of the above
Q13 | The marginal conditions must be satisfied for the attainment of a Pareto-efficient situation inan economy :
- efficiency in exchange
- efficiency of production
- efficiency in the product-mix, or composition of output
- all the above
Q14 | Points where the slopes of the isoquants are equal
- indifference curve
- contract curve
- production possibility curve
- edgewoth box
Q15 | The set of all Pareto efficient allocations in an Edgeworth box diagram is called the
- indifference curve
- contract curve
- production possibility curve
- edgewoth box
Q16 | A scientific paper titled “The Tragedy of the Commons” was written by
- walras
- kaldor
- garrett hardin
- pareto
Q17 | A negative externality from consumption occurs if there is a
- bandwagon effect
- snob effect
- veblen effect
- all the above z
Q18 | The tragedy of the commons results in
- overconsumption
- under investment
- depletion of the resource
- all the above
Q19 | An important mechanism through which sellers and buyers deal with the problem ofasymmetric information is
- market signalling
- insurance markets
- moral hazard
- principal-agent problem
Q20 | The concept of market signalling was first developed by
- michael spence
- kaldor
- garrett hardin
- pareto
Q21 | Non diversifiable risk arises because
- a firm’s profits tend to depend on the overall economy
- a firm’s profits tend to depend on that firm only
- both a & b
- none of them
Q22 | The risk premium for a capital investment by comparing the expected return on thatinvestment with the expected return on the entire stock market is measured by
- diversifiable risk
- non diversifiable risk
- capital asset pricing model
- none of the above
Q23 | The quantity of present goods that must be forgone to increase future consumption by 1 unit iscalled
- the relative price of future goods
- indifference curve
- production possibility curve
- contract curve