JIMMA UNIVERSITY

College Of Business and Economics

Continuing and Distance Education Office

Department Of Economics

Introduction to Economics

Assignment, Weight: 30%

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PARTI: CHOOSE THE BEST ANSWER FROM THE GIVEN ALTERNATIVES .
1. The human nature to want more than what the economy can provide is called the problem of

A. Opportunity cost B. Economics C. Scarcity D. All of the above

2. Which one is wrong about decision making units household?

A. Households use goods and service from goods market

B. Source of income of household is goods and service market

C. Household's primary objective is maximizing profit.

D. All

3. What is role of government in circular flow of economic activities in free market?

A. Taxing both household and firms in respective market

B. Subsidizing both households and firms in their consumption and production.

C. Supplying goods and service in product market

D. Supplying natural resource in factor market

E. A&D F. A & B

4. Which one of the following is work of microeconomics?

A. Studying economic behavior of individual economic unit D. All

B. It deals with aggregate price level C. Deals with national economic growth E. None

5. The physical as well as mental effort of human beings in production and distribution of good
is : A. entrepreneurship B. Labor C. profit D. wages

6. Which one is attributes of scarcity?

A. It has everlasting problem of society B. Specific problem of poor society

C. It is short term problem of society D. All

7. Which one is correct order?

A. Scarcity-Choice-cost-opportunity B. Choice -Scarcity-cost-opportunity

C. cost-Scarcity-Choice-opportunity D. opportunity-cost-Scarcity-Choice
8. ----------- is a place, condition, or mechanism, which brings together both bay in order to
exchange their goods and services:

A. Demand B. Supply C. Market D. Elasticity

9. Which one of the following is not distinct characteristic of perfectly competitive market?

A. There is price competition B. There is perfect knowledge of market information

C. No government intervention D. Free entry and exit

10. Which one is correct definition of demand, ceteris paribus?

A. It is an individual's willingness and ability to buy goods and services at various levels of price
during a particular time.

B. It is an individual's willingness and ability to buy goods and services at specific price during a
particular time, ceteris paribus.

C. It shows the various amounts of a product which a producer is willing and able to make
available for sale over specific time period, at given prices.

D. All

11. Suppose that you are an economist. And you conducted extensive survey of demand nature
of cement products in Ethiopia. As a result you concluded that demand for cement is inelastic,
then what price policy that you advice the company to increases revenue as an economist?

A. Price increasing B. price decreasing C. no price change D. indeterminate

12. Which one is true if total utility increases at decreasing rate?

A. MU will increase B. MU fall C. MU is zero D. MU will be negative

13.----------is the locus of points, each representing a different combination of pair of goods,
which yield the same utility to the consumer so that he/she is indifferent between any two
combinations of goods when it comes to making a choice between them.

A. Satisfaction B. Indifference curve C. Indifference schedule D. indifference map

14. One of the following is not assumed in the PPF model.

A. Fixed technology B. Fixed resources C. Specialization D. None of the above

15. All but one of the following statements is false.

A. Demand and quantity demand are all the same.

B. Price and quantity demand of a commodity are inversely related for all types of commodities
and it is universal law

C. At equilibrium, the market demand and supply curves internet, and this is expected to occur
in every market.

D. Elasticity is a measure of responsiveness of an effect variable for changes in the cause

variable.

16. Which of the following is a basic economic question that every economy should try to
solve? A. What to produce? B. How to produce? C. For whom to produce? D. All of the above.

17. From the PPF the law of increasing opportunity cost is implied by:

A. The negative slope of the curve C. The menu of alternatives

B. The concavity of the curve D. All of the above

18. Your demand for pen and exercise books is:

A. Relatively inelastic B. Dependent on your money income

C. Dependent on the season which you are learning or on vacation D. All are possible

19. GNP measures,

A. The total monetary value of all final goods and services produced by citizens of the country
in a given year

B. total income earned by domestically-located factors of production

C. The total monetary value of final goods and services produced domestically

D. Sum of value added at all stages of production E. All of the above

20. GDP measures the following, except

A. total income earned by domestically-located factors of production

B. total output produced in the country C. total expenditure E. None of the above

D. the sum of value-added at all stages in the production of final goods and services.
21. Which of the following is/are wrong?

A. Nominal GDP measures values of final goods and services using current prices

B. Real GDP measure values of final goods and services using the price of a base year

C. Gross National Product (GNP) total income earned by the nation's factors of production,
regardless of where located. D. all of the above E. none of the above

22. Prices of imported consumer goods:- A. Included in CPI B. Excluded from GDP deflator

C. Included in GDP deflator D. A and B E. None of the above

23. One of the following is wrong about the natural rate of unemployment,

A. It is the sum of frictional and structural unemployment

B. It is the sum of cyclical and frictional unemployment

C. It is the type of unavoidable unemployment D. None of the above

24. Which of the following is/are true about Effects of Inflation?

A. Inflation can result in a redistribution of income and wealth from creditors to debtors and
harm savers

B. Actions taken in anticipation of inflation can adversely affect the economy

C. Anticipated inflation can distort consumer choices by causing buyers to purchase goods now
that they might otherwise prefer to purchase in the future.

D. All of the following E. None of the following

25. GDP has limitations in measuring the social wellbeing of the people in a nation since;

A. It does not accounted for the satisfaction obtained from recreational activities and other
uses of leisure time.

B. It does not include the underground economy (black market) transactions

C. It ignores the quality of goods and services

D. It ignores cost of environmental damage, which could decrease the quality of lives

E. All of the above

 PART II: DISCUSSION AND WPRKOUT QUESTION (5%)
1. What are the distinguishing characteristics of a perfectly competitive and pure monopoly
Market structure?