Financial Markets Test with Multiple Choice Questions

Class Test 1 (Sample Items)

Choose the most correct response. Record your answer on the mark sense sheet provided. Each answer is worth ½ mark.

QUESTION 1

All else equal, a binding price floor will cause less of a surplus if:

(a) both supply and demand are inelastic
(b) both supply and demand are elastic
(c) supply is elastic, but demand is inelastic
(d) supply is inelastic, but demand is elastic

QUESTION 2

The figure shows the market for books before and after an excise tax is introduced. The tax on books is ________, buyers pay ______ of tax per book, and the governments tax revenue is ________ a week.

(a) $0.40 a book; $0.40; $4
(b) $1.20 a book; $0.80; $128
(c) $0.80 a book; $1.20; $12
(d) …show more content…

As we continually increase labour one unit at a time,

(a) the addition to output will become larger, if capital is held constant.
(b) the addition to output will become smaller, if capital is held constant.
(c) larger reductions in capital will be required to keep output constant.
(d) smaller reductions in capital will be required to keep output constant.
(e) larger increases in labour will be required to keep output constant.

QUESTION 11

The least cost technique of producing a given output occurs where the marginal rate of substitution of labour for capital equals the

(a) ratio of the quantity of labour used relative to the quantity of capital used.
(b) ratio of the price of labour to the price of capital.
(c) minimum point on the isoquant line.
(d) marginal cost of capital
(e) ratio of the marginal cost of capital to the marginal cost of labour.

QUESTION 12

A perfectly competitive firm’s supply curve is the upward-sloping part of its

(a) average product curve, at all points above the point of minimum average variable cost.
(b) marginal cost curve, at all points above the point of minimum average fixed cost.
(c) marginal revenue curve, at all points above the point of minimum average revenue.
(d) marginal revenue curve, at all points above the point of minimum average total cost.
(e) marginal cost curve, at all points above the point of minimum