18 reviewed questions with answers and explanations.
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If the demand for one commodity excludes another, it is said to be
B: competitive demand
Competitive demand describes substitute goods serving a similar purpose. Choosing one can replace demand for the other, unlike complements that are used together.
AI-reviewed · source checkedConsider this demand schedule: Price (N) | Quantity (kg) 1 | 100 2 | 120 3 | 150 4 | 180 5 | 200 What type of demand curve does the schedule depict?
C: an abnormal demand curve
The schedule shows quantity increasing as price rises. Interpreted as a demand schedule, this is an upward-sloping or abnormal demand relationship, rather than the usual downward-sloping pattern.
AI-reviewed · source checkedThe median of an odd-numbered set of scores is the
A: middle value in the ordered set
After an odd number of observations has been put in numerical order, one observation occupies the central position. That middle ordered value is the median.
AI-reviewed · source checkedIf demand increases without a change in supply, equilibrium price and quantity will
D: rise
With the usual upward-sloping supply curve unchanged, an increase in demand shifts the demand curve outward. The new intersection occurs at both a higher price and a larger quantity.
AI-reviewed · source checkedIn the process of production, total output is at maximum when
A: MP=0
Marginal product is the change in total product from another unit of the variable input. At the interior maximum of total product, its slope is zero, so marginal product is zero.
AI-reviewed · source checkedThe supply schedule is: Price (N) | Quantity (bags) 1 | 60 2 | 120 What is the price elasticity of supply?
C: 1
Price doubles from N1 to N2 and quantity supplied doubles from 60 to 120 bags. Both rise by 100%, giving supply elasticity 100%/100% = 1.
AI-reviewed · source checkedWhen a consumer is at equilibrium, the MRSxy is equal to the
C: ratio of the two prices
At an interior consumer optimum, the marginal rate of substitution equals the price ratio Px/Py. The consumer's willingness to exchange the goods matches the trade-off imposed by the budget.
AI-reviewed · source checkedRanking is the method used in measuring
B: ordinal utility
Ordinal utility expresses an ordering of preferences rather than a numerical amount of satisfaction. Ranking consumption bundles is therefore the ordinal approach.
AI-reviewed · source checkedThe law of variable proportions is applicable only
D: in the short-run period
The law of variable proportions studies adding a variable input while at least one other input is fixed. That fixed-input condition characterizes the short run.
AI-reviewed · source checkedIf real income increases while nominal income remains the same, it can be inferred that
B: General prices have fallen
Real income equals nominal income divided by a price index. If nominal income is unchanged but real income rises, the relevant general price level must have fallen.
AI-reviewed · source checkedOne of the characteristics of oligopoly is the availability of
A: few sellers
An oligopoly has a small number of significant sellers whose decisions can affect one another. It differs from monopoly with one seller and highly competitive markets with many small sellers.
AI-reviewed · source checkedThe profit of a monopolist can be eliminated where price equals
C: AC
Economic profit equals (price - average total cost) multiplied by output. When price equals average total cost, the firm covers all economic costs and earns zero economic profit.
AI-reviewed · source checkedIn national income accounts, an item counted as part of government spending is
A: salaries and wages
Government wages pay for current labour services and form part of government purchases in national-income accounting. Pensions and other transfer payments do not pay for newly produced output.
AI-reviewed · source checkedIf aggregate demand is lower than total output in an economy national income will
D: fall
When planned expenditure is below current output, firms accumulate unwanted inventories. They tend to reduce production, lowering income until spending and output are brought back into balance.
AI-reviewed · source checkedThe import-substitution strategy of industrialization is to encourage
A: domestic production
Import substitution encourages producing domestically goods that were previously imported. Its direct purpose is to replace foreign supply with local production.
AI-reviewed · source checkedUpstream oil activities involve the
C: exploration of crude oil
Upstream petroleum activities find and extract crude oil and natural gas. Refining and marketing processed petroleum products are downstream activities.
AI-reviewed · source checkedThe transfer of public shareholding corporations to private enterprises is
D: privatization
Privatization transfers ownership or control of a publicly owned enterprise to private owners. Commercialization changes how an enterprise operates without necessarily changing its ownership.
AI-reviewed · source checkedOptimum population enables an economy to attain the highest level of
B: income per head
Optimum population is the population size that maximizes output or income per person, given resources and technology. It is defined by average material output rather than the largest total population.
AI-reviewed · source checked