(Chore the Correct Ans ie € caer fram the Given Alternatives thet A.B and C. if the Bundles A is Aes F Assuine there are three consumption bundles and referred C. According 19 the ordinal wit vr Preferred to B and B is preferred © then A csumption of jonship mostly matches with the o theory, this re A. Consisiency B. Transitivity ©. Utility is ordinal D. Marginal rate of substitution is increase and good “Y” are perfectly substitute goods, which one is TRUE 2. Assuine good “X ‘A. The indifference curves are shaped as right angle B. The marginal rate of substitution is constant C. The marginal rate of substitution is zero D, The indifference curve is fo the of! convex to the origin 3. One is NOT TRU about the relationship’ between total utility (FU) and marginal utility (Mu) ‘A. TU is maximum when MU is zero reases as long as MU is positive B. TUii C. TU increases when MU is negative D. TU is the sum of marginal utilities ay Which statement express the law of diminishing marginal utility in the better w the total and marginal wtlity from 4. ‘A. The more the consumption of a product, the smalle the consumption B. The less the consumption of @ product, the greater the total and marginal utility of ihe consumption C. The more the consumption of @ product, the smaller the marginal uw consuming of an additional unit D. The less the consumption of a product, the greater the total utility of the consumption 5. The consumer with a fixed income will maximize willty when each good is purchased # amounts such that the: is the same for each od is maximized A. Total utility is good B. Marginal utility of each goD. MC curve below HE AVC curve LIE the average tot “cost a ” Aiaveine icing ac Feasing which must bé true? B. AFC & constane ©. MC is ine reasing 12, The largest passiig 108s '0. Competitive fitin in the —— Aka. Sie In the short run and Long cun vespectvely, e neers a 14. One of the following is TRUE about perfectly competitive marker, A. Consumers are Price makers while producers are price takers B. Producers are priee makers while consumers are price c Both producers (Ginms) and ‘consumers are price takers D. Both producers (tims) and Consumers are price makers 15. The budget fine shows that: AL Different combinations of two Boods purchased at given price but different income A given quantity of commodity that can be F . Different coint purchased at constant income nbinations of two ‘goods that can be purchased at east fant prices and inconse D. The same level 1 of uility Obtained trom different eo 16. The total profit of sumption levels, ‘given firm is maximized at a point whore A. Total Revenue equals Total Cost. B, The TR and the TC curves are patallel to each other G. The TR carve and TC curve are parallel, and TC exceeds TR. D. The TR curve and the TC curve are parallel, and TR exeeeds re 17. Which of the following statements is TRUE? A. IFMC is less than AC, then AC will se with an increase in output By 1'marginal product is greater than average produet (AP), shen AP will decrease with ; incteased use of an input C. When MR is greater than MC, a profit maximizing firm would expand output D. When AC is less than MC, then av ‘erage Product is also less than marginal product,petition, e product HF G-workers fy 150 units of 00d and that of 7 workers 179 units. The mar nal produce of — the seventh worker fs B. 270 ©. 290 ee 25.10 A, » B,C, and 1, are any Our market baskets and and if the consumer fas ranked them 56 that Dis pref preferred 16 € + A Is not preferred to B, and Bis not preferred to C €. Wis preferred 1 D. “ A is preferred to A is preferred to D. 26. In theory 6} ory of production, sction, which of the follo. he following reaches its maximutn peisit lastly ©; Marginal product D, Dis preferred to. A AL Average product B. Total product P D. Average cost 27. Whi is ‘ eee R +h one is TRUE based on the descending order of number of selters in the market? . Pure monopoly—> ti ure monopoly—> Oligopoly —* Monopolistic eompetition—> Perfect sompcstion Bare monopaly—>: Beifect competion’ ~/eMonopolist¢ competition —» OREOPOWY Perfect competition + Oli - \petition-» Oligopoly —>Monopolistic competition —» Pure monopoly ‘tion —> Oligopoly —> Pure monopoly of two inputs that yield same Tevel S D. Perfect competition—> Monopolistic compe 28. The locus of points that show various combination of output is known a A. Isoquant curve C. Indifference curve: D, Iso-revenue B, Iso-cost curve Which of in? output and its total cost of the following 29. statements is TRUE about the relationship between the firn production? 'A, Total costs continve to increase with the rising levels of UDS d decline at higher level of output B. Total costs slowly rise; reach its maximum an se rapidly but soon start to decline at higher levels of output C. Total costs initially ri jth the level of output increases. D. Total costs increase at increasing rate wit ‘RUE about indifference curves? "30. Which of the following is 1! A. Utility varies across different points on the same indifference curves. B. The MRS on the same indiffere! nce curve is constant over different basketsC.On the same indifference: eurve, if the ‘consumption of one good increa other must decline. 5 can cross each other, consumption of is competitive market structare Is D. Two indifference curve! 31. The distinguishing feature for monopolist Av Indeterminate demand curve entiation B, Product diff Prive discrimination D. Perfect mobility of resources 32. A rational producer operates in second stage of short-run production. This is ‘becalise: A. the variable input 1s underutilized B. MP is declining and negative. ©. MP is declining but positive D. The fixed input is underutilized. on: 33. One is NOT TRUE about the demand corve of monopoly and monopolistic compet A. Demand curve is downward sloping in both cases, B. The demand curve for the monopoly is Matter than monopolistic competition C. The demand curve for monopolistic competition is more price elastic than monopoly es the two demand D. The availability of close substitues of the product differentiat curves. Suppose that Dire Dawa Textile In the short rim, its marginal cost (MC) equals 4 34, output and Company is a perfectly competitive firm. Birr, and its total revenue (TR) equals 24 birr. The profit maximizing level of price, respectively are A, 4and3 B, 3and4 C. 4and 6 D. 6and4 35, If the probability of success of a certain event is 25 percent and the success yields a payoll of 1000 birr while a failure payoff of 200 birr, the expected value of the event 1s: A. 400 B. 250 6different inthe Dy market chaos on sto make c sive market the expe of Gaviston a fem B® am cea alee he following is an example of @ pEsTeo short nan that in the Tong tun. Which of competitive firm's long-run decision? A. what price fo change buyers for the product and sales promotion ch to spend on advertini BL how C. the profit-maximizing level of outpn D. whether ar not to enter or exit an industry 3 different in E. None 53. 20. in a perfectly competitive market, the type of decision a firm has to make # the short run than in the long nih. Which of the following is an example of a perfectly competitive firm's short-run decision? A- what price to charge buyers for the product B. whether or not to enter or exit an industry C. the profit-maximizing level of output D. how much to spend on advertising and sales promotion None Let Saba and Beza are competing to be the top student in a cla: approaching and they are deciding whether they Should be cooperative and share notes or be uncooperative and keep their notes to themselves. Then answer question 54 —58 depending on . They have'a final exam the following payoff metrics outcomes, Assume 10 marks are bounce given by their teacher, Beza | Share’ |) Don't Shave Share 100, 100 90, 10 Saba Don’t Share 110,90 95,95 , 10Saba chooses don’t share and Beza chuoses don't share t d they both pet 95. Th ‘ontoomne is known as A. Nash Eguilibriom B Dohiinant strategy equilibrium (OSE), ed Strategy Equilibrium. (MSE), D. None of the above $5. What is the dominated strategy and dominant strategy for Saba respectively? A. Share and Share. B. Share, and Don’t Share. ©, Don't Share, and Share. D. Don’t Share, and Don’t Share. __ i8 a Strategy for which the payoff are always greater than any other strategy no matter what the opponent does. A. Dominant strategy. B. Mixed strategy. C. Dominated strategy’ no matter D. Dominant Strategy Equilibrium. isa strategy for which the payoflS are always lower than any other stratezy Sh What the opponent does A. Dominant strategy. B. Mixed strategy. C. Dominated strategy. D_ Dominant Strategy Equilibrium: 58, __ is an outcome where, given the strategy choices of the other players, no individual player can obtain a higher pay off by altering their strategy choice A, Nash Equilibrium. B. Dominant strategy equilibrium (DSE). . Mixed Strategy Equilibrium. (MSE). to D. None of the above. 59, To Determine the level of a factor of production to hire, a firm compares the. Wwaverage factor prec value of marginal product: E Racter's emmpur, average factor Output value of marginal product: A. Pastor's price: B. Factor’s pric D. Factor's output; $53 and the wage net of current employment is 60. A company found that the value of marginal produet of ei rate i $'45. Which one of the following is correct? et A. Too much labor is currently employed and the firm wil lay of Som Bi ‘The firm should shutdown and produced nothing. ©. The finin is employing the profit-maximizing labor D. Too little shor is currently employed and the firm will hire moss worke’ what causes the deman d curve for any 61. For a firm selling its product in a competitive market, factor of production to be downward sloping? A. Diminishing ma ‘ginal product as more of the factor is used B. More demand for greater quantities C. Falling product price necessary to sell a larger output D. None of the above answers are correct 62. An increasé in the price of the firm's output leads to a A. Movement upward along the demand for labor curve. B Rightward shift of the demand for labor curve: C. Movement downward along the demand for lab D. Leftward shift of the demand for labor curve: 63. Ifthe price of a firm's product falls, the firm's demand for labor curve A. Shifts leftward. B. Does not shift and there is no movement along it. G, Does not shift but there is a movement along it D. shifis rightward 64, Adverse selection occurs when. A. All persons involved in transaction have full information, B. One person has information not available to others. C. Post — agreement incentives result in workers shirking. D. Nobody has any information about particular product. bya