Mini-quiz 2

12 Questions
Mini-quiz 2

National Economics and Finance Management Quiz 2009 - Mini-quiz 2

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Questions and Answers
  • 1. 
    Suppose that all the firms in a competitive industry have access to the same technology and that input prices are not affected by the size of the industry. If the minimum value of the long-run average cost curve is $10, then entry of new firms will occur until the market price:
    • A. 

      Equals $10

    • B. 

      Exceeds $10

    • C. 

      Falls below $10

    • D. 

      None of the above

  • 2. 
    In August 2000 the World Health Organisation said that a 10% increase in cigarette prices worldwide would reduce consumption by 4% in high-income countries and by 8% in low-income countries.The above statement suggests that
    • A. 

      Price elasticity of demand for cigarettes is negative in both high-income and low-income countries.

    • B. 

      Smokers in high-income countries are twice as addicted as those in low-income countries.

    • C. 

      Demand for cigarettes is price elastic in both low-income and high-income countries.

    • D. 

      Income elasticity of demand for cigarettes is higher in low-income than in high-income countries.

  • 3. 
    Demand for a good is likely to be more elastic:
    • A. 

      The smaller the fraction of consumer income absorbed by the good

    • B. 

      In the short run than in the long run

    • C. 

      The more broadly defined the good

    • D. 

      The greater the number of available substitutes for the good

  • 4. 
    A toy manufacturer would be willing to sell 88 soft toys for $4 each.  The actual market price is $8.80 each.  This means:
    • A. 

      The total consumer surplus is $421.40

    • B. 

      The total producer surplus is $421.40

    • C. 

      The total consumer surplus is $422.40

    • D. 

      The total producer surplus is $422.40

  • 5. 
    In the diagram above, line ZW represent the marginal private net benefit accruing to a profit maximizing firm. Line OX represents the marginal cost it inflicts on the rest of the community in terms of pollution damage If a law is passed requiring the firm to compensate fully with those who are affected by the pollution, what output will it choose to produce and what profit will it make?
    • A. 

  • 6. 
    The first economist to give the consumption function a key role in macroeconomic analysis is
    • A. 

      Milton Friedman

    • B. 

      John Maynard Keynes

    • C. 

      Irving Fisher

    • D. 

      Franco Modigliani

  • 7. 
    Property insurance is a type of insurance that: _______________________.
    • A. 

  • 8. 
    Taking up an insurance policy involves a commitment to pay the insurance premium promptly. What happens when you do not pay the premium by the due date?
    • A. 

      Your policy lapses

    • B. 

      Your policy continues to be in force and you can take your time to pay your premium

    • C. 

      The insurance company will give you a grace period to pay your premium

    • D. 

      The insurance company will pay your overdue premium by taking a loan against your policy’s cash value, if your policy has a cash value

  • 9. 
    When considering an investment, what are some criteria a rational investor will use to base his decision on? i.             Amount of investment ii.            Investment horizon iii.           Expected return iv.           Number of investors for that investment v.            Administrative charges vi.           Hearsay vii.             The appropriate level of risk one is prepared to take
    • A. 

      All of the above

    • B. 

      Iii, iv, vi, vii

    • C. 

      Ii, iii, v, vii

    • D. 

      I, ii, iii, v

  • 10. 
    The following products are traded on the Exchange EXCEPT:-
    • A. 

      Shares

    • B. 

      Certificates

    • C. 

      Singapore Government Bonds

    • D. 

      Future Contracts

  • 11. 
    All of the following are advantages of investing in unit trusts EXCEPT:-
    • A. 

      Diversification

    • B. 

      Professional management

    • C. 

      Loss of control over individual investments bought by the fund

    • D. 

      Increased investment opportunities

  • 12. 
    Repayment for _________ is usually made in equal monthly installments.          i.                Credit card bill ii.              Overdraft iii.            Revolving credit facility iv.             Housing loan             
    • A. 

      I, ii

    • B. 

      I, iii, iv

    • C. 

      Iii, iv

    • D. 

      Iv only