VU Midterm Past Papers
199 solved midterm past paper MCQs for ECO401 (Economics) at Virtual University, each with the correct answer marked. Use them to learn the VU question style and test your recall. An independent study tool — not affiliated with VU.
Prefer a summary first? Read the ECO401 midterm handout.
Q1. A farm can produce 100 kilograms of apples per year with 2 workers and 400 kilograms of apples per year with 3 workers. The marginal product of the third worker is:
Q2. If marginal utility is greater than price, then consumer will increase:
Q3. Engel curve shows the positive relationship between quantity demanded of normal good and:
Q4. A firm is producing output by using two inputs i.e. labor and capital, paying wages to labor and rent to capital. Suppose isocost line has shifted inward, it shows that:
Q5. Which of the following indicates optimal consumption point for the consumer?
Q6. ___ is the rate at which a firm can substitute capital for labor and hold output constant:
Q7. Ali spends his money income on food and clothes. Holding other things constant, if his income increase by 25%, his budget line would:
Q8. If marginal product is below average product:
Q9. A line which charts out all the different combinations of two goods which a consumer can purchase, is called:
Q10. Assume that the first four units of a variable input generate corresponding total outputs per period of 100, 250, 400, and 550 respectively. The marginal product of the second unit of input is:
Q11. The law of diminishing returns states that as more units of a variable factor are added to a fixed factor:
Q12. The law of diminishing returns assumes:
Q13. Marginal Utility analysis is an analysis of utility which is also known as:
Q14. Suppose firm is producing 800 units of a product by employing 40 units of labor and 20 units of capital. If the marginal physical product of labor (MPPL) and the marginal physical product of capital (MPPK) are 20 units and 25 units respectively, then marginal rate of technical substitution is:
Q15. If the quantity of all inputs are increased by 30% and output expands by 25%, then the firm is experiencing:
Q16. A firm owned by a large number of changing shareholders is a:
Q17. Suppose a firm is facing higher per unit cost due to increase in size of the industry. This implies that firm is experiencing:
Q18. A 50% increase in all inputs results in more than 50% increase in output, this statement describes an aspect of:
Q19. Assume that land used for growing wheat is fixed in quantity and numbers of workers employed are variable. When Ali hires 9 workers, he gets 15 tonnes of wheat. By employing 10 workers, wheat production increases from 15 tonnes to 20 tonnes. The marginal physical product of wheat in this case will be:
Q20. The change in total physical product that results from employing an extra unit of the variable factor is the:
Q21. Which of the following is TRUE about the total cost curve?
Q22. Marginal rate of technical substitution is the slope of:
Q23. The substitution effect of a price rise is always:
Q24. If a firm's long-run average cost of production decreases as a result of increase in production, then the firm is experiencing:
Q25. Consumer will consume additional units of commodity until marginal utility becomes:
Q26. Which of the following statements describes the presence of diminishing returns?
Q27. A line which charts out all the different points on which the consumer is indifferent with respect to the utility he derives, is called;
Q28. Diminishing marginal returns implies
Q29. An indifference curve map shows a number of indifference curves corresponding to
Q30. If money income of consumer rises, its budget line will
Q31. Suppose that thirty units of output are produced by using five units of labour. The average product of labour is.
Q32. All consumes only two goods, Apples and Oranges. If he is confronted with different combinations of Apples and Oranges that give him the equal level of satisfaction, then he will
Q33. In case of constant returns to scale isoquants
Q34. The law of diminishing marginal utility indicates that marginal utility curve is:
Q35. A firm can produce 100 kilograms of apples per year with 2 workers and 400 kilograms of apples per year with 3 workers. The marginal product of the third worker is
Q36. Benefit or satisfaction derived from the consumption of goods and services is called:
Q37. Suppose a person is willing to give up 20 units of good A (on the vertical axis) for 10 units of good B (on the horizontal axis), and his level of satisfaction is unchanged, the marginal rate of substitution is
Q38. Anam is spending all of her income on buying medicines and clothes. Which of the following factors will shift the budget line inward?
Q39. ‘Advertising by a rival industry’ is an example of:
Q40. If the marginal physical product is above the average physical product:
Q41. Which of the following is true for decreasing returns to scale?
Q42. AA spends his money income on food and clothes. Holding other things constant, if his income increases by 25% his budget line would
Q43. The slope of budget line -Px/Py is also called:
Q44. Which of the following is true for constant returns to scale?
Q45. A firm is producing output by using two inputs i.e. labor and capital, paying wages to labor and rent to capital. Suppose price of one input like labor increases, it shows that the isocost line:
Q46. Other things remaining the same, if Anam drinks more and more bottles of coke, her marginal utility from coke will
Q47. Which of the following is the slope of the indifference curve (IC);
Q48. Which of the following is the slope of the budget line;
Q49. The law of diminishing marginal utility refers to the:
Q50. When the price of one good changes, the purchasing power of consumer changes i.e., the budget line shifts leads to:
Q51. Suppose Ali increases his consumption of oranges when his income rises. This implies that for Ali, oranges are:
Q52. The slope of isocost is equal to:
Q53. Suppose a firm is producing output by using two inputs labor and capital paying wages to labor and rent to capital. If prices of both inputs decrease then:
Q54. A good whose consumption increases due to increase in its price is categorized as:
Q55. If two goods were perfect substitutes, their indifference curves would be:
Q56. Ali spends his money income on food and clothes. Holding other things constant, if his income increases by 25% the budget line would:
Q57. According to the law of diminishing marginal utility, as the consumption of a particular good increases:
Q58. Assume that first five units of a variable input generate corresponding total outputs per period of 50, 75, 120, 150, and 250 respectively. The marginal product of 5th unit of input is:
Q59. The law which explains that additional satisfaction falls by the consumption of more and more units of a good, is called:
Q60. Assume that land used for growing wheat is fixed in quantity and number of workers employed are variable. If the marginal physical product of wheat is greater than the average wheat production, then:
Q61. Input price ratio is equal to:
Q62. The marginal utility curve is exactly equal to:
Q63. Ali consumes only two goods, Apples and Oranges. If he is confronted with different combinations of Apples and Oranges that give him the equal level of satisfaction, then he will:
Q64. The curve which shows the relationship between income and quantity demanded is called:
Q65. Setting up of credit information bureaus by banks is an example of
Q66. If a consumer only consumes two goods Apples and Oranges. If he is confronted with different combinations of Apples and Oranges that give him the equal level of satisfaction, then he will:
Q67. If marginal utility is equal to 50 and price is equal to 40, consumer surplus will be:
Q68. A firm is producing output by using two inputs i.e. labor and capital paying wages to labor and rent to capital. Suppose price of one input labor increases, it shows that the isocost line:
Q69. Suppose firm A is producing bicycles, if demand for bicycles is increased and firm A has enough time to increase supply by changing all factors of production, then one can say that:
Q70. How output of a business responds to a change in factor inputs is called;
Q71. The optimal consumption point for the consumer is a point where:
Q72. If marginal physical product is equal to average physical product:
Q73. A firm is producing output by using two inputs i.e. labor and capital paying wages to labor and rent to capital. Suppose isocost line shifts inward, it shows that
Q74. Other things remaining the same, if a person drinks more and more bottles of coke, his marginal utility from coke will
Q75. If inputs used in the production of wheat are increased by 30 percent and wheat production increases by 20 percent, then there must be
Q76. If money income of consumer rises, his budget line will
Q77. If two goods were perfect complements, their indifference curves would be:
Q78. A farmer has produced 500 tonnes wheat on 1 acre land by employing 10 workers. The average physical product in this case would be
Q79. Suppose firm is producing 1000 units of a product by employing 80 units of labor and 40 units of capital. If the marginal physical product of labor (MPPL) and the marginal physical product of capital (MPPK) are 40 units and 50 units respectively, then marginal rate of technical substitution is
Q80. When the price of one good changes, the purchasing power of consumer changes, which effect consumer's;
Q81. Which of the following is an example of Inferior goods?
Q82. Which of the following is true according to the law of demand?
Q83. The demand for oranges is expressed as: Qd = 100 - P. The supply of oranges is expressed as: Qs = 4P. Refer to the above scenario, if the equilibrium price is:
Q84. Consumers can make optimal choices by using which of the following analysis?
Q85. If the cross price elasticity of demand between two products is -3.5, then:
Q86. Which one of the following types of elasticity is calculated as the percentage change in quantity demanded due to percentage change in income of the consumer?
Q87. Suppose a good is having elastic demand. If price of a good increases:
Q88. Q = a - b P represents equation of:
Q89. Measurement of elasticities is made in percentage terms because:
Q90. If a 4% rise in consumer's incomes causes an 8% rise in product's demand, the income elasticity of demand for the product will be:
Q91. Price floor results in:
Q92. Suppose the income elasticity of demand for cars is equal to 2.5. The given value shows that demand for cars is:
Q93. Normal goods are those goods whose quantity demanded goes up as:
Q94. Shortage is a situation in which:
Q95. A market is said to be in equilibrium when:
Q96. If the current market price is above the market clearing level, we will expect a:
Q97. Which of the following measures the responsiveness of demand for one good to a change in the price of another good?
Q98. Which of the following branch of economics describes how interest rate affects inflation but it does not provide any guidance on whether what policy should be followed?
Q99. When total revenue of a firm increases due to increase in price, it means that firm is facing:
Q100. Measurement of price elasticity of demand at a certain point on the demand curve involves:
Q101. Suppose total revenue of a firm remains unchanged due to increase in the price of a good. This shows that demand of this good is:
Q102. The study of economics basically focuses on:
Q103. When the absolute value of price elasticity of demand is equal to one, it means that demand is:
Q104. If there is an increase in price of oil from Rs.100/liter to Rs.110/liter, the change in the quantity demanded of oil can be shown by:
Q105. Whenever we have to give up higher and higher units of one good in order to produce each additional unit of other good, this principal shows:
Q106. If there is a decrease in consumer's income from Rs.12,000 to Rs.10,000, the change in the quantity demanded of inferior goods can be shown by:
Q107. Which of the following is a positive statement?
Q108. The demand for apples is expressed as: Qd = 80 - P. The supply of apples is expressed as: Qs = 3P. Refer to the above scenario, the equilibrium price of apples is:
Q109. Which of the following types of elasticity is calculated as the percentage change in quantity demanded due to percentage change in price?
Q110. If a 2% rise in consumer's incomes causes a 4% rise in product's demand, the income elasticity of demand for the product will be:
Q111. When percentage increase in the price of a good decreases its quantity demanded by the same percentage, it shows that demand of this good is:
Q112. Equilibrium is a state in which:
Q113. Which of the following is a determinant of quantity supplied?
Q114. Microeconomics is the branch of economics that deals with which of the following topics?
Q115. If pen and ink are complements, then an increase in the price of pen will cause:
Q116. When college students leave town for the summer, the demand for meals at the local restaurants decline. This results in:
Q117. An increase in supply is shown by:
Q118. Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be:
Q119. If a 12% price reduction causes quantity demanded to rise by 12% then:
Q120. Which of the following will be TRUE if demand is inelastic?
Showing the first 120 of 199 MCQs.