Agricultural Economics Exam Bank Summary

SALALE UNIVERSITY
COLLEGE OF AGRICULTURE AND NATURAL RESOURCES

DEPARTMENT OF AGRICULTURAL ECONOMICS
1. WORK SHEET OF RESEARCH METHODOLOGY
Multiple Choice Questions
1. ________When each member of a population has an equally likely chance of being selected, this type of
sampling is called:
A. Nonrandom sampling
B. Quota sampling
C. Snowball sampling
D. Random sampling
E. Simple random sampling
2. _______Which of the following techniques yields a simple random sample?
A. Choosing volunteers from an introductory psychology class to participate
B. Listing the individuals by ethnic group and choosing a proportion from within each ethnic group at random
C. Numbering all the elements of a sampling frame and then using a random number table to pick cases from
the table
D. Randomly selecting schools, and then sampling everyone within the school
3. ______Which of the following is not true about stratified random sampling?
A. It involves a random selection process from identified subgroups
B. Proportions of groups in the sample must always match their population proportions
C. Disproportional stratified random sampling is especially helpful for getting large enough subgroup samples
when subgroup comparisons are to be done
D. Proportional stratified random sampling yields a representative sample
4. ________Which of the following sampling techniques is an equal probability selection method in which every
individual in the population has an equal chance of being selected?
A. Simple random sampling
B. Systematic random sampling
C. Proportional stratified sampling
D. Cluster sampling using the PPS technique
E. All
5. _________Which of the following statements are true?
A. The larger the sample size, the greater the sampling error
B. The more categories or breakdowns you want to make in your data analysis, the larger the sample needed
C. The fewer categories or breakdowns you want to make in your data analysis, the larger the sample needed
D. As sample size decreases, so does the size of the confidence interval
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6 _______Which of the following is not a form of nonrandom sampling?
A. Snowball sampling
B. Convenience sampling
C. Quota sampling
D. Purposive sampling
E. None
7 _______Which of the following will give a more “accurate” representation of the population from which a
sample has been taken?
A. A large sample based on the convenience sampling technique
B. A small sample based on simple random sampling
C. A large sample based on simple random sampling
D. A small cluster sample
8 _______Sampling in qualitative research is similar to which type of sampling in quantitative research?
B. Systematic sampling
C. Quota sampling
D. Purposive sampling
9 ________Which of the following would require the largest sample size?
A. Cluster sampling
B. Simple random sampling
C. Systematic sampling
D. Proportional stratified sampling
10 ________A sample consists of:
A. All units of the population
B. 5% units of the population
C. 10% units of the population
D. Any fraction of the population
11 ________Sampling is used in the situations:
A. Blood test of the patients
B. Cooking rice in an utensil
C. Purchase of food commodity from shopkeeper
D. All the above
12 _______The sampling fraction in usual notation is expressed as
A. n/N
B. N/n
C. 1-n/N
D. None
13________Simple random samples can be drawn with of help of:
A. Random numbers table
B. Chit Method
C. Roulette wheel
D. All the above
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14 ________Sampling frames is:
A. A list of units of a population
B. A list of random numbers
C. A list of natural numbers
D. None
15 _______The discrepancies between the estimate and the population parameter are known as:
A. Sampling error
B. Non-sampling error
C. Formula error
D. None
16_______The error in a survey other than sampling error is known as:
A. Sampling error
C. Formula error
D. None
17___If the sample sizes are large from the population, which error will contribute more errors?
A. Sampling error
C. A & B
D. None
18 ________If sample sizes increase, then sampling error will:
A. Increase
B. Decrease
C. A & B
D. None
19 ________If sample sizes increase, then non-sampling error will:
A. Increase
B. Decrease
C. A & B
D. None
20 _______A populations are divided into clusters and it has been found that all the units within a cluster are same
in this situation which sampling will be adopted?
B. Stratified random sampling
C. Cluster sampling
D. Systematic sampling
21 _______A population N is divided into k strata A sample of size n is to be chosen and Ni is the size of the ith
stratum Then sample size n as per proportional allocation is given by:
A. ni=nN
B. ni/Ni=n/N
C. niNi=nN
D. None
22 __If the respondents do not provide the required information to the researcher, it is known as:
A. Non-sampling error
B. The problem of non-response
C. A & B
D. None
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23________The errors falling under faulty planning of survey, it is called:
A. Non-sampling errors
B. Non-response errors
C. Sampling errors
D. Absolute error
24____If there is a certain number of very high values in the sample, it is preferable to compute:
A. Standard error
B. Standard deviation
C. Variance
D. All of the above
25 _____The magnitude of the standard error of an estimate is an index of:
A. Accuracy
B. Precision
C. Efficiency
D. None
26 ________Which of the following statement is true?
A. Population mean increases with increase in sample size
B. Population mean decreases with increase in sample size
C. Population mean decreases with decrease in sample size
D. Population mean is a constant value
27. _______If population is perfectly homogeneous with respect to a characteristic, what size of sample would you
need?
A. A large sample
B. A small sample
C. A single sample
D. No sample
28. _______Which one of the following sample size determination formulas is appropriate when population is
homogenous?
A. Yemane (1967) formula
B. Cochran (1977) formula
C. A &B
D. None
29. _______Which one of the following sample size determination formulas is appropriate when population is
heterogeneous?
A. Yemane (1967) formula
B. Cochran (1977) formula
C. A &B
D. None
30. _______Which one of the following is not the methods of data collection?
A. Household survey
B. Key informant interview
C. Focus group discussion
D. Survey questionnaires
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31. _______Which one of the following is the tools for data collection?
A. Household survey
B. Key informant interview
C. Focus group discussion
D. Survey questionnaires
32. ________The appropriate numbers of participants (persons) in focus group discussion are:
A. 2-4
B. 5-7
C. 6-12
D. 1-3
33. ________The appropriate numbers of participants (persons) in key informant interview are:
A. 2-4
B. 5-7
C. 6-12
D. 1-3
34. ______Which one of the following is the common methods of data analysis?
A. Econometrics analysis
B. Descriptive analysis
C. Inferential analysis
D. All of the above
35. ______Which econometrics model is appropriate when the dependent variable is continuous?
A. Multiple linear regression model
B. Tobit model
C. Binary logistic regression model
D. All of the above
36. ______Which econometrics model is appropriate when the dependent variable is binary?
A. Multiple linear regression models
B. Tobit regression model
C. Binary logistic regression model
D. All of the above
37. _______Which one of the following variables is continuous?
A. Family size measured in adult equivalent
B. Education level measured in year of schooling
C. Income level measured in Dollar
D. All of the above
38. _________Which one of the following variables is a dummy?
A. Sex of households head defined as (1-Male & 2-Female)
B. Age of household head measured in year
C. Livestock size measured in TLU
D. Credit obtained in ETB
39. _________Which one of the following is types of research?
A. Basic research
B. Action research
C. Applied research
D. All of the above
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40. _________Which one of the following is types of data used for research?
A. Primary data
B. Secondary data
C. Sample respondents
D. A&B
41. _________Which one of the following is the source of primary data?
A. Research article
B. Sample respondents
C. CSA data
D. FAO data
42. _________Which one of the following is not the source of secondary data?
A. Research article
B. Sample respondents
C. CSA data
D. FAO data
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2. WORK SHEET OF FARM MANAGEMENT
1. _________Which information is not needed in partial budgeting?
A. Prices of both inputs and outputs both proposal
B. Costs and returns of the new practice
C. Costs and returns of the old practice
D. Cost of whole farm plan
2. ___________Farm production records not include;
A. Crop Production
B. Soil map
C. Livestock Production
D. Family consumption
3 ___________Among type of farm records which one is/are record all assets owned and owed which are
physically counted and valued on a particular date?
A. inventory records
B. production records
C. income and expenditure records
D. Both A and B
4 __________Which one of the following is not components of enterprise budgeting?
A. income
B. depreciation
C. profitability
E. Total revenue
5. __________Why should we keep good records?
A. For better decision making
B. Assess financial status of the farm
C. Provide data for government
D. All
6. ___________Among financial analysis which one is basically measures the relationship between inputs and
outputs?
A. Liquidity
B. Solvency
C. Profitability
D. Efficiency
7. ___________Which one of the following is not the character of good manager?
A. Be a goal oriented individual
B. Possess an enquiring mind
C. He must be hardworking and dedicated
D. Be a risk maker
8. ________Which function of farm management is concerned with determining the job to be done?
A. Planning
B. implementation
C. Controlling
D. Organization
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9. __________In which relationship increase or decrease in the production of one product affects the production
of the other commodity inversely?
A. Independent products
B. Joint products
C. Supplementary products
D. Competitive products
10. __________Which of the following activities not involves in controlling (Feedback) Function?
A. Record information
B. Compare results to a standard
C. Directing inputs
D. Take corrective action
11. __________Among stages of the production function in which stage MPP is less than APP?
A Stage II
B Stage III
C Stage I
D All of the above
12. _________Which of the following statements is incorrect about factor-factor relationship?
A. The goal is cost minimization
B. Input is kept constant in quantity, while output is varied
C. Explained by the principle of factor substitution
D. The choice indicators are substitution ratio and price ratio
13 __________Keeping few birds, some fruit trees and a small garden on farm are the:
A. Complementary products
B. Competitive products
D. Joint products
14 _________Which one of the following is/are not properties of iso-quant?
A. Iso-quants are concave to the origin
B. Iso-quants are not intersecting
C. Iso-quants place above another represents higher output
D. Iso-quant slope downward
15 _________In which production relationship farmers should decide how much of each output to produce, since
the supply of agricultural inputs is limited?
A. Factor –factor
B. Factor- Product
C. Product-Product
D. All of the above
16 _________Factors of production are;
A. Inputs and outputs
B. Outputs only
C. Inputs only
D. The minimum set of inputs that can produce a certain output
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17 _________If marginal products is greater than average product
A. Total product must be increasing
B. Marginal product must be decreasing
C. Marginal product must be increasing
D. Average product may be increasing or decreasing
18 ____________Diminishing marginal returns occur when the total product function is
A. Decreasing
B. Increasing at a decreasing rate
C. Increasing at a constant rate
D. Increasing at an increasing rate
19 __________The MRTS L K, is equal to
A. MP K/ MPL
B. −Δ L/ Δ K
C. MP L /MPK
D. -MPK /MPL
20 __________Crop farming and milk production is an example of:
A. Competitive products
B. Complementary products
D. Joint products
21. _________Among stages of the production function which one is known as rational stage?
A. Stage II
B. Stage III
C. Stage I
D. All of the above
22_________is the goal of product – product relationship
A. Optimization of production
B. Profit optimization
C. Cost minimization
D. Optimum input
23_________ Cat and rat are the example of:
A. Competitive products
B. Complementary products
C. Antagonistic products
D. Joint products
24 ________An acid-test ratio of 15 means
A. Quick assets are 115 times as large as sales
B. That every $150 of quick assets generates $100 in sales
C. That every $150 of sales generates $100 of liabilities
D. Quick assets are 15 times as large as total liabilities
25 ________Cost of Merchandise Sold would be classified as:
A. Asset
B. Expense
C. Liability
D. Revenue
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25 ________Which of the following is not a standard financial statement?
A. Income statement
B. Shareholder sheet
C. Balance sheet
D. Cash flow statement
26 _________What does an income statement show about a company over a period of time?
A. Profitability
B. Reliability
C. Equity
D. Liabilities
27 _________Which of the following is the basic calculation used to analyze an income statement:
A. Assets minus liabilities
B. Income minus expenses
C. Revenue plus sales
D. Sales plus operating costs
28 _________The farm plans requires basic data of:
A. Inventory of resources
B. Potential crops and livestock enterprises
C. Resource requirements per unit of each enterprise
D. List of gross margins for planning the enterprise
E. All
29 ________Which one of the following is/are correct?
A. Simple farm planning is adopted when major changes are contemplated
B. Whole farm planning is adopted either for a part of the land or for one enterprise
C. Good farm planer take excess risks
D. A and B
30 ________Farm budgeting is a method of estimating:
A. Expected incomes
B. Expected expenses
C. Expected profit for a farm business
D. All except C
E. All except A
31 ________Given TVC=2000, TFC= 500, TC= 2500 and TR= 5000 find Gross margin
A. 2500
B. 4500
C. 3000
D. 2000
32 ________Which one of the following is/are incorrect about elements of complete plan and budget?
A. Farm inventory
B. Calendar of operations;
C. Schedule of expected production and income
D. None
33 ________When to use partial budgets:
A. When there is a small reorganization problems
B. To developed format for each actual and potential enterprise
C. To estimate the whole farm activities
D. To compute fixed costs
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34 _______In LPP 1X1 + 1X2 < =Z indicate
A. Constraints function
B. Objective function
C. Optimal function
D. None
35 ________Which one of the following is/are not limitations of Linear Programming?
A. Unbounded solution may occur
B. It does not take into account the time
C. Several real world situations are non-linear
D. Its application only visible in macro model
36 ________Basic assumptions of Linear Programming is/are
A. Proportionality or linearity
B. Additivity
C. Certainty
D. All
37 ________Consider the following price over years for Teff 3 year ago 3000, 2 years ago 4000 and last year 5000
then the weighted average price could be:
A. 4000
B. 433333
C. 450033
D. 5000
38 ________Marginal Revenue is:
A. The extra/additional revenue associated with one additional unit of sales
B. The extra/additional cost associated with one additional unit of output
C. The revenue associated with the first unit of sales
D. The revenue associated with the sale of the average unit
39 _______Stage 3 of production is the:
A. Region of rational production
B. Area where marginal physical product is positive but greater than average physical product
C. Region of production where the marginal physical product is negative
D. Area where total physical product is increasing
40 ________Which one of the following is/are incorrect?
A. Variable resources exist both in the short run and in the long run
B. In the short run some factors of production like capital cannot be varied
C. Both book value and salvage value assess expected market value of the asset at the end of its useful life
D. Valuation at market price might over or under-estimate the value depending on the states of affairs in the
economy
41 _______Assume that an asset depreciate at constant rate given for an asset costing, 2000 initially, SV of 100
and expected life of 5 years depreciation could be
A. 350
B. 250
C. 380
D. 1000
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42 ________If the company’s cost function is: C = 190 + 53Q which one is/ are true?
A. VC function is 53Q
B. 190 is FC
C. VC is 53
D. When Q is 2 then the total fixed cost is 296
E. All
F. A and B
43 ________Farm total operating cost is Birr 200 and the total fixed cost is Birr 120 and Birr 3000 is gross income
The Gross ratio (GR) could be
A. 03
B. 0106
C. 004
D. 0067
44_______ In DSR a ratio of 04 means:
A. 40 percent of the total farm debt is due the following year
B. Shows the degree of financial leverage
C. There is 04 Birr of debt for every 1 Birr of net worth
D. None
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3. WORK SHEET OF MACROECONOMICS I & II
1. _________Who is called the father of modern economics?
A. JM Keynes
B. Adam Smith
C. Alfred Marshall
D. Karl Marx
2. _________Macroeconomics is concerned with:
A. The level of output of goods and service
B. The general level of price
C. The growth of income
D. All
3. _________Which of the following is not a stock variable?
A. Capital
B. Wealth
C. Interest
D. Saving
4. _________In economics the central problem is:
A. Money
B. Scarcity
C. Allocation
D. Production
5. _________Opportunity cost is:
A. A cost that cannot be avoided, regardless of what is done in the future
B. The cost incurred in the past before we make a decision about what to do in the future
C. That which we forgo or give up when we make choice or decision
D. The additional benefit of buying additional unit of a product
6. ________The interaction of individuals and firms in the market can be described as a ______ of money, goods
and services and resources through product and factor markets
A. Constant flow
B. Stable flow
C. Circular flow
D. Regular flow
7. __________The two basic markets shown by a simple circular flow model are :
A. Capital goods and consumer goods market
B. Free and controlled market
C. Product and resource
D. Household and business
8. _________Economic growth can be achieved through:
A. Advanced technology
B. Expansion of resources
C. Exploitation of resources
D. Both A & B
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9. ________The basic problem studied in macroeconomics is:
A. Production of income
B. Usage of income
C. Flow of income
D. Distribution of income
10. ________A source of supply of foreign exchange is:
A. Import
B. Export
C. Black market
D. Donation
11. ________The new classical macroeconomic model assumes that expectations are ________formed and that
wages and prices are ________ with respect to the expected price level
A. Adaptively; completely flexible
B. Adaptively; sticky
C. Rationally; completely flexible
D. Rationally; sticky
12. _________In the new classical macroeconomic model developed by Lucas and Sargent, an anticipated
monetary expansion will
A. Increase aggregate output
B. Reduce aggregate output
C. Have no effect on aggregate output
D. Increase aggregate output and the aggregate price level
13. _________In the new classical macroeconomic model developed by Lucas and Sargent, expansionary macro
policies affect aggregate output
A. Only when the macro policies change is anticipated
B. Only when the macro policies change is unanticipated
C. Only after a long and variable lag, provided the policy is anticipated
D. Relatively quickly, provided the policy is anticipated
14. ________An expansionary monetary policy will cause aggregate output to expand in the new classical
macroeconomic model
A. If the policy is unanticipated
B. If the policy is anticipated
C. Only after a long and variable lag, provided the policy is anticipated
D. Output will never expand in the new classical model when monetary policy is changed
15. _________According to the new classical model
A. Unanticipated policy has no effect on the business cycle
B. Only anticipated policy can influence the business cycle
C. Anticipated policy has no effect on the business cycle
D. Unanticipated policy may or may not have an effect on the business cycle
16. __________The policy ineffectiveness proposition
A. Asserts that anticipated changes in monetary policy cannot affect real aggregate output
B. rules out output effects from policy surprises
C. implies that an anticipated Contractionary monetary policy cannot reduce the rate of inflation
D. Implies that an anticipated expansionary monetary policy will not cause the price level to rise
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17. __________The model that assumes that expectations are formed rationally but does not assume complete
wage and price flexibility is known as the
A. New classical model
B. Keynesian model
C. Monetarist model
D. New Keynesian model
18. _________Wage and price rigidities created by long-term contracts suggest that an anticipated monetary
expansion will have
A. No effect on the aggregate price level
B. No effect on aggregate output
C. An effect on aggregate output only
D. An effect on both aggregate output and the price level
19. ________New Keynesians object to which of the following assumptions?
A. Rational expectations
B. Wage and price stickiness
C. Complete wage and price flexibility
D. Long-term contracts as a source of wage and price rigidities
20. ____________The rational expectations hypothesis implies that when macroeconomic policy changes
A. the economy will become highly unstable
B. the way expectations are formed will change
C. people will be slow to catch on to the change
D. people will make systematic mistakes
21. _________If GDP exceeds GNP, we know with certainty that
A. A budget deficit exists
B. A trade surplus exists
C. A trade deficit exists
D. Receipts of factor income from the rest of the world exceed payments of factor income to the rest of the
world
22. _________Net national product (NNP) is equal to
A. Personal income minus taxes
B. GNP minus consumption of fixed capital
C. GDP plus consumption of fixed capital
D. National income plus consumption of fixed capital
23. _________Which of the following is NOT a component of consumption?
A. Nondurable goods
B. Purchase of a new condominium
C. Education expenses
D. None of the above
24. _________Changes in business inventories will be positive when
A. Production exceeds sales
B. Production is less than sales
C. A trade surplus exists
D. A budget surplus exists
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25. __________Suppose exports are greater than imports Given this information, we know with certainty that
A. A trade surplus exists
B. GNP > GDP
C. GNP < GDP
D. The change in business inventories is positive
26. __________Which of the following is NOT included in National Income?
A. indirect taxes
B. wages and salaries
C. net interest
D. rental income of persons
27. __________Which of the following is included in National Income?
A. indirect taxes
B. consumption of fixed capital
C. proprietors' income
D. all of the above
28. __________Which of the following is not included in investment?
A. the purchase of new equipment by firms
B. nondurable goods
C. the purchase of a new home
D. none of the above
29. __________Changes in business inventories will be negative when
A. production exceeds sales
B. production is less than sales
C. A trade surplus exists
D. A budget surplus exists
30. _________Suppose exports are less than imports Given this information, we know with certainty that
A. a trade deficit exists
B. GNP > GDP
C. GNP < GDP
D. The change in business inventories is positive
31. __________The standard of living typically refers to
A. the rate of unemployment
B. output per capita
C. wealth per capita
D. all of the above
32. __________Economists have suggested that the relatively higher unemployment in Europe has been caused by
which of the following?
A. relatively high unemployment benefits
B. relatively high level of worker protection
C. inadequate macroeconomic policies
D. increased labor costs
E. all of the above
33. _________Inflation represents
A. An increase in output
B. An increase in the aggregate price level
C. An increase in the unemployment rate
D. A recession
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34. __________GDP is the value of all ________ produced in a given period
A. final and intermediate goods and services produced by the private sector only
B. final goods and services
C. final and intermediate goods and services, plus raw materials
D. all of the above
E. none of the above
35. __________When using the income approach to measure GDP, the largest share of GDP generally consists of
A. Interest income
B. Labor income
C. Indirect taxes
D. Profits
E. Capital income
36. _________For this question, assume that 1980 is the base year Given macroeconomic conditions in the United
States over the past three decades, we know that
A. nominal GDP is always smaller than real GDP since 1980
B. real GDP and nominal GDP would be equal for the entire period
C. real GDP is larger than nominal GDP from 2002 to 2008
D. real GDP and nominal GDP were equal in 1980
37. ___________Suppose nominal GDP increased in a given year Based on this information, we know with
certainty that
A. real output has increased
B. the price level (GDP deflator) has increased
C. real output and the price level (GDP deflator) have both increased
D. either real output or the price level (GDP deflator) have increased
E. Real output has increased and the price level has decreased
38. ___________Use the following information to answer this question If nominal GDP rises from $100 trillion to
$120 trillion, while the GDP deflator rises from 20 to 22, the percentage change in real GDP is approximately
equal to
A. -10%
B. 10%
C. 20%
D. 91%
E. 0%
39. ___________In a given year, suppose a company spends $100 million on intermediate goods and $200 million
on wages, with no other expenses Also assume that its total sales are $800 million The value added by this
company equals
A. $200 million
B. $300 million
C. $500 million
D. $700 million
E. $800 million
40. ___________A firm's value added equals
A. its revenue minus all of its costs
B. its revenue minus its wages
C. its revenue minus its wages and profit
D. its revenue minus its cost of intermediate goods
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41. ___________Suppose you are provided with the following data for your country for a particular month: 200
million people are working, 20 million are not working but are looking for work, and 40 million are not
working and have given up looking for work The official unemployment rate for that month is
A. 77%
B. 91%
C. 10%
D. 23%
E. 30%
42. ___________An individual is said to be a discouraged worker if he or she
A. Is working, but prefers not to work
B. Is working part time, but would prefer a full time job
C. Is working in jobs she/he is not suited for
D. Wants to work, and is actively searching for a job
E. Wants to work, but has given up searching for a job
43. _________Which of the following tends to occur when the unemployment rate increases?
A. a reduction in the labor force participation rate
B. a reduction in the number of discouraged workers
C. an increase in the number of employed workers
D. all of the above
44. __________The labor force is defined as
A. The total number of individuals who are employed
B. The sum of the total number of individuals who are employed and the officially unemployed
C. The sum of the total number of individuals who are employed, the officially unemployed, and
discouraged workers
D. The total number of individuals who are 16 years old and older, but not retired
E. None of the above
 Use the information provided below to answer the following questions (45 to 47)
Suppose a country using the United States' system of calculating official unemployment statistics has 100 million
people, of whom 50 million are working age Of these 50 million, 20 million have jobs Of the remainder: 10
million are actively searching for jobs; 10 million would like jobs but are not searching; and 10 million do not
want jobs at all
45. _________The labor force is
A. 20 million
B. 40 million
C. 60 million
D. 80 million
E. 100 million
46. __________The labor force participation rate is
A. 2
B. 3
C. 4
D. 6
E. 8
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47. _________The official unemployment rate is
A. 1
B. 2
C. 33
D. 4
E. 66
48. ___________The GDP deflator provides a measure of which of the following?
A. The ratio of GDP to the size of the population
B. The ratio of GDP to the number of workers employed
C. The ratio of nominal GDP to real GDP
D. The price of a typical consumer's basket of goods
E. Real GDP divided by the aggregate price level Answer:
49. __________Which of the following calculations will yield the correct measure of real GDP?
A. Divide nominal GDP by the consumer price index
B. Divide the GDP deflator by the consumer price index
C. Multiply nominal GDP by the consumer price index
D. Multiply nominal GDP by the GDP deflator
E. None of the above
50. __________The prices for which of the following goods are included in both the GDP deflator and the
consumer price index?
A. goods bought by households
B. goods bought by firms
C. good bought by governments
D. goods bought by foreign households (ie, exports)
E. all of the above
51. __________The Okun's law shows the relationship between
A. Inflation and unemployment rate
B. Output growth and unemployment
C. Inflation and output growth
D. Output growth and money supply
52. ________The Phillips curve describes the relationship between
A. Output growth and unemployment
B. Inflation and output growth
C. Output growth and money supply
D. Inflation and unemployment
53. _________Prices for which of the following are included in the GDP deflator, but not included in the
Consumer Price Index?
A. firms' purchases of new equipment
B. intermediate goods and services
C. consumption of goods
D. consumption of services
54. _________Macroeconomists are concerned about changes in the unemployment rate because changes in the
unemployment rate provide information about
A. the state of the economy
B. the welfare of those who are unemployed
C. both A and B
D. none of the above
19 | P a g e
55. _________Which of the following expressions represents nominal GDP?
A. Yt
B. PtYt
C. Yt /Pt
D. $Yt /Pt
56. __________Which of the following expressions represents real GDP?
A. Yt
B. PtYt
C. Yt /Pt
D. $Yt /Pt
57. _________Deflation generally occurs when which of the following occurs?
A. the consumer price index is greater than the GDP deflator
B. the consumer price index decreases
C. the rate of inflation falls, for example, from 4% to 2%
D. nominal GDP does not change
58. _________Suppose nominal GDP in 2009 does not change (compared its previous level in 2008) Given this
information, we know with certainty that
A. real GDP increased during 2009
B. the GDP deflator increased during 2009
C. both the GDP deflator and real GDP fell during 2009
D. More information is needed to answer this question
59. ________Which of the following does NOT represent real GDP?
A. GDP in current dollars
B. GDP in terms of goods
C. GDP in base year dollars
D. GDP in constant dollars
60. _________Which of the following represents real GDP?
A. GDP in constant dollars
B. GDP in terms of goods
C. GDP in base year dollars
D. all of above
61. _________According to convention, a recession is referred to if an economy goes through
A. at least two consecutive quarters of negative growth
B. at least three consecutive quarters of negative growth
C. at least four quarters of negative growth
D. at least two consecutive months of negative growth
62. __________Which of the following about the Phillips curve is NOT correct?
A. It shows the relation between GDP growth and unemployment
B. It has been redefined as a relation between the change in the rate of inflation and unemployment rate
C. It was first explored by A W Phillips
D. The curve is downward sloping
63. __________Inflation can be measured by all of the following except the
A. Consumer price index
B. Producer price index
C. GDP deflator
D. Finished goods price index
E. All of the above
20 | P a g e
64. __________In 1989, the CPI was 1240, in 1990, it was 1307. What was the rate of inflation over this period?
A. 54 percent
B. 307 percent
C. 51 percent
D. 67 percent
E. You can’t tell without knowing the base year
65. _________If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate
is
A. 4 percent
B. 10 percent
C. -4 percent
D. 3 percent
E. 21 percent
66. __________If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate must be
A. 3/8 percent
B. 5 percent
C. 11 percent
D. 24 percent
E. -5 percent
67. __________Which of the following statements is correct?
A. The nominal interest rate is the inflation rate minus the real interest rate
B. The real interest rate is the nominal interest rate minus the inflation rate
C. The nominal interest rate is the real interest rate minus the inflation rate
D. The real interest rate is the sum of the nominal interest rate and the inflation rate
E. none of these answers
68. _________Under which of the following conditions would you prefer to be the lender?
A. The nominal rate of interest is 15 percent and the inflation rate is 14 percent
B. The nominal rate of interest is 20 percent and the inflation rate is 25 percent
C. The nominal rate of interest is 12 percent and the inflation rate is 9 percent
D. The nominal rate of interest is 5 percent and the inflation rate is 1 percent
69. _______Under which of the following conditions would you prefer to be the borrower?
A. The nominal rate of interest is 12 percent and the inflation rate is 9 percent
B. The nominal rate of interest is 20 percent and the inflation rate is 25 percent
C. The nominal rate of interest is 5 percent and the inflation rate is 1 percent
D. The nominal rate of interest is 15 percent and the inflation rate is 14 percent
70. __________A reasonable measure of the standard of living in a country is
A. Real GDP per person
B. Nominal GDP per person
C. Real GDP
D. The growth rate of nominal GDP per person
E. Nominal GDP
21 | P a g e
71. __________In the long run, inflation is caused by
A. Governments that raise taxes so high that it increases the cost of doing business and, hence, raises
prices
B. banks that have market power and refuse to lend money
C. governments that print too much money
D. increases in the price of inputs, such as labor and oil
72. _________When prices rise at an extraordinarily fast rate, it is called
A. Disinflation
B. Deflation
C. Hyperinflation
D. Inflation
E. Hypo inflation
73. ______The quantity theory of money concludes that an increase in the money supply causes
A. a proportional increase in prices
B. a proportional increase in real output
C. a proportional decrease in velocity
D. a proportional increase in velocity
E. a proportional decrease in prices
74. ________An example of a transfer payment is:
A. profit
B. rent
C. unemployment benefits
D. government purchases
E. wages
75. ___________The value of plant and equipment worn out in the process of manufacturing goods and services is
measured by
A. Intermediate production
B. Net National Product
C. Investment
D. Depreciation
E. Consumption
76. _________Gross Domestic Product can be measured as the sum of
A. final goods and services, intermediate goods, transfer payments, and rent
B. consumption, investment, government purchases, and net exports
C. consumption , transfer payments, wages, and profits
D. Net National Product, Gross National Product, and Disposable personal income
E. Investment, wages, profits, and intermediate production
77. __________Ethiopian Gross Domestic Product measures the production and income of
A. Ethiopian -owned firms no matter where they are located in the world
B. the domestic service sector only
C. people and factories located within the borders of the Ethiopian
D. the domestic manufacturing sector only
E. None of these answers
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78. _________Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices
A. foreign; domestic
B. current year; base year
C. domestic; foreign
D. base year; current year
E. intermediate; final
79. ___________GDP would include which of the following?
A. the value of taking a day off from work
B. consulting services
C. intermediate sales
D. illegal drug sales
E. housework
80. __________Which of the following is not a function of money?
A. hedge against inflation
B. medium of exchange
C. unit of account
D. store of value
81. __________Commodity money
A. has no intrinsic value
B. has intrinsic value
C. is used exclusively in the economies of western Europe and north America
D. is used as reserves to back fiat money
82. __________Which of the following statements about money is not true?
A. A debit card is not really money because it is only a means of transferring money between accounts
B. All the wealth that people hold, in whatever form, should be considered as money
C. Wealth held in the current account you hold with your bank is almost as convenient for buying things
as wealth held in your wallet, so the wealth in current accounts should be included in measures of
money
D. In a complex economy it is not easy to draw a clear dividing line between assets that should be
considered as money and those that should not
83. __________If the banks in an economy operate with a reserve ratio of 20 per cent then the money multiplier is:
A. 4
B. 20
C. 25
D. 5
84. ___________Reserve requirements that may be imposed on an economy’s banks by its central bank specify
that banks’ reserves must be a minimum percentage of their
A. Assets
B. Deposits
C. Loans
D. Government bonds
85. ___________Which of the following policy actions by a central bank is likely to increase the money supply?
A. Increasing the refinancing rate
B. Buying government bonds in open market operations
C. Increasing reserve requirements
D. All of these will increase the money supply
23 | P a g e
86. __________The three main tools of monetary policy are
A. Fiat, commodity, and deposit money
B. Open-market operations, reserve requirements, and the refinancing rate
C. The money supply, government purchases, and taxation
D. Government expenditures, taxation, and reserve requirements
87. _________Suppose the central bank purchases a government bond from a person who deposits the entire
amount received from the sale in her bank, the money supply will
A. Rise by an amount that depends on the bank’s reserve ratio
B. Rise by less than the amount of the deposit
C. Fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
D. Fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
E. Be unchanged
88. __________If there is a general shortage of liquidity in the money market then
A. The banks will increase their lending
B. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each
other will fall and the central bank may be expected to reduce the supply of liquidity to the banks
C. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each
other will rise and the long-term interest rate may be expected to rise as a result
D. The long-term interest rate in the economy will rise and the central bank will raise its interest rate in
response
E. The short-term interest rate at which the economy’s commercial banks lend to and borrow from each
other will rise and the central bank may be expected to increase the supply of liquidity to the banks
89. ___________Which of the following statements about economic fluctuations is true?
A. A depression is a mild recession
B. A variety of spending, income, and output measures can be used to measure economic fluctuations
because most macroeconomic quantities tend to fluctuate together
C. A recession is when output rises above the natural rate of output
D. Economic fluctuations have been termed the "business cycle" because the movements in output are
regular and predictable
90. ___________According to the interest rate effect, aggregate demand slopes downward (negatively) because
A. Lower prices increase money holdings, decrease lending, interest rates rise, and investment spending
falls
B. Lower prices increase the value of money holdings and consumer spending increases
C. Lower prices decrease the value of money holdings and consumer spending decreases
D. Lower prices reduce money holdings, increase lending, interest rates fall, and investment spending
increases
91. ___________Which of the following would not cause a shift in the long-run aggregate supply curve?
A. An increase in the available capital
B. An increase in the available labor
C. An increase in the available technology
D. An increase in price expectations
E. All of these answers shift the long-run aggregate supply curve
24 | P a g e
92. ___________Which of the following is not a reason why the aggregate demand curve slopes downward?
A. The exchange-rate effect
B. The wealth effect
C. The classical dichotomy/monetary neutrality effects
D. The interest-rate effect
E. All of these answers are reasons why the aggregate-demand curve slopes downward
93. _________In the model of aggregate demand and aggregate supply, the initial impact of an increase in
consumer optimism is to
A. Shift the short-run aggregate supply curve to the left
B. Shift the aggregate demand curve to the right
C. Shift the short-run aggregate supply curve to the right
D. Shift the aggregate demand curve to the left
E. Shift the long-run aggregate supply curve to the left
94. _________Which of the following statements is true regarding the long-run aggregate supply curve? The long-
run aggregate supply curve
A. is vertical because an equal change in all prices and wages leaves output unaffected
B. is positively sloped because price expectations and wages tend to be fixed in the long run
C. shifts right when the government raises the minimum wage
D. shifts left when the natural rate of unemployment falls
95. ____________According to the wealth effect, aggregate demand slopes downward (negatively) because
A. Lower prices increase the value of money holdings and consumer spending increases
B. Lower prices decrease the value of money holdings and consumer spending decreases
C. Lower prices reduce money holdings, increase lending, interest rates fall, and investment spending
increases
D. Lower prices increase money holdings, decrease lending, interest rates rise, and investment spending
falls
96. __________The natural rate of output is the amount of real GDP produced
A. When the economy is at the natural rate of unemployment
B. When the economy is at the natural rate of investment
C. When the economy is at the natural rate of aggregate demand
D. When there is no unemployment
97. __________Suppose the price level falls but because of fixed nominal wage contracts, the real wage rises and
firms cut back on production This is a demonstration of the
A. Sticky-wage theory of the short-run aggregate supply curve
B. Classical dichotomy theory of the short-run aggregate supply curve
C. Misperceptions theory of the short-run aggregate supply curve
D. Sticky-price theory of the short-run aggregate supply curve
98. _________Suppose the price level falls but suppliers only notice that the price of their particular product has
fallen Thinking there has been a fall in the relative price of their product, they cut back on production This is a
demonstration of the
A. Misperceptions theory of the short-run aggregate supply curve
B. Classical dichotomy theory of the short-run aggregate supply curve
C. Sticky-price theory of the short-run aggregate supply curve
D. Sticky-wage theory of the short-run aggregate supply curve
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99. _________Suppose the economy is initially in long-run equilibrium Then suppose there is a increase in
military spending due to rising international tensions According to the model of aggregate demand and
aggregate supply, what happens to prices and output in the short run?
A. Prices fall; output rises
B. Prices fall; output falls
C. Prices rise; output falls
D. Prices rise; output rises
100. ____________Suppose the economy is initially in long-run equilibrium Then suppose there is an increase
in military spending due to rising international tensions According to the model of aggregate demand and
aggregate supply, what happens to prices and output in the long run?
A. Output falls; prices are unchanged from the initial value
B. Prices fall; output is unchanged from its initial value
C. Output and the price level are unchanged from their initial values
D. Prices rise; output is unchanged from its initial value
E. Output rises; prices are unchanged from the initial value
101. ___________Suppose the economy is initially in long-run equilibrium Then suppose there is a drought that
destroys much of the wheat crop According to the model of aggregate demand and aggregate supply, what
happens to prices and output in the short run?
A. Prices rise; output falls
B. Prices fall; output rises
C. Prices rise; output rises
D. Prices fall; output falls
102. ____________Suppose the economy is initially in long-run equilibrium Then suppose there is a drought
that destroys much of the wheat crop If policymakers allow the economy to adjust to long-run equilibrium on
its own, according to the model of aggregate demand and aggregate supply, what happens to prices and output
in the long run?
A. Output rises; prices are unchanged from the initial value
B. Output and the price level are unchanged from their initial values
C. Output falls; prices are unchanged from the initial value
D. Prices fall; output is unchanged from its initial value
E. Prices rise; output is unchanged from its initial value
103. ____________Stagflation occurs when the economy experiences
A. Rising prices and rising output
B. Rising prices and falling output
C. Falling prices and falling output
D. Falling prices and rising output
104. __Which of the following events shifts the short-run aggregate supply curve to the right?
A. A decrease in the money supply
B. A drop in oil prices
C. An increase in government spending on military equipment
D. An increase in price expectations
26 | P a g e
105. _______According to the model of aggregate supply and aggregate demand, in the long run, an increase in
the money supply should cause
A. Prices to rise and output to rise
B. Prices to fall and output to remain unchanged
C. Prices to fall and output to fall
D. Prices to rise and output to remain unchanged
106. __________Policy makers are said to "accommodate" an adverse supply shock if they
A. Fails to respond to the adverse supply shock and allow the economy to adjust on its own
B. Respond to the adverse supply shock by decreasing aggregate demand, which lowers prices
C. Respond to the adverse supply shock by decreasing short-run aggregate supply
D. Respond to the adverse supply shock by increasing aggregate demand, which further raises prices
107. _____________Keynes's liquidity preference theory of the interest rate suggests that the interest rate is
determined by
A. Aggregate supply and aggregate demand
B. The supply and demand for loanable funds
C. The supply and demand for money
D. The supply and demand for labor
108. ___________When money demand is expressed in a graph with the interest rate on the vertical axis and the
quantity of money on the horizontal axis, an increase in the interest rate
A. Decreases the quantity demanded of money
B. Increases the quantity demanded of money
C. Decreases the demand for money
D. Increases the demand for money
109. __________When the supply and demand for money are expressed in a graph with the interest rate on the
vertical axis and the quantity of money on the horizontal axis, an increase in the price level
A. Shifts money demand to the right and increases the interest rate
B. Shifts money demand to the right and decreases the interest rate
C. Shifts money demand to the left and increases the interest rate
D. Shifts money demand to the left and decreases the interest rate
110. ___In the market for real output, the initial effect of an increase in the money supply is to
A. Shift the aggregate supply curve to the right
B. Shift the aggregate supply curve to the right
C. Shift the aggregate demand curve to the left
D. Shift the aggregate demand curve to the right
111. __________The long-run effect of an increase in the money supply is to
A. Increase the interest rate
B. Decrease the price level
C. Increase the price level
D. Decrease the interest rate
112. _________The initial impact of an increase in government spending is to shift
A. Aggregate demand to the right
B. Aggregate demand to the left
C. Aggregate supply to the right
D. Aggregate supply to the left
27 | P a g e
113. _______If the marginal propensity to consume MPC is 075, the value of the multiplier is
A. 4
B. 75
C. 5
D. 075
114. _________An increase in the marginal propensity to consume (MPC)
A. Raises the value of the multiplier
B. Has no impact on the value of the multiplier
C. Rarely occurs because the MPC is set by congressional legislation
D. Lowers the value of the multiplier
115. _________When an increase in government purchases raises incomes, shifts money demand to the right,
raises the interest rate, and lowers investment, we have seen a demonstration of
A. Supply-side economics
B. The crowding-out effect
C. The multiplier effect
D. None of these answers
116. ________When an increase in government purchases increases the income of some people, and those
people spend some of that increase in income on additional consumer goods, we have seen a demonstration of
A. The multiplier effect
B. Supply-side economics
C. The crowding-out effect
D. None of these answers
117. _____________Which of the following best describes how an increase in the money supply shifts the
aggregate demand curve?
A. The money supply shifts right, prices fall, spending increases, and the aggregate demand curve shifts
right
B. The money supply shifts right, the interest rate rises, investment decreases, and the aggregate demand
curve shifts left
C. The money supply shifts right, the interest rate falls, investment increases, and the aggregate demand
curve shifts right
D. The money supply shifts right, prices rise, spending falls, and the aggregate demand curve shifts left
118. ______________In an open economy where government spending was $30 billion, consumption was $70
billion, taxes were $20 billion, and GDP was $100 billion this year, investment spending was $10 billion As a
result, there was:
A. net capital inflow of $10 billion
B. net capital outflow of $10 billion
C. net capital inflow of $20 billion
D. net capital outflow of $20 billion
119. ___________There is a __________ relationship between the amount of loanable funds demanded and the
rate of interest
A. positive
B. direct
C. negative
D. Both positive and negative
28 | P a g e
120. ___________Which is false? When there is an increase in
A. the government budget deficit, the total amount of borrowing falls
B. private savings, the interest rate decreases
C. government budget deficit, the private investment is crowded out
D. private savings, the total amount of borrowing increases
121. ___________The term liquidity means that the:
A. asset is used in a barter exchange
B. asset is used as the medium of exchange
C. asset is readily convertible to cash without much loss of value
D. Market interest rate is too low
122. ______Alice’s disposable income increases by $1000, and she spends $600 of it Alice’s
A. MPS is 04 and she saves $400
B. MPC is 04 and she saves $400
C. MPS is 04 and she saves $600
D. MPC is 06 and she consumes $400
123. ____________Unemployment is countercyclical; this means that when the GDP is __________, we should
expect unemployment to be __________
A. in a boom, in a boom as well
B. increasing, in a boom
C. in a boom, below its trend
D. In a burst, in a trough
124. _____________If in 2011 the real GDP was $1000 and the nominal GDP was $1250, and in 2012, they
were $1000 and $800, respectively, the GDP deflator in 2011 is ___________ the GDP deflator in 2012
A. greater than
B. lesser than
C. equal than
D. it is impossible to determine with the information given
125. _____________Which of the following decreases the real demand for money?
A. A decrease in the aggregated price level
B. An increase in the time interval between successive trips to the bank
C. A decrease in the nominal financial transaction fee
D. An increase in the number of shopping trips per period
126. ___________Which of the following increases the velocity of money?
A. An increase in the number of shopping trips per period
B. A decrease in the real consumption expenditure
C. An increase in the time interval between successive trips to the bank
D. A decrease in interest rate
127. ____________Which one of the following is the objective of fiscal policy?
A. Achieve full employment
B. Stabilize the price level
C. Maintain equilibrium in the balance of payment
D. All of the above
128. ___________Central bank use Contractionary monetary policy when
A. To increase government expenditure
B. To reduce inflation
C. A & B
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129. ___________Under fishers quantity theory of money, M stands for
A. Medium of exchange
B. Total quantity of legal tender money
C. Measurement tool
D. All of the above
130. ___________The quantity theory of is expressed by the identity equation?
A. M*Y=P+Y
B. M*V=PY
C. M+V=P
D. None
131. __________In the quantity theory of money, P and Y represent the price and quantity of:
A. All finished goods and services in an economy
B. All finished goods sold in an economy
C. All finished goods and services sold in an economy
132. ___________Who is the head of the monetary policy committee?
A. Central bank, government
B. President
C. Prime minister
D. All of the above
133. ____________If inflation is 6% and you receive a 1% raise in your nominal wage, by how much did your
wage changed?
A. -5%
B. 1%
C. -6%
D. 6%
134. ___________Which of the following is an example of government expenditure?
A. A social security payment for an elderly people
B. Employing a public school teacher
C. An unemployment insurance cheek
D. All of the above
135. ____________Which of the following items is an investment?
A. Purchase of a mutual fund
B. Purchase of government fund
C. Purchase of a new farm tractor
D. Purchase of a stock
136. ___________In the IS-LM model, the impact of an increase in government purchases in the goods market
has ramifications in the money market, because the increase in income causes a (n) _____ in money______
A. Increase, supply
B. Increase, demand
C. Decrease, supply
D. Decrease, demand
30 | P a g e
137. ____________In the IS-LM model under the usual conditions in closed economy, an increase in
government spending increases the interest rate and crowds out:
A. Prices
B. Investment
C. Money supply
D. Saving
138. __________When using AD/AS analysis to illustrate changes within an economy, which of the following
would not need to be considered when looking at changes to economic growth:
A. Increased labor productivity
B. More efficient use of capital stock
C. Developing a more efficient capital and finance sector
D. Increased availability of social capital
139. _____________The Philips curve implied that there was a tradeoff available for government between:
A. Price level and unemployment
B. Price level and employment
C. Output and unemployment
D. Inflation and unemployment
140. _____________If aggregate demand exceeds aggregate supply, unwanted inventories begin to accumulate,
forces firms to _____ prices to get rid of those inventories
A. Rise
B. Reduce
C. Zero
D. None of these
141. ____________Under Keynes consumption function, consumption is _____ function of income
A. Unstable
B. Inverse
C. Stable
D. Neutral
142. __________The reason for the existence of proportional relationship between money stock and price level
is
A. Money illusion
B. Inflation
C. Full employment
D. wage price flexibility
143. ____________In the classical theory, output and employment are determined by
A. Production function
B. Demand for labor and supply for labor
C. Effective demand
D. Both A & B
144. ____________Under the Keynesian theory, output and employment is determined by
A. Saving and investment equality
B. Production function
C. Effective demand
D. Demand for money and supply of money
31 | P a g e
145. ____________The concept of money illusion is first coined by
A. Irving Fisher
B. Milton Friedman
C. Alfred Marshall
D. J M Keynes
146. ___________The independence of real variables from changes in money supply and nominal variables is
called
A. Money illusion
B. Neutrality of money
C. Classical dichotomy
D. Money multiplier
147. ____________Which is the most liquid measure of money supply
A. M1
B. M2
C. M3
D. M4
148. _____________If aggregate demand falls short of current output, it would results
A. Business firms will cut production to keep from accumulating inventories
B. Business firms will expand production to keep from accumulating inventories
C. Business firms will cut production to build up inventories
D. Business firms will expand production to build up inventories
149. _____________The expenditure multiplier is the ratio of
A. The change in equilibrium output to a change in monetary base
B. The change in money supply to a change in monetary base
C. The change in money supply to a change in autonomous expenditure
D. The change in equilibrium output to a change in autonomous expenditure
150. _____________The multiplier concept is important in the Keynesian model because
A. It explains why a large change in autonomous spending has such a small impact on equilibrium output
B. It explains why a small change in autonomous spending can have large impact on equilibrium output
C. It is crucial in understanding why change in investment spending are viewed as the root cause of
business cycle fluctuation
D. Both B & C
151. ____________The well-known work formulated by J M Keynes is
A. Principle of economics
B. Principle of modern trade
C. The general theory of employment, interest and money
D. Modern theory of fiscal policy
152. _____________Transaction demand for money is a function of
A. Income
B. Interest
C. Price
D. Inflation
153. ____________Speculative demand for money is a function of
A. Income
B. Price
C. interest
D. investment
32 | P a g e
154. _____________Interest rate and bond price are
A. Positively related
B. Negatively related
C. Not related
D. Either A or B
155. ____________IS curve shows that when income increase
A. Interest rate must fall to restore equilibrium in the goods market
B. Interest rate must fall to restore equilibrium in the asset market
C. Interest rate must rise to restore equilibrium in the goods market
D. Interest rate must rise to restore equilibrium in the asset market
156. _____________A significant increase in public expenditure leads to:
A. A right ward shift in LM curve
B. A right ward shift in IS curve
C. Left ward shift in LM curve
D. Left ward shift in IS curve
157. _____________Accelerator theory of investment is the ratio of
A. Change in income to change in investment
B. Change in investment to change in income
C. Change in income to change in interest
158. _____________IS curve represents the combination of
A. Income and interest
B. Price and output
C. Interest and investment
159. _____________LM curve represents the combination of
A. Price and output
B. Demand for money and supply of money
C. Income and investment
D. Money supply and investment
160. _____________Effective demand is where
A. Aggregate demand equal to aggregate supply
B. Demand for money is equal supply of money
C. Saving equal to investment
33 | P a g e
4. WORK SHEET OF MATHEMATICS FOR ECONOMISTS
1 _______One of the following is not the advantage of mathematical economics?
A. It helps us to manipulate n-variable case of the model
B. It helps us to state assumptions and conclusions in words and sentences
C. The analysis is more rigorous /accurate
D. It uses more precise and concise language
2 ________Which one of the following is odd?
A. Domain = the set of all items for sale in grocery Range = price
B. {(11:00 AM, 83 0F), (2:00 PM, 89 0 F), (6:00 PM, 85 0F)}
C. Domain = GPA Range = the set of 3nd year agro-economics students
D. {(1, 2), (3, 2), (5, 6), (7, 6)}
E. None
3 ________One of the following is arithmetic sequence?
A. 3, 7, 11, 15 …
B. 1/3, 1, 5/3, 7/3 …
C. 2, 8, 14, 20 …
D. 1, 4+2p, 7+4p, 10 + 6p…
E. All
4 ________If G1 = 4 and r = 1find G3?
A. 4
B. 1/4
C. 1
D. 1/8
E. None
5 ________ a variable whose value determines that of the independent variable
A Exogenous variable
B Endogenous variable
C independent variable
D constant variable
6 ________Which one is incorrect about limit?
A. Existence of Limit is when left and right side gives different value
B. Limiting behavior occurs in a variety of practical situations
C. the two sided limits of the function exist and equal with f(C)
D. Investigate the value of function near particular point
𝑥 2 −4
7 ________The limit of as x approaches 2 from both sides
𝑥−2
A. 0
B. 4
C. -4
D. 0
5𝑥 2 + 6𝑥−3
8_________ lim𝑥→∞ is equal to
4𝑥 2 + 7
A. 5/4
B. 12/9
C. 8/11
D. 3/7
34 | P a g e
9 ________A business manager determines that t months after production begins of a new product, the number of
6𝑡 2 + 5𝑡
units produced will be P thousand, where P (t) = What the value of production in the long run (as t→ ∞)?
(𝑡+1)2
A6
B 55
C 6,000
D 5,500
10 _______ Differential calculus is crucial to solve the following physical problems except one
A. The slope of tangent line to an arbitrary curve
B. The instantaneous velocity and acceleration of a moving body
C. The maximum and minimum value of a model
D. The area of irregular shaped region
11 ________One of the following is the application of differential calculus
A. To recover functions in economics
B. To Find marginal value
C. To find consumer surplus and producer surplus
D. To find the area of the region between two curves
12 ________What the expression for second –order partial derivates fxy for f(x, y) =x2y3-10x
A. 3x2
B. 3x2y
C. 6xy2
D. 2y3
E. None
13 _________ Find the derivative of 𝑓(𝑥) = 𝑥 3/2
A. 3/4√𝑥
2
B. 3 𝑥
√
3√𝑥
C. 2
D. 2/3√𝑥
E. None
4
14 _________Find ∫2 4𝑥 + 2 dx
A. 28
B. 12
C. 36
D. 24
15. _________The sum of the first 10 terms of an arithmetic progression is 15 and the sum of the next 10 terms is
215, find the common difference (d) of the sequence
A4
B6
C3
D2
16 _________If G1 = 9 and r = 1/3 find G3?
A 1/27
B 1/9
C1
D 1/21
35 | P a g e
17 _________Suppose that for a certain corporation the monthly profit (in thousands of dollars) at time t (in
2𝑡 − 4
months) is estimated by: ∏ (t) = 𝑡+1 , ∏(t) Predict the long-range profit as t → ∞
A 4000
B 1000
C 3000
D 2000
18. ______Given revenue of x-company R(x) = 30x + 01x2, what is marginal revenue at x=20?
A 32
B 41
C 34
D 33
19 _________If marginal revenue is given by: F (q) = 200-6q, what extra total revenue is obtained by increasing
sales (q) from 15 to 20?
A. A 374
B. B 475
C. C 362
D. D 465
20_________The function describing the marginal cost of producing a product is given by f(x) = x+100, where x
is the number of units produced, determine the total cost function if the total cost of producing 100 units is birr 40
000
A. C(x) = ½x2+100x+25,000
B. C(x) = ½x2+40 x+25,000
C. C(x) = ½x2+100x+4,000
D. C(x) = ½x2+40x+4,000
21_________An individual accumulated Birr 30,000 ten years before his retirement in order to buy a house after
he is retried. If the person invests this money at 12% compounded monthly, how much will be the balance
immediately after his retirement?
A. 99, 01161
B. 88, 21281
C. 77, 01161
D. 66, 111
22.___________ How much the producers’ surplus at a price level of birr 20 for the price-supply equation
p  s( x)  2  0.0002x 2
A. A 1,440
B. B 240
C. C 300
D. D3,600
23 ___________The relationships between inputs and outputs of a firm is given by the Cobb- Douglas production
as follows: Q  50l 0.8 k 0.2 What is the maximum production?
A. 400000
B. 363,742
C. 80000
D. 263, 902
36 | P a g e
24 ___________XYZ company is spending Birr “y” (in millions, and yielding sales of Br S(x) (in millions)
represented by the function: what the absolute ceiling for their sales?
A. 4 million
B. 5 million
C. 25 million
D. Zero
25 __________Which one of the following is incorrect about the relation between Present value and future value?
A. Present value is the current value of future cash flow
B. Present value is Inflation is taken into consideration, future value is doesn’t consider inflation
C. Both of them are involving discount rate and interest rate
D. Present value is more important for investors than future value
26 _________Which of the following is not necessary information to sketch curves in economics?
A. Extreme points
B. Concavity test
C. X and Y intercept
D. Monotonic test (checking whether the function is increasing or decreasing over the range)
E. none
27 ________Mr Chala creates a new single called ‘Tokkummaa’ which means ‘Unity’ Mr Chala sells his album for
$ 10 per CD, variable cost is $250 per unit and cost of 100 units is $1450 How many units does Mr Chala need to
sell to break even?
A. $1450
B. $120
C. $160
D. 250
28 _________Suppose the utility function for two goods x and y is given by U= x2+y2 and a consumer purchases 2
units of x and 3 unit of y with 4 unit of budget constraint, how many units of X and Y purchased to retain the same
level of utility, respectively?
A. 12/23 and 2/23
B. 7/13 and 8/13
C. 8/13 and 12/13
D. 7/11 and 8/11
29 ___________Function which is either increasing or decreasing is called:
A. Univariate function
B. monotonic function
C. multivariate function
D. Inflection point
37 | P a g e
5. WORK SHEET OF STATISTICS FOR ECONOMICS
1 ________Which of the following is false about probability?
A. If the probability is one, it indicates the respective outcome or event is certain to occur
B. The probability that an event will occur is the sum of the probabilities that the basic outcomes contained in
that event will occur
C. The sum of all probability is equal to one or zero
D. All
2_________is a complete listing of all elementary events of an experiment
A. Event
B. Sample space
C. Probability function
D. All
3 _________What is the probability of getting three numbers of heads in tossing three coins?
A. 2/8
B. 3/8
C. 1/8
D. None
4 _________The amount of time a person must wait for a train to arrive in a certain town is uniformly distributed
between 20 and 40 minutes. What is the probability that a train will arrive at more than 30 minutes?
A. 05
B. 025
C. 075
D. None
5 ________Depending on question number 4, what is the mean and standard deviation respectively?
A. 30 and 677
B. 30 and 577
C. 60 and 677
D. 40 and 577
Depending on the contingency table below, answer question number 6 and 7

Sex Agro economics Statistics
Male 041 008
Female 045 006
6 ________What is the probability that a randomly selected person is a male given that he is from agro
economics?
A. 048
B. 086
C. 049
D. 051
7 _________What is the probability that a randomly selected person is a female given that she is from statistics
department?
A. 014
B. 086
C. 043
D. 049
38 | P a g e
8 __________states that the conditionality of an event, A, given the occurrence of another event, B, is equal to the
product of the likelihood of B given A and the probability of A
A. Conditional probability
B. Bayes theorem
C. Marginal probability
D. All
9 _________Which of the following is odd from the other?
A. Throwing two dice three times
B. Even number between 1 and 10
C. Odd number less than 10
D. Even number greater than 10
10 _____If the probability of success in a Bernoulli trial is 045, what is the variance?
A. 02475
B. 04975
C. 00613
D. None
11 __________Assume 80% of all business startup in the IT industry report that they generate a profit in their first
year If a sample of 10 new IT business startups is selected, find the probability that exactly seven will generate a
profit in their first year?
A. 04026
B. 07452
C. 02013
D. None
12 _________Suppose a card is drawn randomly from an ordinary deck of playing cards, and then put back in the
deck The exercise is repeated five times What is the probability of drawing 1 spade, 1 heart, 1 diamond and 2
clubs?
A. 00586
B. 00654
C. 00745
D. None
13 ________Which of the following is false about Poisson distribution?
A. Events occurs in a given time are constant
B. Events will be occurred dependently
C. It is a discrete probability distribution
D. A and B
14 __________Suppose a given company experiences an average of 1 network failure per week. What is the
probability that the company experiences 2 failures in a given week?
A. 0284
B. 0184
C. 0368
D. 0425
15 _________Which of the following is a continuous random variable?
A. Tossing a die two times
B. The number between 4 and 6
C. The probability of even number less than 20
D. B and C
39 | P a g e
16 _________Which of the following is different from the other?
A. Normal distribution
B. Z-distribution
C. F-distribution
D. Binomial distribution
17 _________How t-distributions differ from Z-distribution?
A. t-distribution use large sample size
B. t- distribution is a continuous distribution
C. It uses when population standard deviation is known
D. It has shorter peak and thicker tails as we compare with z-distribution
18________A sample of size 15 drawn from a normally distributed population has sample mean 35 and sample
standard deviation 14. What is 95% confidence interval for the population mean?
A. 35±78
B. 30±78
C. 26±78
D. None
19 ________If jobs arrive every15 seconds on average, what is the probability of waiting less than or equal to 30
seconds?
A. 086
B. 024
C. 078
D. None
20 Which of the following is an application of exponential distribution?
A. Time between telephone calls
B. Time between machine breakdowns
C. Time between successive job arrivals at a computing center
D. All
21 ________states that the numbers of identically distributed, randomly generated variables increases, their
sample mean approaches their theoretical mean
A. Low of central limit theorem
B. Low of large number
C. Point estimation
D. None
22________ is the average of the standardized data raised to fourth power
A. Skewness
B. Kurtosis
C. variance
D. Mean
23________Accidents occurs with a poison distribution at an average of 4 per day. What is the probability of more
than 5 accidents in one day?
A. 02149
B. 04256
C. 04856
D. None
40 | P a g e
24 ________Which of the following is incorrect about Laspeyre’s price/quantity index?
A. It uses base period’s price/ quantity as weights
B. It compares the cost of collection of a fixed basket of goods selected in the base period with the same
basket of goods in the given period
C. It uses current year weights to construct the index
D. It serves as the basis of constructing the cost of living index
E. None
25________The use of index number is/are:
A. To measure the level of business and economic activities
B. To know the purchasing power of money
C. To estimate, for a given period or a particular space, the percentage change in price, quantities, or values
D. All
26_________Let us say that we heard that there was a 95% confidence interval for the population mean from 12 to
18, what is the point estimate and margin error respectively?
A. 15 and 3
B. 3 and 15
C. 30 and 3
D. None
27_________Which of the following is true about normal distribution?
A. It is asymmetric to the mean
B. It considers only positive number
C. The majority of the data is distributed near to the mean
D. It is impossible to list all outcomes
E. C and D
Workout
Depending on the following data answer question number 28-31
Commodity Teff Wheat

Year
Price Quantity Price Quantity
2009 2400 1800 1600 2800
2010 2600 2000 1650 3000
2011 3000 2200 1700 3200
2012 3200 2300 1750 3400
By taking 2009 as a base year then;
28 Calculate simple price index for Teff
29 Calculate simple quantity index for wheat
30 Construct simple aggregative price index by taking simple aggregates of prices?
31 Construct Paasche’s quantity index?
41 | P a g e
6. WORK SHEET OF ECONOMETRICS
1. _________Which of the following makes econometrics unique from the other discipline?
A. It provides numerical value between dependent and exogenous variables
B. Econometrics can test hypothesis between variables
C. Econometrics can check the existence of multicollinearity and heteroscedasticity
D. All
2. ________Which of the following is/are the goal of econometrics?
A. To analyses data
B. To predict the future values of economic relation
C. Used for policy making depending on the result found
D. All
3. ________When a hypothesis is statistically tested two types of errors can be made The first one is that we
reject the null hypothesis while it is actually true, and is referred to as:
A. Type I error
B. Type II error
C. Alternative hypothesis
D. None
4. _________Which of the following is true about cross-sectional data?
A. It is a type of data set which is taken over a period of time
B. It is a type of data set which is taken at a given point in time
C. It is a type of data which is occurred by interviewing the same type of household periodically
D. None
5. _________Which of the following is the most important and difficult stage of econometric research?
A. Estimation of the model
B. Specification of the model
C. Evaluation of the estimates
D. Evaluation of the forecasting power of the estimated model
6. ________The major objectives and uses of a regression function is/are;
A. To estimate mean or average value of the dependent variable, given the value of independent variable(s)
B. To test hypothesis about sign and magnitude of relationship between the dependent variable and one or
more independent variable(s)
C. To predict or forecast future value(s) of the dependent variable which is in turn used in policy formulation
D. All
7. _________In the model not each and every factor or variable can be included in the function due to;
A. Some of the factors may not be statistically measured
B. Some of the factors may not even known by a person
C. Some of the factors are random appearing in unpredictable way and time
D. Some of the factors have very small influence on the dependent variable
E. All
8. ________In regression line, most of the data lie on the straight line, some of the points would lie above the
straight line and some of the points would also lie below the straight line Why?
A. Omitted Variables from the Function
B. Misspecification of the Mathematical Form of the Model
C. Errors of Aggregation
D. Errors of measurements
E. All
42 | P a g e
9 ________Which of the following is correct about simple linear regression?
A. It shows the relationship of one dependent variable and one endogenous variable
B. It is known as a two variable regression
C. It shows the relationship of one dependent variable and one or more exogenous variable
D. A and B
10 _________If there are four (3) categorical variables, we have:
A. Three dummy variable
B. Five dummy variable
C. Two dummy variable
D. All
11 ________Consider a simple linear regression model with the form 𝑌𝑖 = 𝛽0 + 𝛽1𝑋1𝑖+Ui, we have 5 observations
with the dependent variable y, which are 2, 4, 6, 8 and 10 in deviation form After estimating, the model ∑ 𝑦̂𝑖 2 =
187, the coefficient of determination will be:
A. 075
B. 080
C. 090
D. 085
12 ________Suppose that we run a regression of Y on X2 and get an R2 of 060 If we run a regression of Y on X2
and X3, we would expect:
A. The new R2 to be greater than or equal to 060 if and only if the correlation between X2 and X3 is positive
B. The new R2 to be greater than or equal to 060
C. The new R2 to be less than or equal to 060
D. The new R2 to be less than or equal to 060 if and only if the correlation between X2 and X3 is negative
13 _________Suppose bj is an estimator for the slope coefficient βj The expected value of ˜bj is equal to βj plus
ten As the sample size gets larger and larger, the standard error of bj gets closer and closer to zero while the
expected value of ˜bj remains the same Which of the following statements is true?
A. bj is an unbiased, consistent estimator of βj
B. bj is a consistent but biased estimator of βj
C. bj is an unbiased estimator fo βj but is not consistent
D. bj is a biased estimator of βj and is not consistent
14 ________Which of the following would lead to a smaller standard error for the slope coefficient in a bivariate
regression?
A. A smaller variance of the independent variable
B. A smaller average size of the residuals
C. A larger error sum of squares
D. A smaller sample size
15 ________Which of the following would make us less likely to reject the null hypothesis that the true population mean is
150?
A. Getting a sample mean that is farther from 150
B. Getting a larger t statistic
C. Switching to a larger value for the significance level α
43 | P a g e
16 _________Which of the following statements is definitely not true?
A. Adding an additional regressor can change the estimated slope coefficients of the other regressors
B. Adding an additional regressor can decrease the R2 of the regression
C. Adding an additional regressor can lower the error sum of squares of the regression
D. Adding an additional regressor can increase the standard errors of the estimated slope coefficients of the
other regressors
17._________The 95% confidence interval for the population mean of X:
A. Will be wider than the 90% confidence interval for the population mean
B. Will tend to get wider as we use more observations
C. Will not depend on the variance of X
18 ________Suppose we are testing whether high school GPA and college GPA are jointly significant in a
regression with log wage as the dependent variable. Which of the following statements is true?
A. We will reject the null hypothesis that both coefficients are equal to zero at a 5% significance level if and
only if both of the variables are individually significant at the 5% significance level
B. We will reject the null hypothesis that both coefficients are equal to zero at a 5% significance level if and
only if at least one of the two variables is individually significant at the 5% significance level
C. We will reject the null hypothesis that both coefficients are equal to zero at a 5% significance level if one
of the two variables is individually significant at the 5% significance level
19 _________Suppose that we run a regression with the log of pounds of rice purchased from a store as the
dependent variable and log of the price of a pound of rice as the independent variable A slope coefficient of 03
would be interpreted as:
A. A one dollar increase in the price of a pound of rice is associated with a 03 pound increase in the amount of
rice purchased
B. A one percent increase in the price of a pound of rice is associated with a 30 percent increase in the amount
of rice purchased
C. A one percent increase in the price of a pound of rice is associated with a 03 percent increase in the amount
of rice purchased
D. A one dollar increase in the price of a pound of rice is associated with a 30 percent increase in the amount
of rice purchased
20 _________Suppose that the slope coefficient for a particular regressor Xj has a p-value of 002 We would
conclude that the coefficient is:
A. Economically significant at a 5% significance level
B. Economically significant at a 10% significance level
C. Statistically significant at a 10% significance level
D. All of the above
21 ________Adding an irrelevant variable to a regression will tend to lower:
A. The R2
B. The adjusted R2
C. The standard errors of the coefficients for the other variables
D. The total sum of squares
44 | P a g e
22 _________If X and Y are perfectly correlated, when we regress Y on X we would get:
A. A slope coefficient equal to one
B. A slope coefficient equal to either one or negative one
C. An R2 equal to one
D. An intercept equal to zero
23 _________The distribution of the sample mean of X will:
A. Be centered at zero
B. Be centered at the population mean of X
C. Have a variance equal the variance of X
D. Both (B) and (C)
24.________Suppose that the true relationship between Y and X is given by: Y = β1 + β2X + ε , where ε is a
random error term that meets all of our assumptions Which of the following is not a random variable?
A. b2, the estimated value of the slope coefficient
B. β2
C. The sample mean of Y
D. The error sum of squares from a regression of Y on X
25. __________The sample regression line estimated by OLS
A. Has an intercept that is equal to zero
B. Is the same as the population regression line
C. Cannot have negative and positive slopes
D. is the line that minimizes the sum of squared prediction mistakes
26 ________Consider the multiple regression models with two regressors X1 and X2, where both variables are
determinants of the dependent variable. When omitting X2 from the regression, then there will be omitted variable
bias for β1
A. if X1 and X2 are correlated
B. always
C. if X2 is measured in percentages
D. if X2 is a dummy variable
27 _________The following linear hypothesis can be tested using the F-test with the exception of
A. β2 = 0
B. β1 + β2 = 1 and β3 = -2β4
C. β0 = β1 and β1 = 0
D. β3 = β1+β4β5
28 __________The overall regression F-statistic tests the null hypothesis that
A. All slope coefficients are zero
B. All slope coefficients and the intercept are zero
C. The intercept in the regression and at least one, but not all, of the slope coefficients is zero
D. The slope coefficient of the variable of interest is zero, but that the other slope coefficients are not
29 _________In the regression model Yi = β0 + β1Xi + β2Di + β3 (Xi × Di) + ui, where X is a continuous
variable and D is a binary variable, β3
A. Is the difference in means in Y between the two categories
B. Indicates the difference in the intercepts of the two regression lines
C. Is usually positive
D. Indicates the difference in the slopes of the two regression lines
45 | P a g e
30 __________Assume that you had estimated the following quadratic regression model; test score = 6073 + 385
Income - 00423 Income2 If income increased from 10 to 11 ($10,000 to $11,000), then the predicted effect on test
scores would be
A. 385
B. 474
C. Cannot be calculated because the function is non-linear
D. 296
31_________If the correlation between two variables are zero;
A. It shows there is no linear relation between variables
B. The two variables are dependent
C. the two variables are independent
D. A and C
32 _________Which of the following is true about correlation?
A. The correlation coefficient X on Y is different from the correlation Y on X
B. There is cause and effect relationships between variables
C. Correlation cannot be negative
D. None
33._________Which of the following is true about rank correlation coefficient?
A. It is used to know the relation between quantitative data
B. It is used to know the relation between qualitative data
C. We rank the observation to get the relation between the two variables
D. B and C
34 _________Which of the following is the easiest and the most commonly used method in econometrics?
A. OLS
B. MLH
C. Tobit model
D. Logit model
35. _______Which of the following ii/are the classical assumption of OLS?
A. The sum of error terms are zero
B. The error terms are randomly distributed
C. The error terms have constant variance
D. Explanatory variable should not have perfect relation
E. All
36. __________When the fitted linear regression is given by Yi= 8+082Xi, the value of 082 shows:
A. the change of Y as X changes by one unit
B. the change of X as Y changes by one percent
C. the increase of Y as X increase by one unit
D. A and C
37. __________The standard error test of the parameter estimates measure:
A. the degree of relation between variables
B. the statistical reliability of the estimates
C. the degree of confidence that we may attribute to the estimates
D. B and C
46 | P a g e
38 ._________The zero conditional mean assumption shows that;
A. Error terms has positive effect on dependent variable
B. Disturbance terms has negative effect on dependent variable
C. It assumed the effect of error terms affect the dependent variable positively and negatively in equal
amount
D. All
39. ________Assume the regression of log (wage)=025+075education, then which of the following is true?
A. As education increase by one unit, wage increase by 075 unit
B. As education increase by one percent wage increase by 075 percent
C. As education change by one unit wage change by 075percent
D. All
40 _________is an observation with large residual and it is an observation whose dependent-variable value is
unusual given its value on the predictor variables
A. leverage
B. estimator
C. Outliers
D. Residual
41 _________is an alternative to least squares regression when data is contaminated with outliers or influential
observations and it can also be used for the purpose of detecting influential observations
A. Robust regression
B. Multicollinearity
C. Autocorrelation
D. None
42 __________is the difference between the predicted value (based on the regression equation) and the actual
observed value
A. Leverage
B. Estimator
C. Outliers
D. Residual
43___________is used to test the overall Significance of Regression Model
A. F-test
B. t-test
C. Z-test
D. Chi-square test
44 __________The coefficients of the dummy variables are called:
A. Intercept
B. Mean value
C. Differential intercept coefficients
D. All
45 __________When the zero mean assumption is violated:
A. We obtain a biased estimate of the intercept term
B. The slope coefficients remain unaffected
C. The slope coefficients will be biased
D. A and B
47 | P a g e
46 _________Which of the following is/are the causes of heteroskedastic problem?
A. Error in data collection techniques
B. Existence of outliers
C. Misspecification of the model
D. Incorrect data transformation
E. All
47 ___________Heteroskedastic problems would likely occur commonly in:
A. Time series data
B. Cross sectional data
C. Longitudinal data
D. All
48 ___________If the error terms of an equation has heteroscedastic problem:
A. The OLS estimators are efficient
B. The OLS estimators are biased
C. The OLS estimator are unbiased
D. All
49 __________How can we know the presence of heteroscedastic problem?
A. Graphically
B. Park test
C. Spearman’s Rank Correlation test
D. Goldfeld and Quandt Test
E. All
50 _________If there is high collinearity problem between variables:
A. Estimates of the coefficients are statistically unbiased
B. The variances and the standard errors of the estimates will increase
C. The OLS estimators of the regression estimators are BLUE
D. All
51 _________Which one is the remedies of multicollinearity problems?
A. Dropping one or more of the multicollinear variables
B. Transformation of the variables
C. Multivariate statistical techniques
D. All
52 _________Which of the following regression is/are nonlinear?
A. OLS
B. Tobit
C. Logit
D. Probit
E. All except A
53 _________is a model where the dependent variable can take only two values (dummy variables)
A. Tobit model
B. Multiple regression model
C. Logit model
D. Frontier model
48 | P a g e
54 _________Which of the following is a main component in time series data?
A. Trend
B. Cyclical
C. Seasonal
D. Irregularity
E. All
55 _______The main differences between logit model and probit model are:
A. The way of interpretation of coefficients
B. The probability distribution they assume
C. The type of dependent variable used
D. A and B
56 _________Which of the following is false about logit model?
A. It assumes logistic cumulative distribution function
B. It assumes normal cumulative distribution function
C. We can interpret the coefficient using logged odd ratio
D. The significance of the model is tested by ordinary t-test for individual coefficient
57 _________How can we measure the goodness of fit in binary regressand model?
A. Pseudo R2
B. F-test
C. Coefficient of determination
D. Adjusted –square
58_________is designed to estimate the linear relationships between variables when either left or right censoring
in the dependent variable (the dependent variable is between 1 and 0)
A. Multinomial logit model
B. Tobit regression model
C. Heckman two stage estimation method
D. Logit regression model
59_________A study was conducted to know the relationship between sowing method and yield of wheat Data
was taken from 100 wheat producers and the result shows that;
𝑌̂=4+125D1, where 𝑌̂ represents the estimated yield of wheat in quintal and D1 =1 which represents the farmers
who sow wheat in row planting and 0 otherwise (broadcasting) From this result, which of the following is false?
A. The yield of wheat which is planted in row is greater by 125 quintal as we compare with broadcasting
B. The yield of wheat which is planted in broadcasting is less than by 125 quintal as we compare with
broadcasting
C. The yield of wheat which is planted in broadcasting is 4 quintal
D. The total yield of wheat from row planting is 165 quintal
60_________occurs when one observation’s error term (εi) is correlated with another observation’s error term (εj):
A. Serial correlation
B. Normality assumption
C. Multicollinearity
D. None
49 | P a g e
Answer question number 61-68 depending on the data given below (assuming there is a linear relation between
milk out with dairy experience and amount of concentrate feed used)
No Dairy experience Amount of concentrate feed

(years) used(qt) Total milk output (liter)
1 6 2 6
2 10 6 28
3 4 4 18
4 9 2 4
5 6 4 9
6 17 12 42
7 10 10 30
8 8 9 4
9 5 12 40
10 5 8 34
61 _________What is the effect of dairy experience on total milk output?

A. 0.04
B. 0.08
C. -0.08
D. 0.3
E. None
62 __________What is the effect of Amount of concentrate used on milk output?
A. 0.06
B. 0.08
C. 0.04
D. 3.01
E. None
63 __________What is the estimator of the population error variance?
A. 1.105
B. 1.175
C. 1.204
D. 8.05
E. None
64 __________What is the coefficient of determination and adjusted R-square respectively?
A. 0.5997 and 0.4853
B. 0.6425 and 0.6248
C. 0.7825 and 0.7684
D. None
50 | P a g e
65 _________What is the value F-test?
A. 1.024
B. 5.24
C. 9.024
D. None
66 __________Does dairy experience significantly affects milk production?
A. Yes it does
B. No it doesn’t
C. Difficult to determine
D. None
67 _________Does amount of concentrate feed used significantly affect milk production?
A. Yes it does
B. No it doesn’t
C. Difficult to determine
D. None
68 _________What is the standard error for amount of concentrate feed used in the regression?
A. 2.1752
B. 1.854 1
C. 1.0297
D. 3.4587
69 ________Depending on the result of Breusch-pagan test above, what can you say about the problem of
heteroscedasticity?
A. There is heteroscedasticity problem
B. There no heteroscedasticity problem
C. Both A and B
D. None
70 __________Which of the following tests compares the residual sum of squares computed with and without the
restrictions imposed?
A. F-test
B. t-test
C. Chi –square test
D. Z-test
51 | P a g e
Workout
1. The following results were obtained from a sample of 12 agribusiness firms on their output (Y), labor input
(X1) and capital input (X2) measured in arbitrary units (Hint: use 5% level of significance)
 Y  753  Y 2  48,139  YX 1  40,830
X 1  643 X 1
2
 34,843  YX  6,796
2
X 2  106 X 2
2  976  X X  5,779
1 2
A. Estimate and interpret the regression coefficients

B. Compute the average and marginal productivity of labor and capital in the firms
C. Compute the standard errors of the estimates
D. Compute and interpret the coefficient of multiple determinations
E. Calculate the adjusted R2
F. Test significance of individual coefficients
G. Test the overall significance of the model
H. Identify the type of economies of scale (returns to scale) for the firm and advise
2. The following is a log-transformed Cobb-Douglas Demand function for Potatoes in Ethiopia

ln Yi   0  1 ln X 1i   2 X 2i   3 ln X 3i   4 ln X 4i   i
where Y is per capita consumption of Potato in Birr, X1 is real disposable per capita income in Birr, X2 retail price
of Potato per Kg, X3 retail price of Cabbage per Kg and X4 is retail price of Cauliflower per Kg and  is a random
or error term
a) How you will interpret the coefficients?
b) How you will state the following hypotheses:
a. Own price elasticity of demand is negative as predicted by economic theory?
b. Potato and Cabbage are unrelated commodities?
c. Potato and Cauliflower are substitutes?
52 | P a g e
7. WORK SHEET OF MICROECONOMICS I
1. _________The term “ Micro” is derived from the _____word which means______
A. Latin, small
B. Greek, small
C. English, tiny
D. Roman, small
2. _________Which of the following issue relates to micro-economics
A. Impact of crude price hike on inflation
B. Impact of change in bank rate on bank saving and investment
C. Impact of Information technology on economic growth
D. Impact of shortage of wheat production on wheat prices
3. _________Micro economics theory deals with
A. Economic behavior of individual economic decision making units
B. Economy as a whole
C. Trade relations
D. Economic growth of the society
4. __________Which of the following is a central problem of every economy
A. Abundance of resources
B. Scarcity of economic resources
C. Poverty
D. Moral and ethical values
5. __________Equilibrium relates to which of these
A. Market condition which oscillate
B. Market state of falling price
C. Market condition of rising price
D. Market conditions which once achieved tends to persist
6. _________Normative economic theory deals with:-
A. What is or how the economic problem facing the society are solved
B. How the problem should be solved
C. What to Produce
D. How to produce
7. _________In a mixed economy which sector(s) is/ are found
A. Private Only
B. Public sector only
C. Both A and B
D. None
8. __________In economic theory the term “means” refers to
A. Resources
B. Arithmetic mean
C. A characteristic
D. None
9. __________Cetris Paribus means:-
A. Holding demand constant
B. Holding supply constant
C. Price being constant
D. Other things being constant
53 | P a g e
10. _________Which of the following is/ are not an economic resource;
A. Land
B. Capital
C. Labor
D. Air
11. _________Who defined economics as “ Science which deals with wealth”
A. J (B) Say
B. (A) (C) Pigou
C. Alfred Marshall
D. Robbins
12. ________is known as father of economics
A. Adam Smith
B. Professor A Samulson
C. Alfred Marshall
D. J R Hicks
13. ________Scarcity of resources means
A. Limited resources
B. Non-existence of resources
C. Both
D. None
14. _________Which of the following is not a central problem of a society
A. What to produce
B. How to produce
C. For whom to produce
D. Where to produce
15. __________Which of these statement is true about production possibility curve (PPC/PPF)
A. It shows various combinations of two goods which yield same level of satisfaction
B. It shows various combination of two goods which an economy can produce with a given amount of
resources
C. It shows various combination of two goods which an economy can produce with a given budget
D. It shows various combination of two goods which an economy can produce with a given time
16. ________Any point beyond PPF is:-
A. Attainable
B. Unattainable
C. Attainable with increase in production facilities
D. None
17. __________Consumer surplus:
A. Is the difference between the maximum prices consumers are willing to pay for a product and the lower
equilibrium price
B. The difference between the maximum prices consumers are willing to pay for a product and the minimum
prices producers are willing to accept
C. The difference between the minimum prices producers are willing to accept for a product and the higher
equilibrium price
D. rises as equilibrium price rises
54 | P a g e
18. _________Under perfect market conditions a firm is said to be in equilibrium where
A. Total output is equal to total demand
B. Profit is the maximum;
C. Where the total revenue is maximum
D. Where total average cost is the minimum
19. _________Under perfect market conditions the supply curve of a firm is represented by
A. MC curve
B. MR curve
C. AR curve
D. AC curve
20. _________Long-term equilibrium of an Industry under a perfectly market conditions is achieved when
A. All the firms are earning normal profit
B. All the firms are in equilibrium
C. There is no further entry or exit of firms from the industry
D. All the three
21. _______Which of the following statement is true?
A. In perfect competition Average and Marginal revenue are identical
B. In perfect competition Average and Marginal cost are identical
C. In perfect competition Average price and Marginal cost are identical
D. In perfect competition only normal profit can be earned by a firm
22. _________In the short run, diminishing marginal returns is implied by
A. Rising MC
B. Falling MC
C. Rising AVC
D. Constant TC
23. _________Marginal cost can be equal to Average variable cost when
A. Average variable cost is falling
B. Average variable cost is increasing;
C. Average variable cost is constant
D. Under any of the above situations
24. ________Which of the following is not a method of measurement of price elasticity of demand in economics
A. Total Outlay
B. Total savings
C. Point method
D. Arc method
25. _________A decrease in price will result in an increase in total revenue if
A. Percentage change in quantity demanded in greater than the percentage change in price
B. Percentage change in quantity demanded is less than the percentage change in price
C. Percentage change in quantity demanded is equal to the percentage change in price
D. None
26. __________The law of demand states that:
A. Price and quantity demanded are inversely related
B. The larger the number of buyers in a market, the lower will be product price
C. Price and quantity demanded are directly related
D. Consumers will buy more of a product at high prices than at low prices
55 | P a g e
27. _________What will happen in the current market for good ‘X’ if buyers are expecting higher price in the near
future?
A. The demand for good X will increase
B. The demand for good X will be unaffected
C. The demand for good X will decrease
D. The supply of good X will increase
28. __________In equilibrium, if both demand and supply decrease, what would be the market clearing price?
A. The market clearing price will fall, if the decrease in demand is less than the decrease in supply
B. The market clearing price will rise, if the decrease in supply is greater than the decrease in demand
C. The market clearing price will unchanged, if the decrease in demand and decrease in supply aren’t equal
D. All
29. ________If two goods are complements:
A. They are consumed independently
B. An increase in the price of one will increase the demand for the other
C. A decrease in the price of one will increase the demand for the other
D. They are necessarily inferior goods
30. _______Assume the demand curve for product X shifts to the right This might be caused by:
A. A decline in income if X is an inferior good
B. A decline in the price of Z if X and Z are substitute goods
C. A change in consumer tastes that is unfavorable to X
D. An increase in the price of Y if X and Y are complementary goods
Based on the following graph, answer the following questions
31. ________Refer to the above diagram, a price of $60 in this market will result in:
A. Equilibrium
B. A shortage of 50 units
C. A surplus of 50 units
D. A surplus of 100 units
32. ________Refer to the above diagram A price of $20 in this market will result in:
A. A shortage of 50 units
B. A surplus of 100 units
C. A surplus of 50 units
D. A shortage of 100 units
56 | P a g e
33. _______Refer to the above diagram The highest price that buyers will be willing and able to pay for 100 units
of this product is:
A. $30
B. $60
C. $40
D. $20
34. _________At the point where the demand and supply curves for a product intersect:
A. The selling price and the buying price need not be equal
B. The market may, or may not, be in equilibrium
C. Either a shortage or a surplus of the product might exist, depending on the degree of competition
D. the quantity that consumers want to purchase and the amount producers choose to sell are the same
35. ________Assume in a competitive market that price is initially below the equilibrium level We can predict that
price will:
A. Decrease, quantity demanded will decrease, and quantity supplied will increase
B. Decrease and quantity demanded and quantity supplied will both decrease
C. Decrease, quantity demanded will increase, and quantity supplied will decrease
D. Increase, quantity demanded will decrease, and quantity supplied will increase
36. ________Which of the following will cause a decrease in market equilibrium price and an increase in
equilibrium quantity?
A. An increase in supply
B. An increase in demand
C. A decrease in supply
D. A decrease in demand
37. ________Which of the following statements is correct?
A. If demand increases and supply decreases, equilibrium price will fall
B. If supply increases and demand decreases, equilibrium price will fall
C. If demand decreases and supply increases, equilibrium price will rise
D. If supply declines and demand remains constant, equilibrium price will fall
38. ________If the price of a product falls, that product becomes cheaper and people will want to purchase more
of it in place of other goods This statement best describes:
A. The income effect
B. The substitution effect
C. A complementary good
D. An inferior good
39. ________Utility:
A. Is synonymous with usefulness
B. Is easy to quantify
C. Is want-satisfying power
D. Rarely varies from person to person
40. _______Marginal utility can be:
A. Positive, but not negative
B. Positive, negative, or zero
C. Positive or negative, but not zero
D. Decreasing, but not negative
57 | P a g e
Based on the table give below answer the following questions
Units consumed Total utility Marginal utility
0 0 -
1 W 20
2 35 X
3 Y 10
4 40 Z
41. ________Refer to the above data The value for Y is:
A. 25
B. 30
C. 40
D. 45
42. ________Refer to the above data The value for X is:
A. 15
B. 5
C. 55
D. 10
43. ________Refer to the above data The value for W is:
A. 15
B. 20
C. 25
D. 30
44. ________Refer to the above data The value for Z is:
A. -5
B. +5
C. -10
D. Zero
45. _______Refer to above data Marginal utility becomes negative beginning with the:
A. First unit
B. Second unit
C. Third unit
D. Fourth unit
46. _________Suppose that MUx/Px exceeds MUy/Py To maximize utility the consumer who is spending all her
money income should buy:
A. Less of X only if its price rises
B. More of Y and less of X
C. More of Y only if its price rises
D. More of X and less of Y
47. _________Suppose you have a limited money income and you are purchasing products A and B whose prices
happen to be the same To maximize your utility you should purchase A and B in such amounts that:
A. Their marginal utilities are the same
B. Their total utilities are the same
C. Their marginal and total utilities are proportionate
D. The income and substitution effects associated with each are equal
58 | P a g e
48. ________Economic profits are calculated by subtracting:
A. Explicit costs from total revenue
B. Implicit costs from normal profits
C. Implicit costs from total revenue
D. Explicit and implicit costs from total revenue
49. _________The basic characteristic of the short run is that:
A. Barriers to entry prevent new firms from entering the industry
B. The firm does not have sufficient time to change the size of its plant
C. The firm does not have sufficient time to cut its rate of output to zero
D. A firm does not have sufficient time to change the amounts of any of the resources it employs
50. _________In economists the main difference between the short run and the long run is that:
A. The law of diminishing returns applies in the long run, but not in the short run
B. In the long run all resources are variable, while in the short run at least one resource is fixed
C. Fixed costs are more important to decision making in the long run than they are in the short run
D. In the short run all resources are fixed, while in the long run all resources are variable
51. ________Marginal product is:
A. The increase in total output attributable to the employment of one more worker
B. The increase in total revenue attributable to the employment of one more worker
C. The increase in total cost attributable to the employment of one more worker
D. Total product divided by the number of workers employed
52. ________The law of diminishing returns indicates that:
A. As extra units of a variable resource are added to a fixed resource, marginal product will decline beyond
some point
B. Because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will
be U-shaped
C. The demand for goods produced by purely competitive industries is down sloping
D. Beyond some point the extra utility derived from additional units of a product will yield the consumer
smaller and smaller extra amounts of satisfaction
53. ________Which of the following statements concerning the relationships between total product (TP), average
product (AP), and marginal product (MP) is not correct?
A. AP continues to rise so long as TP is rising
B. AP reaches a maximum before TP reaches a maximum
C. TP reaches a maximum when the MP of the variable input becomes zero
D. MP cuts AP at the maximum AP
54. _______Which of the following is correct?
A. When total product is rising, both average product and marginal product must also be rising
B. When marginal product is falling, total product must be falling
C. When marginal product is falling, average product must also be falling
D. Marginal product rises faster than average product and also falls faster than average product
55. _______Fixed cost is:
A. The cost of producing one more unit of capital, say, machinery
B. Any cost which does not change when the firm changes its output
C. Average cost multiplied by the firm's output
D. Usually zero in the short run
59 | P a g e
56. _______Marginal cost is the:
A. Rate of change in total fixed cost that results from producing one more unit of output
B. Change in total cost that result from producing one more unit of output
C. Change in average variable cost that result from producing one more unit of output
D. Change in average total cost that result from producing one more unit of output
57. ________Which of the following curves is not U-shaped?
A. MC
B. AFC
C. AVC
D. ATC
58. ________The vertical distance between a firm's ATC and AVC curves represents:
A. AFC, which increases as output increases
B. AFC, which decreases as output increases
C. Marginal costs, which decrease as output decreases
D. Marginal costs, which increase as output increases
59. ___________In the short run, which of the following statements is correct?
A. The marginal cost curve intersects the average variable and average fixed cost curves at their minimum
points
B. Average variable cost declines continuously as total output is expanded
C. Total cost will exceed variable cost
D. If the inputs of all resources are increased by equal amounts, total output will expand by diminishing
amounts
Based on the graph given below
60. ________Refer to the above short-run production and cost data In Figure A curve (1) is:
A. Total product and curve (2) is average product
B. Total product and curve (2) is marginal product
C. Average product and curve (2) is marginal product
D. Marginal product and curve (2) is average product
60 | P a g e
61. _________Refer to the above short-run production and cost data In Figure B curve (3) is:
A. AVC and curve (4) is MC
B. MC and curve (4) is AFC
C. MC and curve (4) is AVC
D. AFC and curve (4) is MC
62. _______Refer to the above short-run production and cost data The curves of Figures A and B suggest that:
A. Marginal product and marginal cost reach their maximum points at the same output
B. Marginal cost reaches a minimum where marginal product is at its maximum
C. Marginal cost and marginal product reach their minimum points at the same output
D. AVC cuts MC at the latter's minimum point
63. _________Refer to the above short-run production and cost data The curves of Figures A and B suggest that:
A. Average product and average variable cost reach their maximum points at the same output
B. AVC cuts MC at the latter's maximum point
C. AVC reaches a minimum where AP is at its maximum
D. AFC declines so long as output increases
64. ________The above diagram shows the short-run average total cost curves for five different plant sizes of a
firm The shape of each individual curve reflects:
A. Increasing returns, followed by diminishing returns
B. Economies of scale, followed by diseconomies of scale
C. Constant costs
D. Increasing costs, followed by decreasing costs
65. __________As the firm in the above diagram expands from plant size #1 to plant size #3, it experiences:
A. Diminishing returns
B. Economies of scale
C. Diseconomies of scale
D. Constant costs
61 | P a g e
66. ________As the firm in the above diagram expands from plant size #3 to plant size #5, it experiences:
A. Increasing returns of scale
B. Economics of scale
C. Diseconomies of scale
D. Constant costs
67. ________The above diagram shows the short-run average total cost curves for five different plant sizes of a
firm The position of these five curves in relation to one another reflects:
A. Economies and diseconomies of scale
B. The effect of fixed costs on ATC as output increases
C. The law of constant costs
D. The law of diminishing returns
68. _______The above diagram shows the short-run average total cost curves for five different plant sizes of a firm
In the long run the firm should produce output 0x with a plant of size:
A. #4
B. #3
C. #2
D. #1
69. ________In the above diagram it is assumed that:

A. Some costs are fixed and other costs are variable
B. All costs are variable
C. The law of diminishing returns determines the shape of the cost curve
D. Marginal product first falls, but ultimately rises as output is increased
70. ________Refer to the above diagram Economies of scale:
A. Are evident over the entire range of output
B. Begin at output Q3
C. Occur over the 0Q1 range of output
D. Occur only over the Q1Q3 range of output
71. ________Refer to the above diagram Diseconomies of scale:
A. Begin at output Q1
B. Begin at output Q3
C. Occur over the Q1Q3 range of output
D. Are in evidence at all output levels
E.
62 | P a g e
72. _________Refer to the above diagram Minimum efficient scale:
A. Occurs at some output greater than Q3
B. Is achieved at Q3
C. Is achieved at Q1
D. Cannot be identified in this diagram
73. _________Economists use the term imperfect competition to describe:
A. All industries which produce standardized products
B. Any industry in which there is no non-price competition
C. A pure monopoly only
D. Those markets which are not purely competitive
74. ___________In which of the following industry structures is the entry of new firms the most difficult?
A. Pure monopoly
B. Oligopoly
C. Monopolistic competition
D. Pure competition
75. __________A one-firm industry is known as:
A. Monopolistic competition
B. Oligopoly
C. Pure monopoly
D. Pure competition
76. __________Which of the following statements applies to a purely competitive producer?
A. It will not advertise its product
B. In long-run equilibrium it will earn an economic profit
C. Its product will have a brand name
D. Its product is slightly different from those of its competitors
77. __________A purely competitive seller is:
A. Both a "price maker" and a "price taker"
B. A "price taker"
C. Neither a "price maker" nor a "price taker"
D. A "price maker"
78. ___________Which of the following is not characteristic of pure competition?
A. Price strategies by firms
B. No barriers to entry
C. A standardized product
D. A larger number of sellers
79. __________Which of the following is not a basic characteristic of pure competition?
A. Considerable non-price competition
B. A standardized or homogeneous product
C. No barriers to the entry or exodus of firms
D. A large number of buyers and sellers
80. _____The demand schedule or curve confronted by the individual purely competitive firm is:
A. Relatively elastic, that is, the elasticity coefficient is greater than unity
B. Perfectly elastic
C. Relatively inelastic, that is, the elasticity coefficient is less than unity
D. Perfectly inelastic
63 | P a g e
81. __________For a purely competitive firm total revenue:
A. Graphs as a straight, upsloping line
B. Is a straight line, parallel to the horizontal axis
C. Is a straight line, parallel to the vertical axis
D. Graphs as a straight, down sloping line
82. _________For a purely competitive seller, price equals:
A. Average revenue
B. Marginal revenue
C. Total revenue divided by output
D. All of the above
83. _________The demand curve in a purely competitive industry is ______, while the demand curve to a single
firm in that industry is ______
A. Perfectly inelastic, perfectly elastic
B. Down sloping, perfectly inelastic
C. Down sloping, perfectly elastic
D. Perfectly elastic, down sloping
84. _________Which of the following statements is correct?
A. The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely
competitive industry is down sloping
B. The demand curve for a purely competitive firm is down sloping, but the demand curve for a purely
competitive industry is perfectly elastic
C. The demand curves are down sloping for both a purely competitive firm and a purely competitive industry
D. The demand curves are perfectly elastic for both a purely competitive firm and a purely competitive
industry
85. _______In the short run a purely competitive firm that seeks to maximize profit will produce:
A. Where the demand and the ATC curves intersect
B. Where total revenue exceeds total cost by the maximum amount
C. That output where economic profits are zero
D. At any point where the total revenue and total cost curves intersect
86. ________Pure monopoly means:
A. Any market in which the demand curve to the firm is down sloping
B. A standardized product being produced by many firms
C. A single firm producing a product for which there are no close substitutes
D. A large number of firms producing a differentiated product
87. ________Which of the following is correct?
A. Both purely competitive and monopolistic firms are "price takers"
B. Both purely competitive and monopolistic firms are "price makers"
C. A purely competitive firm is a "price taker," while a monopolist is a "price maker"
D. A purely competitive firm is a "price maker," while a monopolist is a "price taker"
88. ________Which of the following is a characteristic of pure monopoly?
A. close substitute products
B. barriers to entry
C. the absence of market power
D. "price taking”
64 | P a g e
89. _________For a pure monopolist marginal revenue is less than price because:
A. The monopolist's demand curve is perfectly elastic
B. The monopolist's demand curve is perfectly inelastic
C. When a monopolist lowers price to sell more output, the lower price applies to all units sold
D. The monopolist's total revenue curve is linear and slopes upward to the right
90. _________The MR = MC rule:
A. Applies only to pure competition
B. Applies only to pure monopoly
C. Does not apply to pure monopoly because price exceeds marginal revenue
D. Applies both to pure monopoly and pure competition
91. _______Refer to the above diagram for a pure monopolist Monopoly price will be:
A. e Bc Cb Da
92. ________Refer to the above diagram for a pure monopolist Monopoly output will be:
A. Between f and g Bh Cg Df
93. ________Purely competitive firms and pure monopolists are similar in that:
A. The demand curves of both are perfectly elastic
B. Both are price makers
C. Significant entry barriers are common to both
D. Both maximize profit where MR = MC
94. ________In the short run, a monopolist's economic profits:
A. Are always positive because the monopolist is a price-maker
B. Are usually negative because of government price regulation
C. Are always zero because consumers prefer to buy from competitive sellers
D. May be positive or negative depending on market demand and cost
95. ________To maximize profit a pure monopolist must:
A. Maximize its total revenue
B. Maximize the difference between marginal revenue and marginal cost
C. Maximize the difference between total revenue and total cost
D. Produce where average total cost is at a minimum
65 | P a g e
96. _________The profit-maximizing output of a pure monopoly is economically inefficient because in
equilibrium:
A. Price equals minimum average total cost
B. Marginal cost exceeds price
C. Marginal revenue equals marginal cost
D. Price exceeds marginal cost
97. _________Price discrimination refers to:
A. Selling a given product for different prices at two different points in time
B. Any price above that which is equal to a minimum average total cost
C. The selling of a given product at different prices that do not reflect cost differences
D. The difference between the prices a purely competitive seller and a purely monopolistic seller would
charge
98. ________If a monopolist engages in price discrimination, we can expect:
A. Profits to increase and output to fall
B. Both profits and output to increase
C. Both profits and output to decrease
D. The demand curve to lie below the marginal revenue curve
99. _________Other things equal, in which of the following cases would economic profit be the greatest?
A. An unregulated monopolist which is able to engage in price discrimination
B. An unregulated monopolist
C. A regulated monopolist charging a price equal to average total cost
D. A regulated monopolist charging a price equal to marginal cost
66 | P a g e

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SALALE UNIVERSITY

COLLEGE OF AGRICULTURE AND NATURAL RESOURCES

Depending on the contingency table below, answer question number 6 and 7

Commodity Teff Wheat

No Dairy experience Amount of concentrate feed

61 _________What is the effect of dairy experience on total milk output?

A. Estimate and interpret the regression coefficients

2. The following is a log-transformed Cobb-Douglas Demand function for Potatoes in Ethiopia

Based on the following graph, answer the following questions

Based on the graph given below

Based on the graph given below

Based on the graph given below

69. ________In the above diagram it is assumed that:

Based on the graph given below

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