Macroeconomics Analysis (ABAP3203)
Agribusiness Technology - ABT
Semester: Second Semester
Level: 300
Year: 2015
MICROECONOMIC ANALYSIS. CONTINUOUS ASSESSMENT 1. 3/2/2015
INSTRUCTIONS. ANSWER ALL THE QUESTIONS BY WRITING TRUE OR FALSE
1.
There is a decrease in the demand for a commodity when the price of a substitute commodity increases.
2.
When the supply curve is positively sloped, an increase in demand will result in a larger quantity
supplied.
3.
A surplus exists when the market price is above the equilibrium price.
4.
Government subsidization of firms producing Good A results in an increase in the demand for Good A.
5.
Demand is inelastic if the percentage increase in quantity exceeds the percentage decrease in price.
6.
A decline in price leaves total revenue unchanged when Ep=l.
7.
Implicit costs are the costs of factors of production owned by the firm.
8.
The law of diminishing returns holds in both the short-run and long-run periods.
9.
TFC is constant regardless of the level of firm output.
10.
TC is zero when the firm does not produce any output.
11 Decreasing costs refers to the situation wherein output increases proportionately more than inputs.
12.
In a perfectly competitive industry, each firm can affect the commodity price.
13.
The marginal revenue of a firm in perfect competition is equal to the commodity price.
14.
The perfectly competitive firm maximizes profits at the quantity where its MR curve intersects the
rising portion of its MC curve.
15.
A firm breaks even when price equals its average variable cost.
16.
All firms in perfect competition break even in the long run.
17.
Pure monopoly is the opposite of perfect competition.
18.
The monopoly maximizes profit at the output level where P=MC.
19.
The monopolist always earns profits in the short run.
20.
A monopoly leads to a higher commodity price and less output than perfect competition.
21.
All monopoly profits disappear in the long run.
22.
The monopoly power of a monopolistic competitor is limited by the availability of close substitutes.
23.
A monopolistic competitor produces at the lowest point on its LAC curve.
24.
Restricted entry is a characteristic of monopolistic competition.
25.
In tacit collusion, oligopolists meet and decide on a price leader to follow in their pricing policies.
26.
In the long run oligopolists can earn profits.
27.
No business has total control over the market price under monopolistic market model.
28.
Monopoly ensures quality of products to meet up with competition.
29.
Natural monopoly based an overwhelming cost advantage for the incumbent firm.
30.
Economic models and theories are accurate statements of reality.
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