ECO 105-Principles of Economics (BBA) SPECIAL ASSESSMENT PART I. SELECTED/SHORT
ID: 1137225 • Letter: E
Question
ECO 105-Principles of Economics (BBA) SPECIAL ASSESSMENT PART I. SELECTED/SHORT RESPONSE (60 marks) 1. TRUE OR FALSE (10 marks) 1. The Latin phrase economists use that means "all else equal" is ceteris paribus -2. If coffee and tea are substitutes, then an increase in the price of coffee will result in an increase in the demand for tea. 3. Perfect competition results in less efficient market outcomes. 4. Monopolistic competition is an industry market structure with many firms each able to differentiate their product. 5. The income of U.S. citizens working abroad counts in U.S. GNP. 2. MUTIPLE CHOICE (30 marks) 1) The economy is currently at Point A. The opportunity cost of moving from Point A to P 120 90 40 60 80 Plasma televisions A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions. B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions. C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions. D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions. Special Assessment
Explanation / Answer
True and False Questions
1. True
Ceteris paribus means all other factors remaining the same.
2. True
When two goods are substitutes, increase in price of one makes the other good relatively cheaper leading to higher demand of the other good.
3. False
In perfect competition, efficient level of output is produced as P=MC.
4. True
Monopolistic competition is characterised by product differentiation.
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