1. Marginal cost is?

• A. the lowest cost of producing goods
• B. the cost of production of the most efficient firm in an industry
• C. the cost of production of the most inefficient firm in an industry
• D. the cost of production of the last or extra unit of goods produced by a firm

2. The price mechanism 

• A. regulates supply and demand
• B. rations the consumers
• C. rewards the producers
• D. allocates scarce resources
• E. does all of the above

3. In a free market economy, the rationing of scarce goods is done principally by?

• A. the government
• B. business organizations
• C. the price mechanism
• D. consumers

4. Scale of preference shows

• A. incomes of consumers in order of size
• B. utilities enjoyed by consumers
• C. opportunity cost of goods consumed
• D. consumer’s wants in order of priority

5. There is unemployment of resources when production is

• A. within the production possibility curve
• B. outside the production possibility curve
• C. along the production possibility curve
• D. adequate to meet market demand

6. A major characteristic of natural resources is they

• A. are unlimited in supply
• B. have high cost of production
• C. are free gifts of nature
• D. do not command any price

7. A major disadvantage of a capitalist economy is that it

• A. leads to low production of goods and services
• B. requires large number of officials to operate
• C. considers individual consumers’ satisfaction
• D. worsens income inequality among the citizens

8. The mining sector of an economy contributes 60% to the Gross Domestic Product(GDP). If the GDP is $540, what is the contribution of the mining sector?

• A. $ 90.00
• B. $ 180.00
• C. $ 324.00
• D. $ 350.00

9. The increase in the demand for a commodity may lead to a decrease in the demand for another if both are

• A. in complementary demand
• B. of the same quality
• C. in composite demand
• D. in competitive demand

10. The demand curve for goods of ostentation is usually

• A. negatively sloped
• B. positively sloped
• C. vertical
• D. horizontal

11.

PN equals average revenue or marginal revenue cure of

• A. An imperfect competitive firm
• B. a monopoly
• C. a perfectly competitive firm
• D. a monopolistic competitive firm

12. If the quantity demanded of a commodity increases from 20 units to 30 units when there is an increase in price from $4.00 to $5.00, the elasticity of demand is

• A. 0.50
• B. 0.65
• C. 2.00
• D. 2.50

13. The supply curve of a locally-produced good may shift to the right if

• A. there is an increase in taxes on inputs
• B. government increases subsidies
• C. rural-urban migration is encouraged
• D. the price of the commodity increases

14. In perfectly elastic supply, the supply curve

• A. is vertical
• B. is horizontal
• C. slopes upward
• D. slopes downward

15.

A country’s budget allocation to various sectors of the economy is shown in the pie chart above…

Use it to answer this question.

If the budget of the country was $7,200, how much is allocated to Education?

• A. $2,400.00
• B. $2,000.00
• C. $1,200.00
• D. $1,000.00

16.

A country’s budget allocation to various sectors of the economy is shown in the pie chart above…
Use it to answer this question

What is the ratio of expenditure on health to Agriculture if the yearly budget is 7200?

• A. 2: 3
• B. 3:4
• C. 4:3
• D. 5:4

17. A consumer of a single commodity is in equilibrium when

• A. he can equate his demand with price
• B. he equates marginal utility and price
• C. he can equate his marginal and total utilities
• D. his marginal utility is equal to zero

18. If the government imposes a minimum price on a commodity

• A. market surplus occurs
• B. the market will be cleared in the short-run
• C. excess demand occurs
• D. government regulation is no longer needed

19. A minimum price legislation is also called

• A. price ceiling
• B. price floor
• C. price control
• D. price mechanism

20. Which of the following factors is not a cause of diminishing returns?

• A. Increase in variable inputs
• B. Land fragmentation
• C. Constant technology
• D. Technological innovations

21. In manufacturing, division of labour may be hindered by

• A. excessive demand for the product
• B. low level of technology
• C. excess supply of labour
• D. increase in the export of goods

22. The production cost that varies inversely with output is the

• A. total fixed cost
• B. marginal cost
• C. average fixed cost
• D. average cost

23. A firm that closes down will still incur

• A. variable cost
• B. fixed cost
• C. total cost
• D. marginal cost

24. The sufficient condition for a firm to be in equilibrium is that the

• A. firm must show that it is profitable
• B. marginal cost must be equal to average revenue
• C. marginal revenue curve is above the average revenue curve
• D. marginal cost curve cuts the marginal revenue curve from below

25. Cooperative societies are formed mainly to

• A. assist producers to maximize their profits
• B. encourage thrift and credit among members
• C. promote and maintain the welfare of members
• D. break the monopolies of private companies

26. A disadvantage of a jont-stock company is

• A. unlimited liability
• B. limited liability
• C. lack of continuity when a shareholder dies
• D. limited control in management by shareholders

27. The middlemen is responsible for

• A. providing research facilities
• B. purchasing raw materials
• C. designing the product
• D. breaking the bulk

28. A major function of the retailer is to

• A. grant credit to the wholesaler
• B. break bulk and sell products in small units
• C. reduce cost of distribution
• D. generate demand for products through advertisement

29. A positive effect of a rapid population increase is

• A. an excessive budget deficit
• B. a reduction in standard of living
• C. a wider market for goods and services
• D. a higher dependency ratio

30. Which of the following factors may not affect the efficiency of labour?

• A. Education and training
• B. Provision of welfare service
• C. Race and colour of workforce
• D. Quality of other factor inputs

31. The type of unemployment found among workers who leave their jobs in search of other jobs is termed

• A. seasonal unemployment
• B. structural unemployment
• C. frictional unemployment
• D. cyclical unemployment

32. The main objective of marketing boards is to

• A. accumulate revenue for government
• B. educate farmers on pricing of cash crops
• C. stabilize the incomes of cash crop farmers
• D. provide warehousing facilities

33.

The point x inside the ppc indicate?

• A. resources are fully utilized
• B. the country is poor
• C. some resources are idle
• D. resources are not available

34. Which of the following industries will add more value to primary products?

• A. Service industry
• B. Construction industry
• C. Mining industry
• D. Processing industry

35. Gross National Product (GNP) less the provision for the wear and tear of assets is the

• A. net present value
• B. net national product
• C. net factor income
• D. net indirect taxes

36. An example of transfer payments in national income accounting is

• A. money transferred to another country
• B. unemployment allowance paid to the citizens
• C. the amount paid to a worker on transfer
• D. transfer of funds from one bank to another

37. Increasing national income without effective control of population size in a country can lead to

• A. higher per capita income
• B. increase in poverty
• C. increased outflow of aid
• D. underutilization of resources

38. An example of commodity money is

• A. currency note
• B. mobile money
• C. cheques
• D. silver

39. If inflation is anticipated, people may

• A. save more money
• B. spend more money
• C. give out more loans
• D. spend less money

40. If the Central Bank increases its bank rate

• A. many banks will shut down their operations
• B. customers will borrow more from banks
• C. the supply of money may be reduced
• D. interest charges by banks will fall