Islamic University, Gaza

Faculty of Commerce Micro-Economics Course

Department of Economics Political Science Final Exam

No. of Questions : ( ___ ) ------Feb., 2008

Student's Name: …………………………..……………………………………………Section No ( …… )

_________

(Question No. 1)

Mark the following questions with either True (T) or False (F):(____ Marks)

  1. Productive efficiency occurs when society can not increase the output of one good

without cutting back on another good./

  1. Full employment of land, labour and capital means that an economy operates on

the PPF.*

  1. Marginal rate of transformation is the ration of the change in capital goods to the

change in consumer goods./

  1. Normal rate of return is the opportunity cost of investment elsewhere, which is the

forgone interest./

  1. Utility is maximized when the marginal utilities of all goods are exactly equal.*
  2. Variable cost does not grow exactly like total cost*

7. Any nation can supply itself with everything it needs*

8. Most economic activities would be described as imperfect competition/

9. Effective demand must be accompanied with the ability and willingness

of consumers to pay./

10. The rapid increase in college tuitions will lower the demand for college*

11. Monopoly still exists even if there is more than one supplier for a commodity./

12. A good harvest season will generally increase the income of farmers*

13. A competitive firm will produce output up to the point where price equals average

variable cost

14.When demand is unit elastic, a decrease in price will result in an increase in total revenue.

15. When demand is inelastic, a decrease in price will result in increase in total revenue./

16. The diamond/water paradox helps to illustrate the concept of marginal utility./

17. If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on x and less on y. /

18. When the price of a good increase, the budget constraint dose not change.*

19. In the short run, firms can enter an industry but not exit an industry.*

20. Total fixed cost rise continuously as total output increasing.*

21. Marginal cost reflect changes in variable cost./

22. Breaking even is a situation in which a firm earns exactly a normal rate of return./

23. The difference between ATC and AVC equals AFC./

24. The long run average cost curve of a firm exhibiting economies of scale is downward-sloping./

25. Depreciation is anincrease in an asset’s economic value over time.*

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