Download C211 OA 2026 PRACTICE QUESTION SET ONE and more Exams Reasoning in PDF only on Docsity!
C211 OA 2026 PRACTICE QUESTION SET ONE
โ legal rights awarded by government authorities to investors of new products or processes who are given monopoly rights to derive income from inventions. Answer: patent โ exclusive legal rights of authors and publishers to publish and disseminate their work. Answer: copyright โ exclusive legal rights of firms to use specific names, brands and designs to differentiate their products. Answer: trademark โ characterized by the invisible hand of market forces where the government takes a hands off approach. Answer: market โ factors of production should be government owned or state owned and all supply, demand and pricing are planned by the government. Answer: command โ the economic system of most countries. Answer: mixed economy โ a curve that represents a consumers preferences. Answer: indifference curve
โ ________ indifference curves are preferred to ______ ones. Answer: higher, lower โ indifference curves are bowed ______. Answer: inward โ the rate at which a consumer is willing to substitute one good for another. Answer: marginal rate of substitution โ the limit on consumption bundles that a consumer can afford. Answer: budget constraint โ a piece of analysis that shows the combination of goods the consumer can afford given their income and price of goods. Answer: budget constraint โ an increase in income will shift the budget constraint ________. Answer: outward โ the slope of the indifference curve equals the slope of the. Answer: budget constraint โ the consumer chooses consumption of the two goods so that the marginal rate of substitution equals the. Answer: relative price
โ where do firms with market power determine the quantity of product/service they will produce?. Answer: quantity where MR = MC, quantity where P = MC โ where will firms with price setting capacity maximize profits?. Answer: intersection between the marginal cost curve and the marginal revenue curve โ a market with only a few sellers offering similar or identical products. Answer: oligopoly โ a firm is a sole seller of a product with no close substitutes. Answer: monopoly โ many firms sell similar products but not identical. many firms compete for the same customers, free entry and exit. Answer: monopolistic competition โ many buyers and sellers, identical products, free entry and exit, perfect information, price taker. Answer: perfectly competitive โ what may rare, precious, and hard-to-duplicate resources and capabilities lead to for a firm?. Answer: sustained comparative advantage
โ company strategies must consider actions by rival firms is a lesson learned from what. Answer: prisoners dilemma about oligopoly โ what prevents oligopolistic firms from behaving like monopolies?. Answer: antitrust laws โ oligopolies are best off when producing a ______ quantity of output and charging a price ______ marginal cost. Answer: small, above โ decrease in income _______ demand for normal goods. Answer: decreases โ decrease in income ______ demand for inferior goods. Answer: increases โ increase in income _____ demand for inferior goods. Answer: decreases โ increase in income ______ demand for normal goods. Answer: increases โ good in which people will purchase more of as their income increases. Answer: normal good
โ a change in price will not cause a large change in the quantity demanded. Answer: inelastic โ the percentage change in price is equal to the percentage change in quantity demanded. Answer: unit-elastic โ necessities have a _____ income elasticity. Answer: small โ luxuries have a ______ income elasticity. Answer: large โ how the quantity demanded of one good changes in response to a change in the price of another good. Answer: cross-price elasticity โ substitute goods have a ______ cross elasticity. Answer: positive โ complementary goods have a _____ cross elasticity. Answer: negative โ price elasticity of demand equation. Answer: % change in quantity demanded / % change in price โ income elasticity of demand equation. Answer: % change in quantity demanded / % change in income
โ cross elasticity of demand equation. Answer: % change in quantity demanded of Y / % change in price of X โ tools the federal reserve has in regards to monetary control. Answer: open market operations, discount rates, reserve ratios โ purchase or sale of US treasury or US government bonds in the open market. Answer: open market operations โ when the fed buys bonds, what happens to the money supply and AD?. Answer: increases money supply and shifts AD to the right โ when the fed sells bonds, what happens to the money supply and AD?. Answer: decreases money supply and shifts AD to the left โ the interest rate on loans that the Fed makes to the bank. Answer: discount rate โ reducing the discount rate does what?. Answer: increases money supply, increases AD โ increasing the discount rate does what?. Answer: decreases money supply, decreases AD
โ producer surplus is measured in the area ______ the supply curve, _____ the price, ______ the quantity supplied. Answer: above, below price, up to โ total surplus equation. Answer: value to buyers - cost to sellers โ the study of economy wide phenomena such as inflation, unemployment and economic growth. Answer: macroeconomics โ the study of how households and firms make decisions and how they interact in markets. Answer: microeconomics โ income must _______ expenditure in an economy. Answer: equal โ the market value of all final goods and services produced within the border of a given country during a specified period of time. Answer: gross domestic product โ gross domestic product measures what two things?. Answer: total amount of expenditures and total income of everyone in the economy โ 4 components of GDP. Answer: 1. consumption
- investment
- government purchases
- net exports (exports minus imports) โ which payments are not counted in government expenditures?. Answer: transfer payments, social security โ a tax on goods produced abroad and sold domestically. Answer: tariff โ a method used to restrict international trade by taxing imported goods. Answer: tariff โ the fall in total surplus that results from a tax. Answer: deadweight loss โ financial environment in which exchange rates and payments for goods and services are conducted. Answer: international monetary system โ what happens to a country's real exchange rate and nominal interest rate as the price level increases. Answer: exchange rates depreciate, interest rates increase
โ in addition to improving efficiency, why might a government intervene in a market?. Answer: to promote equality โ what is the relationship between marginal cost and total cost?. Answer: marginal cost is the change in total cost divided by the change in quantity โ a seller maximize profits in a perfectly competitive market by producing. Answer: the quantity where P = MC โ the economic profit of a competitive firm is the difference between _______ and _______. Answer: total revenue and total cost โ when average variable costs are above the price, what should a firm do?. Answer: temporarily shut down โ what is the producers demand curve when the producer sells a differentiated product?. Answer: downward sloping โ a competitive firms demand curve is ______ elastic than a monopoly's demand curve. Answer: more
โ at which point does a monopoly maximize profit?. Answer: where MC = MR โ many firms and differentiated products. Answer: monopolistic competition โ if the consumers budget constraint has shifted inwards, the consumer will buy ______ normal goods and ______ inferior goods. Answer: fewer normal goods and more inferior goods โ if there is an increase in market demand in a perfectly competitive market, equilibrium price will ______ and equilibrium quantity will ______. Answer: they will both increase โ if both demand and supply decrease, what will happen to equilibrium price and quantity?. Answer: quantity will decrease, but price can either increase or decrease โ the positive or negative numbers of cross price elasticity of demand represent what?. Answer: complements and substitutes โ enacting a permanent income tax cut is what kind of policy?. Answer: fiscal
โ currency diversification is also known as. Answer: strategic hedging โ focuses on forward contracts and swaps to contain currency risks. Answer: currency hedging โ geographically dispersing operations through sourcing or FDI in multiple currency zones. Answer: strategic hedging โ possession of natural resources and related transport and communication infrastructure. Answer: natural resource seeking โ abundance of strong market demand and customers willing to pay. Answer: market seeking โ economies of scale and abundance of low cost factors. Answer: efficiency seeking โ abundance of innovative individuals, firms, and universities. Answer: innovation seeking โ exports, licensing, and franchising are ______ entry modes. Answer: non-equity
โ partially owned subsidiaries, joint ventures, acquisitions, and greenfield operations are ___ entry modes. Answer: equity โ indicate a relatively larger, harder to reverse commitments. Answer: equity modes of entry โ tend to reflect relatively smaller commitments to overseas markets. Answer: non equity โ an MNE enters foreign markets via _______ modes through FDI. Answer: equity โ ownership, location and internalization are 3 advantages of. Answer: MNE's โ the rate at which a person can trade the currency of one country for the currency of another. Answer: nominal exchange rate โ the rate at which a person can trade the goods and services of one country for the goods and services of another. Answer: real exchange rate โ the relative price of the currency of two countries. Answer: nominal exchange rate
