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Business Economics
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The document entails questions and answers for Business economics (CB2) for quick revision. it is also the same as Economics business
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(business finance)1CB2: BUSINESS ECONOMICS
QUESTIONS AND ANSWERS .
1.) The demand curve for Good X describes the amount of Good X that:
A. buyers can but are not willing to purchase at different prices
B. buyers are both willing and able to purchase at one particular price
C. will be supplied at different prices
D. buyers are both willing and able to purchase at different prices
[1½]
2. Which one of the following accurately describes the opportunity cost of producing
Good X?
A. The cost of producing Good X in money terms.
B. The foregone output from the next best alternative use to which factors of
production used to produce Good X could be put.
C. The stream of services provided by Good X over its entire lifetime.
D. The production of Good X foregone in the previous year to enable Good X to
be produced this year.
[1½]
3.) The law of diminishing marginal utility applied to consumption of Good X implies
that the:
A . more one consumes of Good X, the less utility one derives from the first unit
of consumption of Good X
B. total utility derived from the consumption of Good X increases by smaller
amounts for each extra unit of Good X consumed
C. marginal utility derived from the consumption of an extra unit of Good X falls
, (business finance)2
if the price of Good X falls
D. marginal utility derived from the consumption of an extra unit of Good X falls
if the price of Good X rises
[1½]
4.) The price of Good X will not change following an increase in the demand for Good X
if the price elasticity of:
A. supply is zero
B. supply is infinite
C. demand is zero
D. demand is 1
[1½]
5.) Which one of the following will NOT shift the demand curve for a normal good to the
left?
A . A fall in consumers incomes.
B. A rise in the price of a complementary good.
C. A fall in the price of a substitute good.
D. A rise in the price of the normal good.
[1½]
6.) Which ONE of the following statements is NOT applicable to a Giffen good?
A. The demand curve has a positive slope.
B. The income effect on demand of a price change will affect demand in the
opposite direction to the substitution effect.
C. The substitution effect of a fall in price of the good will lead to a fall in
demand.
D. Demand falls if income increases, other things being equal.
[1½]
7.) A profit maximising monopolist that price discriminates is able to:
A. achieve a greater average revenue than if it charged a single price
B. achieve lower total production costs per unit of output
C. increase its profits and simultaneously lower its profit maximising output
D. increase its profits by reducing its production costs more than its total revenue
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