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Question-1
All of the following statements are wrong except:
(A)
A monopoly will always be Pareto efficient
(B)
A perfectly competitive market is not always Pareto efficient
(C)
Redistribution of income from producers to consumers can restore Pareto efficiency
(D)
The presence of externalities will preclude Pareto efficiency
Question-2
The total cost to society of producing an additional unit of a good or service is the:
(A)
Marginal damage cost
(B)
Marginal social cost
(C)
Marginal external cost
(D)
Marginal private cost
Question-3
If social marginal costs are _____________ private marginal costs, the level of output will be ____________ the socially optimal level.
(A)
Equal to, equal to
(B)
Greater than, higher than
(C)
Less than, lower than
(D)
All of the above
Question-4
If some gain and some lose as the result of a proposed change and it can be demonstrated that the value of the gains would exceed the value of the losses, then the change is said to be:
(A)
Unequivocally Pareto optimal
(B)
Potentially efficient
(C)
Inefficient
(D)
Technically efficient
Question-5
Externalities are a problem only if:
(A)
The externalities are negative
(B)
Decision makers do not take them into account
(C)
All firms are perfectly competitive
(D)
All firms are monopolistic
Question-6
A person will continue to pursue an activity up to the point where:
(A)
Marginal benefit equals marginal private cost
(B)
Marginal social cost equals marginal external cost
(C)
Marginal benefit equals marginal social cost
(D)
Marginal benefit equals marginal damage cost
Question-7
According to Ronald Coase:
(A)
Governments should tax monopolistic supplier of durable goods
(B)
There is an ‘n’ shaped relationship between income inequality and GDP per capita
(C)
Additional greenhouse gases from developing economies can be balanced by a reduction in pollution from highly developed economies
(D)
A monopoly supplier of a durable good would sell all units of output at the perfectly competitive price
Question-8
When markets are imperfect and exhibit externalities:
(A)
Government intervention will not improve market performance
(B)
There is an inefficient allocation and use of society's scarce resources
(C)
Society's well-being is not affected
(D)
Government intervention will always improve market performance
Question-9
Externalities, both negative and positive, are a cause for
(A)
Concern
(B)
Market failure
(C)
Full employment
(D)
Monopolistic competition
Question-10
Which of the following would meet an economist's definition of a public good?
(A)
An elementary school
(B)
A hospital
(C)
A university
(D)
National defense
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Cambridge Secondary Grade 9
IGCSE
Practice in Related Chapters
Competitive Markets Demand and Supply
The Foundations of Economics
Elasticities
Fundamental Concepts in Economics
The Theory of the Firms Production, Costs, Revenue and Profits
The Theory of the Firm II Market Structures
The Level of Over All Econonic Activity
Aggregate Demand and Aggregate Supply
Macroeconomic Objectives I : Low Unemployment,Low and Stable Rate of Inflation
Demand-Side and Supply-Side Policies
Government Intervention
Macro Economic Objectives II : Economic Growth and Equity in the Distribution of Income
Market Failure
International Trade
Exchange Rates and the Balance of Payments
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