Mid term Exam 1 2223

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Economics

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Feb 20, 2024

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Mid term Exam 1 (2023-24) 1. Marginal Utility Concept  What does the law of diminishing marginal utility suggest about consumer behavior? a) Utility increases at a decreasing rate as more units of a good are consumed. b) Consumers' satisfaction remains constant regardless of consumption quantity. c) Marginal utility increases as consumption increases. d) Total utility decreases as more units of a good are consumed. 2. Opportunity Cost  Which of the following best defines the concept of opportunity cost? a) The cost of the most expensive alternative forgone. b) The total sum of all alternatives when one is chosen. c) The value of the best alternative forgone in making any decision. d) The cost incurred by not choosing the least expensive option. 3. Game Theory and Strategy  In game theory, what is a dominant strategy? a) A strategy that ensures the player always loses. b) A strategy that results in the highest payoff for a player, regardless of the opponent's actions. c) A strategy that changes based on the opponent's actions. d) A cooperative strategy that maximizes collective benefits. 4. Supply and Demand  In a competitive market, what effect does an increase in demand have on the equilibrium price and quantity, ceteris paribus? a) Price decreases, quantity increases. b) Price increases, quantity decreases. c) Price and quantity both increase. d) Price and quantity both decrease. 5. Inferential Statistics  What is the primary goal of inferential statistics? a) To describe the main features of a data set. b) To make predictions about a population based on a sample. c) To summarize data in a meaningful way. d) To collect data from a population. 6. Market Structures  Which characteristic is most associated with a perfectly competitive market? a) Firms have significant control over prices. b) There are many buyers and sellers, each with negligible impact on market price. c) There is one seller who controls the market price. d) Products are highly differentiated. 7. Probability Theory  What does the law of large numbers state about probabilities? a) The probabilities of independent events add up to 1. b) The sample mean converges to the population mean as the sample size increases. c) The probability of an event occurring

twice in a row is squared. d) Probabilities decrease as the number of trials increases. 8. Consumer Surplus  How is consumer surplus defined in a market? a) The difference between the maximum price consumers are willing to pay and the market price. b) The surplus of goods remaining after consumers make purchases. c) The total value consumers get from a good minus the total amount they spend. d) The amount by which a company's revenue exceeds its production costs. 9. Elasticity of Demand  What does it mean if a product has an elasticity of demand greater than 1? a) Demand is inelastic, and consumers are not sensitive to price changes. b) Demand is perfectly elastic, and quantity demanded changes by an infinite amount for any price change. c) Demand is unit elastic, and percentage changes in price lead to equal percentage changes in quantity demanded. d) Demand is elastic, and consumers are very sensitive to changes in price. 10. Statistical Hypothesis Testing  In the context of hypothesis testing, what is a Type I error? a) Accepting the null hypothesis when it is false. b) Rejecting the null hypothesis when it is true. c) Failing to detect an effect that is present. d) Detecting an effect that is not present.

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