BOLE BULBULA GENERAL SECONDARY SCHOOL: ADDIS ABABA:

DEC.2023; ECONOMICS MID EXAM FOR GRADE 11B

Time: 30 minutes Load: 30%
Name: _____________________________________Sec. & Roll №._______

Part I. Write ‘True’ if the statement is correct or ‘False’ if it is incorrect for

each of the following statements (One point each).
1. Short run is a period in which supply can be changed by changing only the variable factors, fixed
factors remaining the same.
2. An indifference curve shows the constant utility line to the consumer.
3. The marginal rate of substitution is constant as we move down the indifference curve.
4. On an indifference map, higher indifference curves represent higher utility.
5. In consumer theory, the consumer has an infinite income to spend on goods and services.
6. The firm’s demand curve as perceived by a monopoly is the same as the market demand curve.
7. The most important variable that determines the long-run equilibrium of monopoly markets is the
adjustment to the number of firms in the market.
8. Monopolistic competitive market involves many firms which are competing against each other but
selling products that are distinctive in some way.
9. A firm will exit a market if the revenue it gets less than its total cost.
10. For perfectly competitive market, the Condition for Long - Run Equilibrium of a Firm, is MR=P.

Part II: Choose the correct answer from the four alternatives for the following
questions (two point each).
1. Which one of the following is not a property of a standard indifference curve?
A. Indifference curves are downward sloping. C. Indifference curves do not cross.
B. Indifference curves are convex to the origin. D. Indifference curve have a constant slope.
2. Indifference curves that intersect would violate:
A. the diminishing marginal utility assumption C. the transitivity property of indifference theory.
B. the completeness of preference theory. D. none of the above
3. When a consumer wants to maximize his/her utility, he/she can do that by:
A. maximizing the marginal utility obtained from only one good.
B. saving more money and spending less on the goods.
C. consuming outside his/her budget line.
D. finding a point of tangency between his/her budget line and his/her indifference
curve.

ECONOMICS MID EXAM FOR GRADE 11B

4. Given two commodities X and Y and level of income M, if price of good X increases
(money income and price of Y remaining the same), which of the following is true?
A. The budget line rotates to the right. C. The budget line rotates inward for the X commodity.
B The slope of the budget line remains the same. D. Both the X and Y intercept changes together.
5. Which one of the following curves shows the relationship between equilibrium quantities of
two goods and the various levels of income?
A. income consumption curve (ICC) C. price consumption curve (PCC)
B. demand curve D. indifference curve (IC)
6. In a perfectly competitive market, the firm is in the long-run equilibrium when:
A. MR = ATC = MC = P. C. Price is stable.
B. The price is greater than the average cost. D. None of the above.
7. Which of the following is not a characteristic of perfect competition?
A. A large number of buyers and sellers C. the existence of only zero profit in the short run
B. uniform price D. the absence of transparent cost
8. The Condition for Long - Run Equilibrium of a Firm in the perfectly competitive market is
A. MR= LMC B. SAC=LAC C. SMC=P D. All
9. The breakeven point can take the form of:
A. MR =MC B. MR MC C. MR MC D. MR=P
10. If the marginal cost of a firm is rising and greater than its marginal revenue, the firm
should:
A. shut down in the short run
B. increase output to increase revenue and profit
C. remain at the same level of output since any change would lead to larger losses
D. decrease output

Part III. Workout

1. Assume that the total expenditure of a consumer on two goods X and Y is E = Birr
2900, and prices of goods X and Y are PX = Birr 50 and PY = Birr 40. The marginal
utility from consumption of X and Y is given as MUx =X and MUy = 4Y.
Required:
a. Formulate his/her budget equation.
b. Calculate the slope of the budget line.
c. Work out the optimum quantities of the two goods that the consumer would buy.
d. Draw a graph to show your answers.

ECONOMICS MID EXAM FOR GRADE 11B

2. Answer the following questions based on the given below graph:

1. What does point ‘Q’ represent on the above graph?

2. What does point ‘R’ represent on the above graph?

3. What is the opportunity cost moving from ‘C’ to ‘D’ on the curve?

ECONOMICS MID EXAM FOR GRADE 11B