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Focused topic practice

applied microeconomics MCQs

Practise focused applied microeconomics questions with marked answers for exam preparation and subject revision.

applied microeconomics Mcqs
1. In the UK, electricity industry parts are a ____ and other parts are ___ ?
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A. natural monopoly; potentially competitive

B. monopolistic competition duopoly

C. nationalized; privatized

D. cartel; a sellers market

2. The external benefits of using cars are ____ and the external costs are _____?
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A. high; high

B. low; high

C. low; low

D. high; low

3. Privatization is the transfer of ?
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A. publicly held stock to private individuals.

B. privately owned businesses to the government sector

C. corporately owned businesses to individuals

D. government businesses to the private sector
4. De-regulation is where the government ?
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A. removes barriers to entry

B. removes barriers to entry and minimum product quality standards

C. breaks up private sector monopolies.

D. imposes higher standards of conduct

5. A conglomerate merger is a merger of ?
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A. firms producing unrelated products.

B. firms at various stages in production process.

C. firms producing the same product

D. firm producing complementary products

6. Evidence suggests that the price elasticity of demand for motoring is ?
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A. absolutely inelastic

B. inelastic

C. Unitarily elastic

D. Elastic

7. Sales staff are keen to sell extended warranties because ?
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A. they are paid commission on each extended warranty they sell.

B. the cost of repair will usually exceed the cost of the warranty

C. They are concerned about customer satisfaction.

D. extended warranties offer value for money.

8. Supporters of antimonopoly enforcement argue that the real gain from such enforcement ?
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A. is that it forces firms to produce efficiently.

B. is that if encourages firms to engage in research which leads to new products

C. is the revenue generated from the fines paid by those individuals who are found guilty of antitrust violation?

D. Is that this policy serves to deter firms from engaging in such practices as collusion, price-fixing and deceptive advertising
9. Economists use the term regulatory capture to mean a situation where the private sector firms being regulated ?
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A. Persuade the government to change the regulatory regime.

B. Persuade the regulator to act in the firms interests.

C. Persuade the regulator to operate in the industrys interests

D. Bribe the regulator.

10. A horizontal merger is a merger of?
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A. firms producing the same product

B. firms producing complementary products

C. firms producing unrelated products

D. firms at various stages in a production process.

11. The theory of the second best suggests that in the absence of perfect competition a privatized industry should charge a price of ?
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A. p = Z

B. p = MC

C. P = MC Z

D. P = MC + Z
12. In the country X it is now becoming possible to buy electricity from a gas company and gas from an electricity company. This is called ?
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A. natural monopoly.

B. cross-subsidization.

C. deregulation

D. making markets contestable
13. A merger in which firms at various stages in a production process combine is a ?
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A. horizontal merger

B. vertical merger

C. production merger

D. conglomerate merger.

14. A firm charging different buyers different prices for the same product is practicing ?
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A. price fixing.

B. Price discrimination

C. price discounting.

D. Competitive pricing.

15. Antimonopoly legislation is undertaken to ____ competition and market regulation is undertaken to ____ competition ?
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A. restrict; promote

B. promote; promote

C. restrict; restrict

D. promote; restrict
16. Between 1990 and 1999 car ownership per thousand of the population fell in ?
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A. Belgium

B. USA

C. Spain

D. UK

17. Antimonopoly laws are based on the proposition that ?
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A. competition is the best way to achieve efficiency.

B. increasing market power is the best way to achieve efficiency.

C. public ownership is the best way to achieve efficiency

D. regulation is the best way to achieve efficiency.

18. Spending on motoring as a % of household expenditure in the UK shows that motoring is ?
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A. a potential public good

B. a superior good

C. an inferior good

D. Environmentally damaging

19. Which city has the following transport policy ?
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A. Singapore

B. London

C. Car licenses are very expensive vehicle entry to the city center is very restricted road pricing is being introduced and modern cheap rail transport is being expanded.

D. New York

E. Athens

20. A merger between a paper producer and a book publisher is an example of?
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A. a complementary products merger.

B. a horizontal merger

C. a conglomerate merger.

D. a vertical merger