ECON 1002
Microeconomics
Final Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following best defines "monopolistic
competition"?
- A) A market structure with a single seller.
- B) A market structure with many firms selling differentiated
products.
- C) A market structure with a few firms selling identical
products.
- D) A market structure where there are no barriers to entry.
- Correct ANS: B
Rationale: Monopolistic competition involves many firms
competing with products that are differentiated from one another.
2. What is the primary effect of imposing a price ceiling on a
market?
- A) Increased revenue for producers.
- B) Shortage in the market.
- C) Surplus in the market.
- D) Price stability.
- Correct ANS: B
Rationale: A price ceiling, set below equilibrium, leads to a
shortage because the quantity demanded exceeds the quantity
supplied.
©2024/2025
,3. In the context of game theory, what does a "Nash
equilibrium" represent?
- A) A scenario where all players collaborate to achieve the best
outcome.
- B) A situation where no player can benefit by changing
strategies while the other players' strategies remain unchanged.
- C) A point where players maximize their payoff.
- D) A stable outcome that is not impacted by external factors.
- Correct ANS: B
Rationale: In a Nash equilibrium, each player's strategy is
optimal given the strategies of all other players, leading to no
incentive to deviate.
4. Which of the following externalities is associated with
pollution?
- A) Positive externality
- B) Negative externality
- C) Internalized externality
- D) Social surplus
- Correct ANS: B
©2024/2025
, Rationale: Pollution is a negative externality because it
imposes costs on third parties not involved in the production or
consumption of the polluting activity.
5. Which of the following best explains the concept of “price
elasticity of demand”?
- A) The responsiveness of quantity supplied to a change in
price.
- B) The degree to which quantity demanded changes with a
price change.
- C) The relationship between total revenue and price.
- D) The effect of income changes on demand.
- Correct ANS: B
Rationale: Price elasticity of demand measures how much the
quantity demanded of a good responds to a change in its price.
Fill-in-the-Blank Questions
6. When a firm in a perfectly competitive market maximizes
profits, it produces at the level where _______ equals _______.
- Correct ANS: Marginal cost (MC) equals marginal revenue
(MR).
Rationale: This is the profit-maximizing condition for firms
in perfect competition.
©2024/2025
Microeconomics
Final Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following best defines "monopolistic
competition"?
- A) A market structure with a single seller.
- B) A market structure with many firms selling differentiated
products.
- C) A market structure with a few firms selling identical
products.
- D) A market structure where there are no barriers to entry.
- Correct ANS: B
Rationale: Monopolistic competition involves many firms
competing with products that are differentiated from one another.
2. What is the primary effect of imposing a price ceiling on a
market?
- A) Increased revenue for producers.
- B) Shortage in the market.
- C) Surplus in the market.
- D) Price stability.
- Correct ANS: B
Rationale: A price ceiling, set below equilibrium, leads to a
shortage because the quantity demanded exceeds the quantity
supplied.
©2024/2025
,3. In the context of game theory, what does a "Nash
equilibrium" represent?
- A) A scenario where all players collaborate to achieve the best
outcome.
- B) A situation where no player can benefit by changing
strategies while the other players' strategies remain unchanged.
- C) A point where players maximize their payoff.
- D) A stable outcome that is not impacted by external factors.
- Correct ANS: B
Rationale: In a Nash equilibrium, each player's strategy is
optimal given the strategies of all other players, leading to no
incentive to deviate.
4. Which of the following externalities is associated with
pollution?
- A) Positive externality
- B) Negative externality
- C) Internalized externality
- D) Social surplus
- Correct ANS: B
©2024/2025
, Rationale: Pollution is a negative externality because it
imposes costs on third parties not involved in the production or
consumption of the polluting activity.
5. Which of the following best explains the concept of “price
elasticity of demand”?
- A) The responsiveness of quantity supplied to a change in
price.
- B) The degree to which quantity demanded changes with a
price change.
- C) The relationship between total revenue and price.
- D) The effect of income changes on demand.
- Correct ANS: B
Rationale: Price elasticity of demand measures how much the
quantity demanded of a good responds to a change in its price.
Fill-in-the-Blank Questions
6. When a firm in a perfectly competitive market maximizes
profits, it produces at the level where _______ equals _______.
- Correct ANS: Marginal cost (MC) equals marginal revenue
(MR).
Rationale: This is the profit-maximizing condition for firms
in perfect competition.
©2024/2025
