BSocSc Bachelor of Social Science Bachelor of Social Science Economics 2

Question 1

Which market structure is characterized by many sellers offering differentiated products with some pricing power?

Accepted Answer

Monopolistic competition

Answer

Monopolistic competition features many firms selling similar but differentiated products, giving each some control over price.

Question 2

When the government imposes a price ceiling below the equilibrium price, the likely result is:

Accepted Answer

A shortage of the good

Answer

A binding price ceiling keeps price artificially low, causing quantity demanded to exceed quantity supplied, creating a shortage.

Question 3

The concept of 'crowding out' in macroeconomics refers to:

Accepted Answer

Higher government spending reducing private investment via rising interest rates

Answer

Crowding out occurs when government borrowing raises interest rates, making private borrowing more expensive and reducing private investment.

Question 4

A Lorenz curve that bows further away from the 45-degree line of equality indicates:

Accepted Answer

Higher income inequality

Answer

Greater deviation of the Lorenz curve from the perfect equality diagonal reflects a higher Gini coefficient and more unequal income distribution.

Question 5

In game theory, a Nash equilibrium is a situation where:

Accepted Answer

No player can improve their outcome by unilaterally changing strategy

Answer

A Nash equilibrium occurs when each player's strategy is the best response to the strategies chosen by all other players.

BSocSc Bachelor of Social Science Practice Test