model examination for exit exam

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wolaita sodo university college of business and economics department of economics model examination for exit exam based on the following information, answer the questions 1, 2 and 3 suppose a man currently has 38,000 birr and he is considering taking a new but risky job that will increases his wealth to 50,000 birr with likelihood of 0.6 if it succeeds but will reduce his wealth to 20,000 birr with probability of 0.4 if it fails. the utility level associated with 38,000 birr is 20 and the utility level associated with an income of 20,000 birr and 50,000 birr is 15 and 30, respectively. 1. what is the expected utility of the new job? a. 22.5 b. 26 c. 30 d. 24 answer: d 2. what will be the type of risk? a. risk aversion c. risk neutral b. risk loving d. risk premium answer: b 3. expected income of the …

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one good decreases, the budget line shifts to the right on the side of the good c. the slope of budget line remain the same if the change in price is not proportional d. the intercept of the budget line remain the same even the price of the goods changed answer: b 8. what will not be the effect of price change on consumer equilibrium if he/she allocates the budget m to purchase two goods x and y with their respective prices? a. income-consumption curve c. income effect b. substitution effect d. a and c answer: a 9. if q = 3l + 6k, which of the following is true? a. mrts is a constant equal to ½ if l is on the horizontal axis b. the production function displays constant returns to scale c. k and l are perfect substitutes in production d. all answer: d 10. if marginal …

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answer question number 15 & 16 consider the short run cost function of a firm is given by: ac = 1/3q2 - 5q + 9, where ac & q are average cost and output, respectively. 15. what is the average fixed cost of the firm? a. 3 b. 9 c. 0 d. 9/q answer: c 16. at what output level the firm minimizes its marginal cost? a. 9 b. 1 c. 8 d. 10 answer: a 17. under perfectly competitive market, the firm is said to be in equilibrium when a. price is greater than marginal cost b. marginal cost is equal to marginal revenue and given marginal cost is decreasing c. the slope of total revenue curve is equal to market price d. the distance between the total revenue and total curves is maxima when mr exceeds mc. answer: c 18. when firm is producing in stage i, a. …

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n, investment, government consumption, and net exports. answer: d 23. if mpc = 0.75 (and there are no income taxes) when g increases by 100, then the is curve for any given interest rate shifts to the right by: a. 100 c. 300 b. 200 d. 400 answer: d 24. which of the following will occur if there is an increase in taxes? a. the is curve shifts and the economy moves along the lm curve. b. both the is and lm curves shift. c. output will change causing a change in money demand and a shift of the lm curve. d. neither the is nor the lm curve shifts. answer: a 25. the introduction of a stylish new line of toyotas, which makes some consumers prefer foreign cars over domestic cars, will, according to the mundell-fleming model with fixed exchange rates, lead to: a. a fall in income and …

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nt income is less than future income. b. the price of second period consumption is more than first period consumption. c. for consumers facing binding borrowing constraint, second period income is more important than first period income. d. it assumes consumers as rational and forward looking. answer: d 30. which one of the following is/are true about the rental price of capital? a. the lower the stock of capital, the lower the real rental price of capital. b. the greater the amount of labour employed, the greater the real rental price of capital. c. the better the technology, the lower the real rental price of capital. d. all of the above are true. answer: b 31. the keynesian theory of money demand emphasizes the importance of a. a constant velocity b. irrational behavior on the part of some economic agents c. interest rates on the demand for money d. expectations …

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wolaita sodo university college of business and economics department of economics model examination for exit exam based on the following information, answer the questions 1, 2 and 3 suppose a man currently has 38,000 birr and he is considering taking a new but risky job that will increases his wealth to 50,000 birr with likelihood of 0.6 if it succeeds but will reduce his wealth to 20,000 birr with probability of 0.4 if it fails. the utility level associated with 38,000 birr is 20 and the utility level associated with an income of 20,000 birr and 50,000 birr is 15 and 30, respectively. 1. what is the expected utility of the new job? a. 22.5 b. 26 c. 30 d. …

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