EFM

Sample Questions
Module 2 (Ch: 14, 15, 16, 17, and 21)
1. Define the competitive firm and explain the features of competitive market.
2. Draw the cost curves for a typical competitive firm. For a given price, explain how the
firm choose the level of output that maximize profit.
3. Under what condition will a firm shut down temporarily? Explain.
4. Under what conditions will a firm exit a market? Explain.
5. Explain the supply curve in a competitive market including short run & long run.
6. What is the meaning of monopoly? And why monopoly arises?
7. Explain the natural monopoly with an example.
8. Draw the demand, marginal revenue, and marginal cost curves for a monopolist. Show
the profit maximizing level of output. Show the profit maximizing price.
9. How economic well being is reduced from the monopolys use of market power?
10. Describe the two problems that arise when regulators tell a natural monopoly that it must
set a price equal to marginal cost.
11. Explain price discrimination in detail with two examples.
12. What is oligopoly? Explain with examples.
13. What is a cartel and what quantity and price would they try to set?
14. How does the number of firms in an oligopoly affect the outcome in its market?
15. What is prisoners dilemma and what does it have to do with oligopoly?
16. What is resale price maintenance and why it is controversial?
17. Define monopolistic competition.
18. Describe how monopolistic competition like monopoly? How is it like perfect
competition?

19. Draw a diagram depicting a firm in a monopolistically competitive market that is making
profits. Now show what happens to this firm as new firms enter the industry.
20. What are the main differences between monopolistic & perfect competition?
21. How might advertising reduce economic well being? How might advertising increase
economic well being?
22. Explain Budget constraint and Indifference curve. Also explain how consumer
equilibrium is achieved with the help of them?

Module 3 ( Ch: 23, 24, 25)

23. Write a note on circular flow diagram.
24. What is GD and explain the components of GDP.
25. What is real GDP, nominal GDP and GDP deflator?
26. Is GDP a good measure of Economic well-being?
27. Write a short note on: Consumer Price Index(CPI) . OR What is CPI? List the steps
involved in calculation of CPI.
28. Which are the problems in measuring cost of living? OR Describe the three problems that
make CPI an imperfect measure of cost of living?
29. Explain GDP Deflator versus the consumer price index.
30. Explain the meaning of nominal interest rate and real interest rate. How are they related?
31. Explain the productivity and its role and determinants.
32.

What are the Government policy to raise productivity and living standard?