CFA Level 1

Quiz No. 1

Multiple Choice— Select the option that best completes the sentence or provides the answer to the question.
  1. Indifference curves that are convex to the origin reflect:
  2. The consumer's choice is optimal if his Marginal Rate of Substitution
  3. A firm's production is technologically efficient whenever:
  4. Vasya opens up his own economic consulting practice. The fee he charges per hour is $100. In order to start his own business Vasya quit his job which was paying $50,000 per year and cashed in a $10,000 certificate of deposit that would have yielded him 5% interest this year. During the first year, expenses for items such as paper and utilities totaled $5,000. If Vasya provides 1,000 hours of consulting services in his first year, then his economic profit equals:
  5. The rate at which a firm can substitute one factor for another while still producing the same level of output is known as the:
  6. Assume that a firm is a price taker in its input markets. If the firm's technology is characterized by diminishing marginal physical product of its variable input in the short run, the firm's short-run:
  7. The value of price elasticity of demand:
  8. An investor has $100,000 held in a two-year bank CD earning four percent with weekly compounding. The terms impose a 10 percent penalty for early withdrawal. How much will the investor receives if he redeems the CD after 18 months?
  9. When valuing a call option using the binomial model, an increase in the probability that the underlying will go up most likely implies that the current price of the call option:
  10. A firm increases the number of hours its workers are employed from 7,000 to 8,000, and output increases from 140,000 bushels to 155,000 bushels. The marginal product of an extra hour is