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In a simple model of resource market, a household is_______________.

A) Supplier of goods and services

B) Buyer of resources
C) Seller of resources
D) Buyer of goods and services
ANSWER: C

A movement along a demand curve can be caused by a change in ________________.

A) Consumer income
B) The price of substitute/complement
C) Expectations about future prices
D) The price of the good in question
ANSWER: D

A price above the market equilibrium price results in ____________.

A) Shortage
B) Inflation
C) Excess demand
D) Surplus
ANSWER: D

A decrease in the demand for a good will __________ price and _________ in quantity.
A) Decrease/decrease
B) Increase/decrease
C) Increase/increase
D) Decrease/increase
ANSWER: A

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A market clearing price is ________________.
A) A price set by the government
B) Total surplus is maximized
C) Disequilibrium price
D) Quantity supplied greater than quantity demanded
ANSWER: B

Indifference curves normally _________________.

A) Have a positive slop
B) The graph is concave to the origin
C) Intersect each other
D) Never cross each other
ANSWER: D

When total utility decreases, marginal utility is ______________.

A) Positive
B) Maximum
C) Negative
D) Zero
ANSWER: D

Marginal cost and average cost are the same at the output level in which ______________.
A) AVC is minimum
B) MC is minimum
C) AC is minimum
D) MP is maximum
ANSWER: C

When the firm experiences increasing marginal returns _______________________.

A) Marginal costs are increasing
B) Marginal costs are decreasing
C) Marginal cost is constant
D) Total costs are decreasing
ANSWER: B
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The cost that has rectangular hyperbola shape is ___________________________.

A) Total fixed cost
B) Average variable cost
C) Average cost
D) Average fixed cost
ANSWER: D

When variable costs increase _________________.

A) AC curve shifts down

B) AVC curve shifts up
C) TFC curve shifts down
D) MC curve shifts down
ANSWER: B

Long run production function is a relationship between _____________.

A) Factor-product
B) Cost-output
C) Factor-factor
D) Product-product
ANSWER: C

Which one of the following is beyond the managerial control?

A) Total fixed cost
B) Marginal cost
C) Average variable cost
D) Total variable cost
ANSWER: A

An allocation in which one can be made better-off without anyone else being made worse-off is.
A) Edge worth box
B) Pareto optimal
C) Pareto improvement
D) pure exchange
ANSWER: C
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Which one is incorrect about preferences described by a utility function?

A) diminishing MU of wealth is a risk loving
B) diminishing MU of wealth is a risk averse
C) increasing MU of wealth is a risk loving
D) constant MU of wealth is a risk neutral
ANSWER: B

Competitive firm choose the profit maximization level of output at which____________.

A) P<MR=MC
B) P>MR=MC
C) P=MR=MC
D) P=AVC
ANSWER: C

Which one of the following is false?

A) Each painter refuses to sell if a price < her cost
B) Cost is a measure of her willingness to buy
C) Each painter eager to sell if a price > her cost
D) many of allocations in the EWB are technically inefficient
ANSWER: C

In a perfectly competitive market, a firm impossible to produce goods and services ________.
A) If a price greater than the AVC in the short run
B) If the loss is equal to the TFC
C) if a firm gets zero profit
D) if the price is less than AVC
ANSWER: D

Which one of the following distinguishes monopolistically competitive from perfect competition
market?
A) produces too high output than perfect competition
B) markup over marginal cost in monopolistically competitive

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C) the output produced in monopolistically competitive is efficient
D) monopolistically competitive demand curve is perfectly elastic
ANSWER: B

If inverse demand curve for profit maximizing monopolist is p= 60−2q & cost function as C= q3
−2q2+12q+30, the monopolist profit is.
A) 78
B) 98
C) 52
D) 68
ANSWER: B

Buyer’s willing to pay for a good minus the amount the buyer actually pays for it is __________.
A) Producer surplus
B) Welfare economics
C) Consumer surplus
D) Total surplus
ANSWER: C

A situation in which economic actors interacting with one another, each choose their best strategy
given strategies that all others have chosen.
A) Nash equilibrium
B) Best response
C) Payoffs
D) Dominant strategy
ANSWER: A

A competitive firm in a product market will hire a unit of labor by a required wage rate from a
competitive labor market where ______________________.
A) MRPL <VMRPL = SL
B) MFCL = MRPL
C) MRPL = SL
D) MRPL = VMRPL = SL = MFCL
ANSWER: D

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The objective of macroeconomics study is _____________.
A) to achieving full employment
B) to maintain stable price
C) to attain economic growth
D) to improve balance of trade
E) All
ANSWER: E

A book called “An enquire into nature and the causes of wealth of nation” was written by _______.
A) Robert Malthus
B) Adam smith
C) M.J. Keynes
D) Jen Baptiste Say
E) All
ANSWER: B

Gross domestic product or GDP is ____________________.

A) the total dollar value intermediate goods and services produced in the economy in a given
time period.
B) the total dollar value of wages paid to producing workers in a given time period.
C) the total dollar value of final goods and services produced in the economy in a given time period.
D) the total dollar value of government production in a given time period.
ANSWER: C

Price and wages are sticky in the case of ________________________.

A) Classical view
B) Neoclassical view
C) Keynesian view
D) Monetarist view
E) All
ANSWER: C
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One of the following is true about GDP measurement.

A) It does not measure leisure activities
B) It measures home activity
C) It measures underground economy
D) It measures environmental problems
E) B, C and D only

ANSWER: A

Refers the phenomenon of cyclical booming and depression.

A) Trade cycle
B) expansion
C) depression
D) A&B
E) all
ANSWER: A

Which of the following is not true?

A) Natural unemployment does not always exist
B) Full employment equals between 4% and 5% unemployment
C) CPI - represents price paid by consumers
D) All
ANSWER: A

Which of the following sequence of events follows an expansionary monetary policy?

A) r↓ ⇒ I↓ ⇒ Ad↓ ⇒ Y↓.
B) r↓ ⇒ I↑ ⇒ Ad↑ ⇒ Y↑.
C) r↑ ⇒ I↑ ⇒ Ad↓ ⇒ Y↑.
D) r↑ ⇒ I↓ ⇒ Ad↓ ⇒ Y↓.
ANSWER: D

Unemployment due to fluctuation of business cycle is.

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A) Seasonal unemployment workers.
B) Disguised workers
C) Cyclical unemployed workers
D) Structural unemployment
ANSWER: C

Unemployment due to mis- match between skills needed and skill offered is _______________.
A) Frictional unemployment
B) Seasonal unemployment
C) Structural unemployment.
D) Cyclical unemployment.
ANSWER: C

The total population (aged 16 and older) of Bahir Dar is 48 million. Of this total, 4 million are
Unemployed and 36 million currently hold jobs. What are the rates of unemployment and labor
force participation of Bahir Dar city?
A) The rate of unemployment is 11 %, and the labor force participation rate is 83 %.
B) The rate of unemployment is 10%, and the labor force participation rate is 75 %.
C) The rate of unemployment is 10%, and the labor force participation rate is 83 %.
D) The rate of unemployment is 11%, and the labor force participation rate is 90 %

ANSWER: B

Stagflation is a combination of:

A) increasing unemployment and increasing inflation
B) decreasing unemployment and decreasing inflation.
C) increasing unemployment and decreasing inflation.
D) decreasing unemployment and increasing inflation.

ANSWER: A

Fiscal policy refers to __________________________________.

A) the control of interest rates.
B) the control of government spending and taxations.
C) the control of the quantity of money.
D) the control of interest rates and of government spending.
ANSWER: B
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If real GDP for a given year is $2400 billion and nominal GDP is $2400 billion.
A) this year is the base year for the GDP deflator.
B) the GDP deflator for this year is 1.25.
C) the GDP deflator for this year is 0.8.
D) the GDP deflator for this year is 1.10.
ANSWER: A

In the consumption function, suppose Ca = 60, c = 0.75, Y = 3000, and T = 800. Consumption
expenditure is ______________________.

A) 1590.
B) 1510.
C) 1710.
D) 2245.
E) 2910.
ANSWER: C
If disposable income increases by $100 and consumption increased by $85, ceteris paribus, we
may conclude that.
A) the marginal propensity to consume is 0.85.
B) the marginal propensity to consume is 0.15.
C) $15 is autonomous consumption.
D) a change in disposable income is induced by a change in consumption.
ANSWER: A

In 2008, consumption spending is $7,000, government purchases is $2,000 and investment

spending is $1,500. If GDP for 2008 is $10,300, then.
A) export is $400 and import is $200.
B) export is $100 and import is $200.
C) export is $600 and import is $800.
D) export is $500 and import is $300.
ANSWER: C

The multiplier measures _____________________.

A) number of steps it takes to move from one equilibrium to another.

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B) rise in saving resulting from a rise in income.
C) marginal propensity to invest.
D) rise in equilibrium GDP resulting from a one dollar rise in planned autonomous
expenditures.
ANSWER: D

The largest piece of investment spending, accounting for about 3/4th of the total is___________.
A) Business fixed investment
B) Residential investment
C) Inventory investment
D) A& B
ANSWER: A

Barter system means.

A) Purchase of commodity with money

B) Sale of commodity with money
C) Purchase and sale of commodity with commodity
D) All
ANSWER: C

Fisher equation of exchange states that ______________________.

A. P varies directly with income
B. P varies directly with M
C. P and M are constants
D. None of the above

ANSWER: B

The curve provides the combinations of r and Y that satisfy the equation representing the money
market in equilibrium is __________________________.
A) IS-curve
B) BOP
C) LM-curve
D) All
E) None
ANSWER: C

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In the IS-LM model, equilibrium income can be affected by ___________________.
A) Monetary policy alone.
B) Fiscal policy alone.
C) Both fiscal and monetary policy.
D) Neither monetary nor fiscal policy

ANSWER: C

Balance of Payments equilibrium means.

A) the balance of trade equals zero
B) the current account balance equals zero
C) the capital account balance equals zero
D) the current account balance is exactly offset by the capital account balance
E) All
ANSWER: D

Macroeconomic equilibrium in an open economy requires _______________________.

A) goods market equilibrium
B) money market equilibrium
C) Balance of payments equilibrium
D) all of the above
E) only (a) and (b) above
ANSWER: D

The IS curve represents.

A) Investment and saving when the commodity markets are in disequilibrium.
B) Equilibrium in the commodity markets for every combination of interest rates and
output level.
C) The determination of the level of interest rate.
D) The determination of the level of income and output.
E) None
ANSWER: B

If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the
depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is __________.
A) 1.
B) 2.
C) 3.
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D) 4
E) None
ANSWER: B

When the real exchange rate rises __________________.

A) exports will decrease but imports will be unaffected.
B) imports will decrease but exports will be unaffected.
C) exports will increase and imports will decrease.
D) exports will decrease and imports will increase.
ANSWER: D

If the national saving rate increases, the ____________________________.

A) economy will grow at a faster rate forever.
B) capital-labor ratio will increase forever.
C) economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio is
reached.
D) capital-labor ratio will eventually decline.
ANSWER: C

Assume that equilibrium GDP (Y) is 5,000. Consumption is given by the equation C = 500 + 0.6Y.
Investment (I) is given by the equation I = 2,000 - 100r, where r is the real interest rate in percent.
No government exists. In this case, the equilibrium real interest rate is.
A) 2 percent.
B) 5 percent.
C) 10 percent.
D) 20 percent.
ANSWER: B

In a Solow model with technological change, if population grows at a 2 percent rate and the
efficiency of labor grows at a 3 percent rate, then in the steady state total output grows at a
______ percent rate.
A) 0
B) 2
C) 3
D) 5
ANSWER: D

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Which of the following would shift the LM curve?
A) an increase in the tax rate
B) an increase in the real money supply
C) a decrease in government spending
D) All of these.
ANSWER: B

According to the theory of comparative advantage, which of the following is not a

reason why countries trade?

A) Costs are higher in one country than in another.

B) Prices are lower in one country than in another.
C) The productivity of labor differs across countries and industries.
D) Exports give a country a political advantage over other countries that export less.
ANSWER: D

If my opportunity cost of typing one term-paper page is baking three dozen cookies
and your opportunity cost of typing one term-paper page is baking four dozen
cookies, then _______________________.
A) You have a comparative advantage in cookie-baking.
B) I have a comparative advantage in cookie-baking.
C) You have an absolute advantage in cookie-baking.
D) I have an absolute advantage in cookie-baking.
ANSWER: A

Which of the following holds that a government can improve the economic well-being of a
country by encouraging exports and discouraging imports?
A) Mercantilist
B) David Ricardo’s theory
C) Adam Smith’s theory
D) All
ANSWER: A

Several levels of economic integration are possible. Let three such levels from the leas integrated
to the most integrated are.
A) Free trade area, customs union, common market.
B) Customs union, free trade area, economic union.
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C) Free trade area, monetary union, common market.
D) Monetary union, economic union, customs union
ANSWER: A

Which one of the following is not a reason for export promotion?

A) To eventually achieve significant export-led economic growth
B) To enlarges the production capacity of a country
C) Export markets are much bigger than domestic markets
D) All of the above
E) None of the above
ANSWER: D

In country A, it takes 10 labor hours to produce cloth and 20 labor hours to produce grain.
In country B, it takes 20 labor hours to produce cloth and 10 labor hours to produce grain.
Which country should produce grain?

A) Both A and B should produce grain.

B) B.
C) No country should produce grain.
D) A
ANSWER: B

Under the theory of Mercantilism, how was wealth defined?

A) The amount of gold/precious metal a country had
B) A nation's ability to produce
C) A country's diversity in materials
D) None
ANSWER: A

Is a process wherein a company exports a product at a price that is significantly lower than the
price it normally charges in its home (domestic) market ?
A) Dumping
B) Diversification
C) Exchange rate controls
D) All of the above
E) None of the above

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ANSWER: A

Focuses on free movement of goods, services and factors of

production, and following a common external trade policy against non-members, national,
social, taxation and fiscal policies are harmonized and administered by a supranational
institution.
A) Free trade area
B) Common market
C) Customs union
D) Economic union
ANSWER: D

One of the following is a methods of import substitution.

A) Tariff
B) Embargo on import
C) Quotas
D) All of the above
E) None of the above
ANSWER: D

What is the term used to describe a situation where the price of imports exceeds the price of
exports?
A) An improvement in the terms of trade.
B) A neutral performance in the terms of trade.
C) Deterioration in the terms of trade.
D) All of the above
ANSWER: C

Occurs when production shifts to more efficient producers for reasons of comparative advantage,
allowing consumers access to more goods at a lower price than would have been possible without
integration .

A) Trade diversion
B) Divestment
C) Trade creation
D) Retrenchment
ANSWER: D

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International trade forces domestic firms to become more competitive in terms of?

A) The introduction of new products

B) Product design and quality
C) Product price
D) All of the above
ANSWER: D

By engaging in international trade, nations can, in effect.

A) Consume at any point on their production possibility curves.

B) Consume inside their production possibility curves.
C) Consume outside their production possibility curves.
D) All of the above
ANSWER: C

Which one of the following statements is true about budgeting?

A) Partial budget estimates the profitability of the entire farm plan
B) Complete budgeting considers the non -linear relationship between input and output
C) Budgeting ignores diminishing returns and complimentary relationships between enterprises
D) Whole farm budget is usually simpler than partial budgets
ANSWER: C

If a farm financial analysis is performed and a farmer decides he must increase asset turnover,
which of the following is the way to address an exceptionally high value of invested asset and
achieve high asset turnover rate?

A) Liquidate nonproductive asset

B) Change the debt structure to have less current liability
C) Concentrate on higher crop yields this year
D) Lower farm fuel and utility bills
ANSWER: A

Suppose, there are two states of nature (dry and wet) based on past experience with the probability
of occurrence of these conditions are o.4 and 0.5 respectively with 40 and 50 quintals of maize
produce and 15 and 40 quintals of teff produce for each state of nature, what will be the expected
yield of maize and teff that are used for planning purpose respectively?

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A) 49.5 & 26
B) 41 & 26
C) 45 & 23
D) 26 & 41
ANSWER: B

Suppose farm have a total cost of 5,000 birr what will be the break-even yield if the output price
is 200 birr/qt?
A) 25 qt /hectare
B) 1000,000 qt /hectare
C) 0.04 qt /hectare
D) 0.25 qt /hectare
ANSWER: A

Which one of the following statements is incorrect?

A) If the total assets exceed the total liabilities, the business is solvent.
B) If the total liabilities exceed the total assets, the net worth is greater.
C) If the total assets exceed the total liabilities, the net worth is greater.
D) Balance sheet is used as a basis for credit access.
E) The greater the net-worth means the farther away from insolvency
ANSWER: B

Which one of the following is not the characteristics of farming as business?

A) Inelastic demand for farm products
B) Heavy dependence upon climatic factors
C) Elastic demand for farm products
D) Agricultural prices & production move in opposite directions
ANSWER: C

It is necessary to prepare partial budget for all the following reasons except __________.
A) Changing to different levels of a single technology
B) Estimating the level of risk and uncertainty on the entire farm
C) Substituting one enterprise for another without any change in the entire farmland area
D) Changing to different technologies

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ANSWER: B

Which one of the following is not operational decision?

A) Making changes in livestock feed ration
B) Decision on timing of production
C) Selecting planting and harvesting dates
D) Decision on the level of mechanization
ANSWER: D

A situation in which a decision maker knows all of the possible outcomes of a decision and the
probability associated with each outcome is referred to as____________________.
A) certainty
B) risk
C) Uncertainty
D) All
ANSWER: B

Which type of asset is liquidated at a fastest rate?

A) Working Asset
B) current asset
C) Fixed Asset
D) A and B
ANSWER: B

Which of the followings aren’t true about partial budget?

A) It helps to analyze how changes in certain farm enterprises affect profit
B) Measures every return and cost change
C) It helps to analyze loan repayment capacity of a farm business
D) It is intermediate in scope between enterprise and whole farm budgeting
E) It shows the effect that various price, yield & costs have on net farm income if proposed
change is made
ANSWER: C

Conducted at the research station by taking into consideration the farmers problems, resource
availability with farmers________.

A) On-farm Adaptive Research

B) Off-farm adaptive research

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C) On-station studies
D) Farming system research through system modelling
ANSWER: C

Which one of the following is not the characteristics of farming system research?

A) It is concerned with ‘Bottom-up’ research strategy

B) It substitutes on station research
C) It emphasizes extensive on-farm activities
D) It acknowledges the location specificity of technological solutions
ANSWER: B

Measured in terms of relative income distribution is______________________.

A) Capability
B) Claims
C) Equity
D) Sustainability
ANSWER: B

Which of the following is not the goal of Sustainable Agriculture?

A) Enhancing the quality of farmers’ life in general
B) Consuming fewer renewable resources
C) Improving ecological conditions & preventing pollution
D) Consuming fewer non-renewable resources
ANSWER: B

Ability to see the world as a complex system, that everything is connected to everything else.

A) System
B) Farming system
C) System thinking
D) Agricultural system
ANSWER: C

All of the following statements are correct except.

A) Independent elements can never constitute a system
B) Agricultural system is Artificial systems
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C) Set of mathematical equations and computer programs are artificial systems
D) Natural systems are dependent on systems of the other divisions.
ANSWER: D

A livelihood is sustainable if it fulfills the followings except.

A) cope with and recover from stress and shocks
B) maintain or enhance its capabilities and assets
C) provide sustainable livelihood opportunities for the next generation
D) It can generate income
ANSWER: D

Which one of the following is not a household strategy for coping with stresses and shocks?
A) Stint
B) Hoard
C) Claims
D) Sequencing
ANSWER: D

An intervention aiming to provide food and meet other essential needs for households to maintain
nutritional levels and save lives (relief) is _________________.
A) Livelihood Provisioning
B) Livelihood protection
C) Livelihood promotion
D) Livelihood strategy
ANSWER: A

Natural resource classification based on an economic significant rates of regeneration of the

resources is _______________________.
A) Land and water resources
B) Biotic and abiotic resources
C) Renewable and nonrenewable resources
D) Material and energy resources
ANSWER: C

A concept which is predominantly associated with optimistic view is _______________________.

A) Limits to growth
B) Beyond the limit

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C) Ultimate resource
D) All of the above
ANSWER: B

According to Strong-sustainability paradigm.

A) Sustainability is possible as far as natural capital is maintained

B) Sustainability is possible as far as human capital is maintained
C) Sustainability is possible if either natural capitals or human capitals are non-declining
D) Sustainability could be achieved as far as total capital is non-declining,
ANSWER: D

According to Simon’s environmental Kuznet curve (EKC) hypothesis.

A) The relationship between economic growth and various indicators of environmental

problems are inverted U-shape.
B) He addresses that economic growth will eventually have an environmental impact at
early stage of economic development
C) He proposes that the ultimate growth will lead to further environmental improvements
D) All of the above
ANSWER: D

Scholars have different views on property regimes, of which, one is seen as the most inefficient
property right.

A) Private property right

B) State property right
C) Common property right
D) Open access property right
ANSWER: D

Among the criteria of efficient property rights, characterized by ‘all resources are privately owned
and all entitlements are completely specified’ is to infer ___________________.

A) Enforceability
B) Excludability
C) Universality
D) Exclusivity
ANSWER: C

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A state of Pareto optimality is ______________________.

A) It is possible to make one person better-off without making someone else worse off
B) The production of a good can be increased without decreasing the production of another
good
C) It is impossible to make a consumer/producer better-off without making someone else
consumer/producer worse off.
D) there is a room for a welfare improvement at least to one party
ANSWER: C

Externality could arise when___________________________.

A) Cost/benefit resulting from some economic activity or transaction is best owed up on parties
outside the activity/transaction.
B) Welfare of one agent depends on the activity of another agent.
C) Utility/production possibility of one agent is affected by the actions of another agent
D) All of the above
ANSWER: D

In an economic activity when externality is zero, we can satisfy one characteristics of a property
right.
A) Universality
B) Exclusivity
C) Transferability
D) Enforceability

ANSWER: B

At a maximum sustainable yield (Xmsy) of a fishery_________________________.

A) Stock of a fishery reaches at its maximum level
B) A maximum carying campacity of a fishery is attained
C) Flow of a fishery reaches at its maximum level
D) A biological equilibrium level is achieved
ANSWER: C

Among the following statements, one well describe an open access fishery.

A) It is economically attractive though it is inefficient from the fish stocks perspective

B) A profit maximizing point is where marginal revenue (MR) equals to marginal cost (MC)
C) Effort is required relatively low as compared to private property right regime
D) Harvest in open access is up to a point where total revenue (TR) equals to total cost (TC)
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ANSWER: D

Based on their effect on the absorbtive capacity of the environment, pollutants might be classified
as.
A) Regional pllutants and local pollutants
B) Global pollutants and surface pollutants
C) Fund pollutants and stock pollutants
D) Stock pollutants and global pollutants
ANSWER: C

An invironmental policy instrument which involves providing an incentive for a environmental

pollutter to follow some prescribed mandate, technological restriction or acceptable behavior is
___________________________.
A) Tradeable permits
B) Emission Charges
C) Liability rules
D) Emission standards
ANSWER: C

In determining an efficient level of pollution, the optimal situation is when __________________.

A) Total damage cost equals total abatement cost

B) Marginal damage cost equals zero
C) Marginal control cost equals marginal abatement cost
D) Marginal abatement cost equals marginal damage cost
ANSWER: D

Among the following non-market valuatin methods, one will use surogate market as a proxy so as
to value the non-marketable economic resources.

A) Contingent valuation method

B) Coice experiment method
C) Conjoint analysis
D) Hedonic pricing method
ANSWER: D

Which one of the following is an approach to research is concerned with subjective assessment
of attitudes, opinions and behavior?

A) Quantitative approach
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B) Qualitative approach
C) Experimental approach
D) Inferential approach
E) Simulation approach
ANSWER: B

Which one of the following is false about sampling?

A) The objective of sampling is to estimate population values from the information contained
by the elements of the sample
B) Sampling is the selection of part of an aggregate of items to represent the whole
C) Census is always more preferable than sampling
D) Sampling reduces the time of a study
E) All
ANSWER: C

Analysis used when both measurable and non-measurable variables are simultaneously predicting
a set of dependent variables is called ____________________.

A) Multivariate analysis
B) Multiple discriminant analysis
C) Canonical analysis
D) Descriptive analysis
E) None of the above
ANSWER: C

One is different from others level of measurement.

A) Year
B) Temperature
C) Religion
D) Time
ANSWER: C

Which of the following is/are not characteristics of informal survey?

A) Flexible in data collection process
B) Direct researcher-farmer interaction
C) Can use semi structured questions
D) Requires shorter period of time
E) None of the above
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ANSWER: E

What is/are false about abstract? An abstract _____________.

A) can be a short summary of a research proposal

B) is presented before the main text of a report
C) can be a short summary of a research report
D) has information about the research problem
E) None of the above
ANSWER: E

Which of the followings is true?

A) Theoretical review usually follows empirical review of literatures.

B) Formal surveys are more dynamic and iterative than informal surveys.
C) Various PRA tools are exclusive and subjective in application.
D) Possible outcomes of research experiment are unpredictable.
E) None of the above
ANSWER: E

Formal survey respondents are _____ representative of the population than the informal survey.
A) More
B) Equally
C) Less
D) Unrelated
ANSWER: A

What type of data you generate from respondents by asking “What is the monthly rain fall record
for the year 2002?”
A) Ordinal
B) Ratio
C) Interval
D) Nominal
ANSWER: B

Which of the following sampling method/s is/are not included in probability sampling?
A) Cluster sampling
B) Snowball sampling
C) Simple random sampling
D) Systematic sampling
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ANSWER: B

Which one of the following is false about hypothesis?

A) It can be formulated based on theory

B) It can be formulated based on previous experience
C) It is prediction on the research agenda
D) It is an important step of all research types
E) It has an implication with the type of data required and the type of methods
ANSWER: D

Which of the following is/are question/s of empirical research review related to research on “Street
Boys/Girls at Bahir Dar”?
A) Who are street boys?
B) What is the difference between street prostitutes and street girls?
C) What are the factors leading boys/girls to live on streets around Bahir Dar?
D) Where is the boundary of Bahir Dar?
E) What is the meaning of Garbage food?
ANSWER: C

A feasible solution to a linear programming problem ______________.

A) must satisfy all the constraints of the problem simultaneously
B) need not satisfy all of the constraints, only some of them
C) must be a corner point of the feasible region
D) must optimize the value of the objective function
ANSWER: A

In marking assignments, which of the following should be preferred?

A) Only row having single zero.
B) Only column having single zero.
C) Only row/column having single zero.
D) Column having more than one zero.
ANSWER: C

The similarity between assignment problem and transportation problem is _______.

A) both are rectangular matrices.
B) both are square matrices.
C) both can be solved by graphical method.
D) both have objective function and non-negativity constraints.

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ANSWER: D

Which one of the following is true during revising the opportunity cost table of the assignment
problem, after drawing lines through all of the zeros?

A) the smallest uncovered number is added to all zeros.

B) the smallest uncovered number is added to all uncovered numbers.
C) the largest uncovered number is added to all uncovered numbers.
D) the smallest uncovered number is added to all numbers at the intersection of lines.
E) the largest uncovered number is added to all numbers at the intersection of lines.
ANSWER: D

Which of the following statements about the northwest corner rule is false?
A) One must exhaust the supply for each row before moving down to the next row
B) One must exhaust the demand requirements of each column before moving to the next
column
C) When moving to a new row or column, one must select the cell with the lowest cost
D) One must check that all supply and demand constraints are met
ANSWER: C

Which of the following is used to find an optimal solution of assignment problems?

A) Modified distribution method
B) Northwest corner method
C) Stepping-stone method
D) Hungarian method
ANSWER: D

The maximum value of Z = 3x + 4y subjected to constraints x + y ≤ 4, x ≥ 0 and y ≥ 0

is______________.

A) 14
B) 28
C) 12
D) 16
ANSWER: D
Which statement characterizes standard form of a linear programming problem?
A) Constraints are given by inequalities of any type
B) Constraints are given by a set of linear equations

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C) Constraints are given only by inequalities of >= type
D) Constraints are given only by inequalities of <= type
ANSWER: A

In applying Vogel's approximation method to a profit maximization problem, row and column
penalties are determined by _________________________.
A) finding the largest unit cost in each row or column.
B) finding the smallest unit cost in each row or column.
C) finding the sum of the unit costs in each row or column.
D) finding the difference between the two lowest unit costs in each row and column.
E) finding the difference between the two highest unit costs in each row and column.
ANSWER: D

The purpose of the stepping-stone method is to _________________________.

A) develop the initial solution to the transportation problem.

B) assist one in moving from an initial feasible solution to the optimal solution.
C) determine whether a given solution is feasible or not.
D) identify the relevant costs in a transportation problem.
ANSWER: B

The method of finding an initial solution based upon opportunity costs is called__________.

A) the northwest corner rules

B) Vogel's approximation
C) Johanson's theorem
D) Flood's technique
E) Hungarian method
ANSWER: B

The purpose of a dummy source or dummy destination in a transportation problem is to _______.

A) prevent the solution from becoming degenerate

B) provide a means of representing a dummy problem

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C) make certain that the total cost does not exceed some specified figure
D) obtain a balance between total supply and total demand
ANSWER: D

Operations Research techniques are_______________________ in nature.

A) Quantitative
B) Judgemental
C) Approximate
D) Qualitative
ANSWER: A

Which of the following statements is correct?

A) Every LP problem has at least one optimal solution.

B) Every LP problem has a unique solution.
C) If an LP problem has two optimal solutions, then it has infinitely many solutions.
D) If a feasible region is unbounded then LP problem has no solution
ANSWER: D

In solving the LPP: “minimize f = 16x + 20y subject to constraints 2x + y ≥ 10, x ≥ 6, y ≥ 2, x ≥

0, y ≥ 0” redundant constraints are.

A) 2x + y ≥ 10, x ≥ 0, y ≥ 0
B) x ≥ 6
C) x ≥ 6, y ≥ 2
D) y ≥ 2, x ≥ 0, y ≥ 0
ANSWER: A
Mathematical model of Linear Programming is important because ______________________.
A) it helps in converting the verbal description and numerical data into mathematical
expression
B) decision makers prefer to work with formal models.
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C) it captures the relevant relationship among decision factors.
D) it enables the use of algebraic techniques.
ANSWER: A

The first step in formulating a linear programming problem is ____________________________.

A) identify any upper or lower bound on the decision variables

B) state the constraints as linear combinations of the decision variables
C) understand the problem
D) identify the decision variables
ANSWER: C

The transportation method assumes that ______________________________________.

A) there are no economies of scale if large quantities are shipped from one source to one
destination
B) the number of occupied squares in any solution must be equal to the number of rows in the
table plus the number of columns in the table plus 1
C) there is only one optimal solution for each problem
D) the number of dummy sources equals the number of dummy destinations
ANSWER: A

In simplex, a maximization problem is optimal when all Delta J, i.e. Cj – Zj values are _______.

A) either zero or positive

B) either zero or negative
C) only positive
D) only negative
ANSWER: B

Both transportation and assignment problems are members of a category of LP problems

called___________________.
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A) shipping problems
B) logistics problems
C) generalized flow problems
D) routing problems
E) network flow problems
ANSWER: E
The most fundamental objective of network analysis is to______________.
A) minimize total project duration
B) minimize total project cost
C) minimize production delays, interruption and conflicts
D) maximize total project duration
ANSWER: A

Which one of the following is not the possible Loading criterion for assignment problems?
A) Minimizing operating time”
B) Maximizing profit”
C) Minimizing production cost”
D) Minimize uncertainty and risk
ANSWER: A

Which one of the following is/are false about duality linear programing problem?

A) Corresponding to every LPP, there is another LPP.

B) The given problem is called the primal.
C) The related problem to the given problem is known as the primal.
D) The dual of a dual is the primal
ANSWER: C

A component of linear programming which indicates constraints that require the decision variables
not to take on negative values is _____________________.

A) Objective function
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B) Decision variables
C) Resource constraints
D) Non-negativity constraints
ANSWER: D

When the value of decision variables in Linear Programing is permitted to increase infinitely
without violating the feasibility condition, then the solution is said to be ________________.

A) Unbounded
B) alternative solution
C) Infeasibility
D) Redundant Constraint
ANSWER: C

The variable that has the most positive value in the Cj - Zj row also called as indicator row
___________________ is.

A) Leaving variable
B) Slack variable
C) Entering variable
D) Decision variable
ANSWER: C

In simplex approach of solving LPP, the row associated with the leaving variable is called ______.

A) Key row
B) Key element
C) Key column
D) Replacement ratio
ANSWER: A

In a simple linear regression model, 𝑌 = 𝛼 + 𝛽𝑋𝑖 + 𝜇𝑖 .

A) 𝑌 is the independent; 𝑋 is the dependent variable
B) 𝑌 is the regressor; 𝑋 is the explanatory variable
C) 𝑌 is the explained; 𝑋 is the explanatory variable
D) 𝑌 is the predictor; 𝑋 is the independent variable
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ANSWER: C

In regression analysis, a variable that is being determined is _________________.

A) The dependent variable
B) The regressor
C) The independent variable
D) The predictor
ANSWER: A

Which econometric problem can occur if there is no constant variance of the residuals?

A) Homoscedasticity
B) Multicollinearity
C) Heteroscedasticity
D) Autocorrelation
ANSWER: C

Which one of the following alternatives is true?

A) −𝟏 ≤ 𝒓 ≤ 𝟏
B) −𝟏 < 𝒓 ≤ 𝟏
C) 𝟎≤𝒓≤𝟏
D) 𝟎≤𝒓<𝟏
ANSWER: A

𝐶𝑜𝑣(𝑈𝑖 𝑋𝑖 ) = 0 indicates, _____________________________.

A) Endogeneity
B) Exogeneity
C) Autocorrelation
D) Homoscedasticity
ANSWER: B

Suppose you are interested to see the influence of education level and work experience on a salary
of employees, which of the following is best to model this relationship?

A) Multiple linear regression model

B) Simple linear regression model

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C) Logit model
D) Correlation
ANSWER: A

One is used to judge the explanatory power of the independent variable(s)?

A) Coefficient of correlation
B) Coefficient of determination
C) Explanatory variables
D) Explained variable
ANSWER: B

Which one of the following econometric problems is more common in cross-sectional data?

A) Multicollinearity
B) Autocorrelation
C) Heteroscedasticity
D) None
ANSWER: C

Which of the following alternative shows if 𝛽̂ is unbiased estimator of the true parameter 𝛽?

A) E(β̂) = β
B) E(β̂) ≠ β
C) E(β̂) ≥ β
D) E(β̂) ≤ β
ANSWER: A
Variance Inflation Factor (VIF) is used for detecting the problems of ________________.

A) Non-normality
B) Autocorrelation
C) Heteroscedasticity
D) Multicollinearity
ANSWER: D

If the values of TSS and RSS are 600 and 200 respectively, the coefficient of determination will
be _______________________.

A) 0.33

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B) 0.66
C) 0.50
D) 0.75
ANSWER: B

In a simple regression model Y is a dependent variable, X is the independent variable and the
coefficient of correlation between Y and X is assumed to be 0.4. Which one of the following
alternatives is correct?

A) 40% of the variation in Y is explained by X

B) 0.16% of the variation in Y is explained by X
C) 0.4% of the variation in Y is explained by X
D) 16% of the variation in Y is explained by X
ANSWER: D

In regression analysis, the residual is the difference between ________________________.

A) The actual and estimated value of the dependent variable

B) The actual and estimated value of the independent variable
C) The actual value of the dependent and estimated value of the independent variables
D) The actual value of the independent and estimated value of the dependent variables
ANSWER: A

Which of the following data can be collected at a given point of time on one or more variables?

A) Time series data

B) Cross-section data
C) Pooled data
D) Panel data
ANSWER: B

Which of the following tests can be used to test the overall significance of the coefficient of
explanatory variables?

A) Student t-test
B) Standard error test
C) F-test
D) Confidence interval
ANSWER: C

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Which one of the following alternatives does not show the presence of multicollinearity problem?

A) High variance inflation factor

B) High coefficient determination with low t-statistic values
C) High correlation coefficients between variables
D) Low variance inflation factor
ANSWER: D

The shortest types of business cycle which lasts 3-5 years is _________________________.
A) Kondratief cycle
B) Jugler Cycle
C) Kitchin Cycle
D) B&C
E) all
ANSWER: C

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