Top 250+ Solved Managerial Economics 1 MCQ Questions Answer
Q. Implicit costs are:
a. equal to total fixed costs.
b. comprised entirely of variable costs.
c. "payments" for self-employed resources.
d. always greater in the short run than in the long run.
Q. The law of diminishing returns only applies in cases where:
a. there is increasing scarcity of factors of production.
b. the price of extra units of a factor is increasing.
c. there is at least one fixed factor of production.
d. capital is a variable input.
Q. When the total product curve is falling, the:
a. marginal product of labour is zero.
b. marginal product of labour is negative.
c. average product of labour is increasing.
d. average product of labour must be negative.
Q. When marginal product reaches its maximum, what can be said of total product?
a. total product must be at its maximum
b. total product starts to decline even if marginal product is positive
c. total product is increasing if marginal product is still positive
d. total product levels off
Q. Variable costs are:
a. sunk costs.
b. multiplied by fixed costs.
c. costs that change with the level of production.
d. defined as the change in total cost resulting from the production of an additional
Q. The reason the marginal cost curve eventually increases as output increases for thetypical firm is because:
a. of diseconomies of scale.
b. of minimum efficient scale.
c. of the law of diminishing returns.
d. normal profit exceeds economic profit.
Q. If the short-run average variable costs of production for a firm are rising, then thisindicates that:
a. average total costs are at a maximum.
b. average fixed costs are constant.
c. marginal costs are above average variable costs.
d. average variable costs are below average fixed costs.
Q. If a more efficient technology was discovered by a firm, there would be:
a. an upward shift in the avc curve.
b. an upward shift in the afc curve.
c. a downward shift in the afc curve.
d. a downward shift in the mc curve.
Q. The firm's short-run marginal-cost curve is increasing when:
a. marginal product is increasing.
b. marginal product is decreasing.
c. total fixed cost is increasing.
d. average fixed cost is decreasing.
Q. A firm encountering economies of scale over some range of output will have a:
a. rising long-run average cost curve.
b. falling long-run average cost curve.
c. constant long-run average cost curve.
d. rising, then falling, then rising long-run average cost curve.
Q. When a firm doubles its inputs and finds that its output has more than doubled, this isknown as:
a. economies of scale.
b. constant returns to scale.
c. diseconomies of scale.
d. a violation of the law of diminishing returns.
Q. The larger the diameter of a natural gas pipeline, the lower is the average total cost oftransmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:
a. economies of scale.
b. normative economies.
c. diminishing marginal returns.
d. an increasing marginal product of labour.
Q. If all resources used in the production of a product are increased by 20 percent andoutput increases by 20 percent, then there must be:
a. economies of scale.
b. diseconomies of scale.
c. constant returns to scale.
d. increasing average total costs.
Q. Surplus is a condition of:
a. excess supply
b. a deficiency in supply
c. market equilibrium
d. excess demand
Q. The effect on sales of an increase in price is a decrease in:
a. the quantity demanded
b. demand
c. supply
d. the quantity supplied