Top 80+ Solved MicroEconomics, Theory and Applications 1 MCQ Questions Answer
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. The marginal product of labour curve shows the change in total product resulting from a:
a. one-unit increase in the quantity of a particular resource used, letting other resources vary
b. one-unit increase in the quantity of a particular resource used, holding constant other resources
c. change in the cost of a variable resource
d. change in the cost of a fixed resource
Q. When the total product curve is falling, the:
a. marginal product of labor is zero
b. marginal product of labor is negative
c. average product of labor is increasing
d. average product of labor 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 unit of output.
Q. Which is not a fixed cost?
a. monthly rent of rs.1,000 contractually specified in a one-year lease
b. an insurance premium of rs.50 per year, paid last month
c. an attorney\s retainer of rs.50,000 per year
d. a worker\s wage of rs.15 per hour
Q. If you know that with 8 units of output, average fixed cost is Rs.12.50 and average variablecost is Rs.81.25, then total cost at this output level is:
a. rs.93.75
b. rs.97.78
c. rs.750
d. rs.880
Q. With fixed costs of Rs.400, a firm has average total costs of Rs.3 and average variable costsof Rs.2.50. Its output is:
a. 200 units
b. 400 units
c. 800 units
d. 1600 units
Q. The reason the marginal cost curve eventually increases as output increases for the typicalfirm 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 this indicatesthat:
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. a downward shift in the afc curve
c. an upward 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 is knownas:
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