1- According to thelaw of diminishing returns: A. The marginal product falls as
ID: 1253841 • Letter: 1
Question
1- According to thelaw of diminishing returns:
A. The marginal product falls as more units of a variable factorare added to a fixed factor.
B. Marginal utility falls as more units of a product areconsumed.
C. The total product falls as more units of a variable factorare added to a fixed factor.
D. The marginal product increases as more units of a variablefactor are added to a fixed factor.
2- "Returns to scale"is a concept that operates:
A. In both the long-run and the short-run.
B. Only in the long-run.
C. Only in the short-run.
D. In either the long-run or the short-run but never both.
3- A consultant for Mattel (the producer of Barbie)reports that their long
run average cost curve is decreasing. In other words, heis saying that:
A. The firm has increasing returns to scale and the law ofdiminishing marginal productivity does not apply to this firm.
B. The firm has decreasing returns to scale and the law ofdiminishing marginal productivity does not apply to this firm.
C. The firm has increasing returns to scale but the law ofdiminishing marginal productivity may still apply to this firm.
D. The firm has decreasing returns to scale but nonetheless thelaw of diminishing marginal productivity may still apply to thisfirm.
4- In a production process, all inputs are increased by20%, but output
increases less than 20%. This means that the firmexperiences:
A. Decreasing returns to scale.
B. Constant returns to scale.
C. Increasing returns to scale.
D. Negative returns to scale
5- A graph showing all the combinations of capital andlabor available for a
given total cost is the:
A. Budget constraint.
B. Expenditure set.
C. Isoquant.
D. Isocost line.
6- If a firm is producing 100 units, its AverageVariable Cost is Rs.5 and its
Total Fixed Cost is Rs.700, then:
A. Average Fixed Cost per unit is Rs.70.
B. Total cost is Rs.700.
C. Total Variable Cost is Rs.5000.
D. Average Total Cost is Rs.12 per unit.
7- If TC = 100 + 6Q, then the AVC for producing 10 unitsis:
A. 6.
B. 100.
C. 160.
D. 60.
8- Which of the following statements isTRUE?
A. The long-run average cost curve is always U-shaped.
B. All short-run average cost functions are tangent to thelong-run average cost function at minimum average short runcost.
C. All short-run average cost functions are tangent to thelong-run average cost function.
D. The long-run average cost curve cannot bedownward-sloping.
9- Graphically, the Marginal Cost curve cuts through theAverage Total
Cost curve at:
A. The lowest point on the MC curve.
B. The highest point on the MC curve.
C. The lowest point on the ATC curve.
D. The middle of the upward-sloping portion of the total costcurve.
10- At the profit-maximizing level of output, what isTRUE of the total revenue (TR) and total cost (TC)curves?
A. They must intersect with TC cutting TR from below.
B. They must intersect with TC cutting TR from above.
C. They must be tangent to each other.
D. They must have the same slope.
11- The "perfect information" assumption of perfectcompetition includes
all of the following EXCEPT:
A. Consumers know their preferences.
B. Consumers know their income levels.
C. Consumers know the prices available.
D. Consumers can anticipate price changes.
12- Because of the relationship between a perfectlycompetitive firm's
demand curve and its marginal revenue curve, the profitmaximization
condition for the firm can be written as:
A. P = MR.
B. P = AVC.
C. AR = MR.
D. P = MC.
13- As the manager of a firm, you calculate that themarginal revenue is
Rs.152 and marginal cost is Rs.200. Youshould:
A. Expand output.
B. Do nothing without information about your fixed costs.
C. Reduce output until marginal revenue equals marginalcost.
D. Expand output until marginal revenue equals zero.
14- If at the profit-maximizing quantity, profits arepositive, then:
A. Price < Average Total Cost.
B. Price > Average Total Cost.
C. Price < Average Variable Cost.
D. Price = Marginal Cost.
15- A firm never operates:
A. At the minimum of its average total cost curve.
B. At the minimum of its average variable cost curve.
C. On the downward-sloping portion of its average total costcurve.
D. On the downward-sloping portion of its average variable costcurve.
16- The monopolist has no supply curvebecause:
A. The quantity supplied at any particular price depends on themonopolist's demand curve.
B. The monopolist's marginal cost curve changes considerablyover time.
C. The relationship between price and quantity depends on bothmarginal cost and average cost.
D. Although there is only a single seller at the current price,it is impossible to know how many sellers would be in the market athigher prices.
17- Following are the disadvantages of monopolyEXCEPT:
A. Monopolists earn higher profits.
B. Monopolists produce high quality goods at higher prices.
C. Most of the “surplus” (producer + consumersurplus) accrues tomonopolists.
D. Monopolists do not pay sufficient attention to increasingefficiency.
18- For the monopolist shown below, the profitmaximizing level of output
is:
A. Q1.
B. Q2.
C. Q3.
D. Q4.
19- If current output is less than the profit-maximizingoutput then the next
unit produced:
A. Will decrease profit.
B. Will increase cost more than it increases revenue.
C. Will increase revenue more than it increases cost.
D. Will increase revenue without increasing cost.
20- In the short run, a perfectly competitive firmearning negative economic
profit is:
A. On the downward-sloping portion of its average total costcurve.
B. At the minimum of its average total cost curve.
C. On the upward-sloping portion of its average total costcurve.
D. Above its average total cost curve.
Explanation / Answer
a c d d e c a b b a d a a c c b a d a Hope that helps!Related Questions
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