Economics Test (20 Marks)

20 Questions | Total Attempts: 115

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Economics Test (20 Marks)


Questions and Answers
  • 1. 
    Write your text here
  • 2. 
    Which of the following statements is true?
    • A. 

      Accumulation of capital depends solely on income of individuals.

    • B. 

      Savings can be influenced by government policies.

    • C. 

      External economies go with size and internal economies with location.

    • D. 

      The supply curve of labour is an upward slopping curve.

  • 3. 
    Diminishing marginal returns implies:
    • A. 

      Decreasing average variable costs.

    • B. 

      Decreasing marginal costs.

    • C. 

      Increasing marginal costs.

    • D. 

      Decreasing average fixed costs.

  • 4. 
    Which cost increases continuously with the increase in production?
    • A. 

      Average cost.

    • B. 

      Marginal cost

    • C. 

      Fixed cost.

    • D. 

      Variable cost.

  • 5. 
    Which of the following cost curves is never ‘U’ shaped?
    • A. 

      Average cost curve.

    • B. 

      Marginal cost curve.

    • C. 

      Average variable cost curve.

    • D. 

      Average fixed cost curve.

  • 6. 
    Which one of the following is also known as planning curve?
    • A. 

      Long run average cost curve.

    • B. 

      Short run average cost curve.

    • C. 

      Average variable cost curve.

    • D. 

      Average total cost curve.

  • 7. 
    With which of the following is the concept of marginal cost closely related?
    • A. 

      Variable cost.

    • B. 

      Fixed cost

    • C. 

      Opportunity cost.

    • D. 

      Economic cost

  • 8. 
    Which of the following statements is true of the relationship among the average cost functions?
    • A. 

      ATC = AFC – AVC

    • B. 

      AVC = AFC + ATC

    • C. 

      AFC = ATC + AVC

    • D. 

      AFC = ATC – AVC

  • 9. 
    Which of the following is not a determinant of the firm’s cost function?
    • A. 

      The production function

    • B. 

      The price of labour.

    • C. 

      Taxes

    • D. 

      The price of the firm’s output

  • 10. 
    The positively sloped (i.e. rising) part of the long run average total cost curve is due to which of the following
    • A. 

      Diseconomies of scale.

    • B. 

      Increasing returns.

    • C. 

      The firm being able to take advantage of large-scale production techniques as it expands its output

    • D. 

      The increase in productivity that results from specialization

  • 11. 
    A firm producing 7 units of output has an average total cost of ` 150 and has to pay`RS350 to its fixed factors of production whether it produces or not. How much of the average total cost is made up of variable costs?
    • A. 

      200

    • B. 

      50

    • C. 

      100

    • D. 

      300

  • 12. 
    Which of the following statements is true?
    • A. 

      The services of a doctor are considered production

    • B. 

      Man can create matter.

    • C. 

      The services of a housewife are considered production

    • D. 

      When a man creates a table, he creates matter

  • 13. 
    If decreasing returns to scale are present, then if all inputs are increased by 10% then
    • A. 

      Output will also decrease by 10%.

    • B. 

      Output will increase by 10%.

    • C. 

      Output will increase by less than 10%.

    • D. 

      Output will increase by more than 10%.

  • 14. 
    The average product of labour is maximized when marginal product of labour
    • A. 

      Equals zero.

    • B. 

      Equals the average product of labour.

    • C. 

      Is maximized

    • D. 

      None of the above

  • 15. 
    Laws of production does not include ....
    • A. 

      Returns to scale

    • B. 

      Law of diminishing returns to a factor

    • C. 

      Law of variable proportions.

    • D. 

      Least cost combination of factors.

  • 16. 
    The efficient scale of production is the quantity of output that minimizes
    • A. 

      Average fixed cost

    • B. 

      Average total cost.

    • C. 

      Average variable cost.

    • D. 

      Marginal cost

  • 17. 
    Average product is defined as
    • A. 

      Total product divided by the total cost

    • B. 

      Total product divided by marginal product.

    • C. 

      Total product divided by the number of units of variable input.

    • D. 

      Marginal product divided by the number of units of variable input

  • 18. 
    Marginal product, mathematically, is the slope of the
    • A. 

      Total product curve

    • B. 

      Average product curve.

    • C. 

      Marginal product curve

    • D. 

      Implicit product curve

  • 19. 
    When marginal costs are below average total costs
    • A. 

      Average fixed costs are rising

    • B. 

      Average total costs are falling

    • C. 

      Average total costs are rising.

    • D. 

      Average total costs are minimized

  • 20. 
    In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience
    • A. 

      An increase in pollution level.

    • B. 

      Diseconomies of scale.

    • C. 

      Economies of scale.

    • D. 

      Constant returns to scale.

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