Principles Of Micro Economics Set 4
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This set of Principles of Micro Economics Multiple Choice Questions & Answers (MCQs) focuses on Principles Of Micro Economics Set 4
Q1 | Whenever marginal product is increasing with increasing use of an input,
- total product is increasing at a decreasing rate
- total product is increasing at an increasing rate
- marginal product is less than average product
- average product is decreasing.
Q2 | When average product is at a maximum, marginal product is
- zero
- increasing
- equal to average product
- greater than average product
Q3 | Whenever average product is declining, with increases in input usage,
- marginal product is less than average product
- total product is declining with increases in input
- total product is increasing with increases in input
- marginal product is greater than average product
Q4 | The total product curve may initially show output increasing at an increasingrate as more labour is hired because of the:
- declining quality of the labor force.
- principle of comparative advantage.
- law of diminishing marginal returns.
- increase in marginal physical product.
Q5 | If labour is the only variable resource and its marginal physical product falls asmore workers are hired:
- the law of diminishing marginal returns is at work.
- marginal cost is rising.
- average cost may still be declining.
- average physical product may still be rising.
Q6 | When both average and total product are greater than zero, and marginalproduct equals average product, then total product:
- is at a maximum.
- is positive and rising.
- is falling.
- is negative but rising.
Q7 | Costs incurred only when production occurs are known as:
- explicit costs.
- fixed costs.
- variable costs.
- technological expenses.
Q8 | The law of diminishing marginal returns is encountered as increasing amountsof labour are hired because:
- as production rises, the additional labor hired is less and less skilled.
- experienced workers are hired before the less skilled.
- each extra worker hired decreases the amounts of land and capital per worker, so the work place becomes more congested and managerial control becomes more difficult.
- as more and more is produced, selling it requires cutting prices.
Q9 | Which of the following is irrelevant for rational decision making?
- total variable cost (tvc)
- explicit cost.
- average fixed cost (afc).
- marginal cost (mc).
Q10 | A curve that can never be “U” shaped is the:
- average variable cost curve.
- marginal cost curve.
- average fixed cost curve.
- average total cost curve.
Q11 | Diminishing marginal returns are most compatible with:
- economies of scale.
- advantages from specialization.
- positively-sloped marginal cost curves
- depreciation of the capital stock.
Q12 | If average variable costs fall as output grows:
- marginal costs must also be declining.
- fixed cost must also be declining.
- total cost must also be declining.
- average cost must be below average variable cost.
Q13 | In economic theory the costs of a firm
- tend to be less than the everyday use of the term costs would suggest
- includes implicit as well as explicit outlays
- always decline as more output is produced
- are usually defined in such a way that profits will be larger than the
Q14 | The average total costs of the firm as defined in standard economic theory
- are the sum of the fixed and any variable costs divided by the number of units of labour input
- are the sum of the fixed and any variable costs
- are the sum of the average fixed and the total variable costs
- are the sum of the fixed and variable costs divided by the number of units of output
Q15 | The short run as the term is used in connection with the theory of the firm is aperiod of time:
- too short for the firm to vary all its inputs
- no more than a week
- long enough for the firm to vary the quantity of all its inputs
- in which the fixed costs are zero
Q16 | According to the principle of diminishing marginal physical productivity, inthe short run
- as output increases, costs per unit of output must eventually decline
- marginal product will decrease continually as output is expanded
- as output is increased, the quantity of inputs needed to produce additional units of output will increase, causing costs per unit of output to increase
- total output will become negative once marginal product begins to decline
Q17 | Economies of scale
- set in as soon as diminishing marginal physical productivity is experienced
- are usually considered to be a phenomenon of the long run
- are not always available in the short run
- help ensure that industries will be competitive rather than monopolized
Q18 | Marginal costs and average variable costs are equal when
- average variable cost is a maximum
- average variable cost is rising
- average variable cost is falling
- average variable cost is a minimum
Q19 | Theory of demand examines the behaviour of the--------
- Consumer
- Producer
- Firm
- Industry
Q20 | The want satisfying power of a commodity:
- Satisfaction
- Utility
- Value
- Marginal Utility
Q21 | Utility is the concept which is:
- Objective
- Subjective
- Both
- None
Q22 | Change in utility resulting from one unit change in consumption is called:
- Total Utility
- Extra Utility
- Marginal Utility
- Average Utility
Q23 | When Total Utility is maximum, Marginal Utility is :
- Zero
- Negative
- Positive
- One
Q24 | When Marginal Utility is negative, Total Utility:
- Declines
- Increases
- Remains the same
- None of these
Q25 | Saturation point is the point where:
- TU = 0
- MU = 0
- MU is +ve
- TU = 1