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This set of Introductory Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Introductory Economics 1 Set 1

Q1 | When individuals income falls (everything remain the same) his demand for a normalgood
  • rises
  • falls
  • remains the same
  • negative
Q2 | Cardinal utility analysis to consumer equilibrium was developed by
  • marshall
  • hicks and allen
  • geremy bentham
  • gossen
Q3 | MC at any level of output is given by
  • slope of tc curve
  • slope of tvc curve
  • slope of either tc or tvc
  • slope of tfc
Q4 | If a firm’s average cost is Rs.32 at 6 units of output and Rs.34 at 7 unit, which oneamong the following is the marginal cost of producing the 7th unit
  • 46
  • 2
  • 36
  • 42
Q5 | The cost that cannot be recovered once spent
  • accounting cost
  • fixed cost
  • implicit cost
  • sunk cost
Q6 | The saucer-type of modern Short run Average Variable Cost (SAVC) represents
  • excess capacity
  • managerial costs
  • load factors
  • reserve capacity
Q7 | The Long run Average Cost curve (LAC) in modern cost theory is roughly
  • u shaped
  • saucer shaped
  • l shaped
  • rectangular hyperbola
Q8 | Under increasing returns to scale, which of the following is the nature of the long runaverage cost curve?
  • downward sloping
  • upward rising
  • parallel to output axis
  • identical to short run average cost curve
Q9 | Which of the following has a U shape?
  • average fixed cost curve
  • total cost curve
  • average variable cost curve
  • total variable cost curve
Q10 | AFC curve will always be
  • rectangular hyperbola
  • u shaped
  • horizontal
  • downward sloping
Q11 | Implicit cost of a factor of production is determined by its
  • sunk cost
  • variable cost
  • fixed cost
  • opportunity cost
Q12 | Economic cost include both
  • explicit cost and implicit cost
  • fixed cost and variable cost
  • explicit cost and prime cost
  • money cost and sunk cost
Q13 | The U shape of MC curve reflects
  • economies of scale
  • law of increasing returns
  • reserve capacity
  • law of variable proportion
Q14 | Envelope curve is
  • long run marginal cost curve
  • long run average cost curve
  • total cost curve
  • none of the above
Q15 | In long run, which factor of production is fixed?
  • labour
  • capital
  • building
  • none of the above
Q16 | The U shape of the average total cost curve reflects
  • ldmu
  • the law of variable proportions
  • consumer’s surplus
  • reserve capacity
Q17 | The total fixed cost is a
  • horizontal straight line
  • vertical
  • hyperbola
  • u shaped
Q18 | When AC minimum in short run
  • ac < mc
  • ac > mc
  • ac = mc
  • any of above is possible
Q19 | The shape of TVC and TC are
  • rectangular hyperbola
  • inverse ‘s’ shape
  • horizontal straight line
  • l shaped
Q20 | The cost expressed not in terms of money but in terms of efforts of workers undergonefor making the commodity
  • opportunity cost
  • real cost
  • sacrifice cost
  • implicit cost
Q21 | The MC curve cuts the AC curve at
  • the maximum point
  • the initial point
  • the minimum point
  • any point
Q22 | The minimum point of ATC is at.............. position of the minimum point of AVC
  • right
  • left
  • same
  • all of above can be
Q23 | If the long run cost curve shifts down wards it is an indication of
  • technological progress
  • lower factor prices
  • both of these
  • reserve capacity
Q24 | The U shape of the LAC reflects
  • law of variable proportions
  • laws of returns to scale
  • reserve capacity
  • none of these
Q25 | A production possibility curve is concave to the point of origin because of
  • increasing marginal rate of transformation (mrt)
  • increasing marginal opportunity cost (moc)
  • both of the above
  • decreasing marginal rate of transformation