Micro Economics Theory Applications I Set 4

Master of Arts in Economics (MA Economics)

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This set of MicroEconomics, Theory and Applications 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics Theory Applications I Set 4

Q1 | If all resources used in the production of a product are increased by 20 percent and outputincreases by 20 percent, then there must be:
  • economies of scale
  • diseconomies of scale
  • constant returns to scale
  • increasing average total costs.
Answer: constant returns to scale
Q2 | ______ shows the overall output generated at a given level of input:
  • cost function
  • production function
  • iso cost
  • marginal rate of technical substitution
Answer: production function
Q3 | Isoquants are equal to:
  • product lines
  • total utility lines
  • cost lines
  • revenue lines
Answer: product lines
Q4 | The marginal product curve is above the average product curve when the average product is :
  • increasing
  • decreasing
  • constant
  • none
Answer: increasing
Q5 | Increasing returns to scale can be explained in terms of:
  • external and internal economies
  • external and internal diseconomies
  • external economics and internal diseconomies
  • all of these
Answer: external and internal economies
Q6 | An isoquant is ______ to an iso cost line at equilibrium point:
  • convex
  • concave
  • tangent
  • perpendicular
Answer: tangent
Q7 | At the point of inflexion, the marginal product is:
  • increasing
  • decreasing
  • maximum
  • negative
Answer: maximum
Q8 | Diminishing marginal returns implies:
  • decreasing average variable costs
  • decreasing marginal costs
  • increasing marginal costs
  • decreasing average fixed costs
Answer: increasing marginal costs
Q9 | If the marginal product of labour is below the average product of labour. It must be true that:
  • marginal product of labour is negative
  • marginal product of labour is zero
  • average product of labour is falling
  • average product of labour is negative
Answer: average product of labour is falling
Q10 | Law of variable proportion is valid when:
  • only one input is fixed and all other inputs are kept variable
  • all factors are kept constant
  • all inputs are varied in the same proportion
  • none of these
Answer: only one input is fixed and all other inputs are kept variable
Q11 | A significant property of Cobb Douglas production function is that the elasticity ofsubstitution between inputs is
  • equal to 1
  • more than 1
  • less than 1
Answer: equal to 1
Q12 | CES production function is
  • homogeneous
  • linearly homogeneous
  • linearly non homogeneous
  • none of the above
Answer: linearly homogeneous
Q13 | --------- goods violate the law of demand after prices have risen above a certain level
  • normal goods
  • snob goods
  • veblen goods
  • bandwagon goods
Answer: veblen goods
Q14 | According to ----------- when income increases by a small increment, it leads to increasingmarginal utility of income
  • kaldor
  • hicks
  • markowitz
  • friedman and savage
Answer: markowitz
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