Principles Of Micro Economics Set 4 MCQs

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