UOL SAMPLE MCQ On MICRO ECONOMICS - COST & PRODUCTION
1. Increasing returns to scale for a firm are shown graphically by
A) returns to scale have nothing to do with the shape of the long-run average cost curve.
B) a horizontal long-run average cost curve.
C) a vertical long-run average cost curve.
D) an upward-sloping long-run average cost curve.
E) a downward-sloping long-run average cost curve.
2. When cost curves are drawn for a firm, all of the following are generally assumed EXCEPT
A) average fixed costs are constant.
B) firm is too small to influence factor prices.
C) average variable cost initially declines, then rises at higher output levels.
D) total fixed costs are constant.
E) marginal product of the variable factor eventually declines.
A) average fixed costs are constant.
B) firm is too small to influence factor prices.
C) average variable cost initially declines, then rises at higher output levels.
D) total fixed costs are constant.
E) marginal product of the variable factor eventually declines.
3. Consumer surplus
A) is the difference between what the consumer is willing to pay for all the units consumed and what he/she actually paid.
B) is the total value that a consumer receives from a purchase of a particular good.
C) is a measure of the gains a consumer receives in the market.
D) is the sum of the marginal values to the consumer.
E) is the consumption of a commodity above and beyond the amount required by the consumer.
4. The supply curve remains the same if there is a change in:
A) the number of suppliers of the commodity
B) technology.
C) the price of the good
D) the price of a commodity that is a substitute or complement in production.
E) factor costs.
A) is the difference between what the consumer is willing to pay for all the units consumed and what he/she actually paid.
B) is the total value that a consumer receives from a purchase of a particular good.
C) is a measure of the gains a consumer receives in the market.
D) is the sum of the marginal values to the consumer.
E) is the consumption of a commodity above and beyond the amount required by the consumer.
4. The supply curve remains the same if there is a change in:
A) the number of suppliers of the commodity
B) technology.
C) the price of the good
D) the price of a commodity that is a substitute or complement in production.
E) factor costs.
5. Short-run cost curves rise eventually because of the effects of
A) the increasing price of variable inputs.
B) increasing marginal productivity of the variable inputs.
C) increasing fixed costs.
D) diminishing marginal product.
E) decreasing average product.
6. A normal good is a good
A) that everyone normally consumes.
B) that normal people consume.
C) whose demand varies directly with household income.
D) whose demand does not vary with household income.
E) whose demand varies inversely with household income.
7. In defining a long-run average cost curve,
A) factor prices are varied and the quantity of factors of production is held constant.
B) factor prices are held constant and technology is assumed to change.
C) the time period must be longer than one year.
D) factor prices are held constant and the quantity of factors of production used is varied.
E) technology, factor prices, and the quantity of factors of production are all varied.
8. In the short run, the firm's product curves show
A) the increasing price of variable inputs.
B) increasing marginal productivity of the variable inputs.
C) increasing fixed costs.
D) diminishing marginal product.
E) decreasing average product.
6. A normal good is a good
A) that everyone normally consumes.
B) that normal people consume.
C) whose demand varies directly with household income.
D) whose demand does not vary with household income.
E) whose demand varies inversely with household income.
7. In defining a long-run average cost curve,
A) factor prices are varied and the quantity of factors of production is held constant.
B) factor prices are held constant and technology is assumed to change.
C) the time period must be longer than one year.
D) factor prices are held constant and the quantity of factors of production used is varied.
E) technology, factor prices, and the quantity of factors of production are all varied.
8. In the short run, the firm's product curves show
A) TP is at its maximum when MP = O.
B) TP begins to decrease when AP begins to decrease.
C) when MP > AP, AP is decreasing.
D) when the MP curve cuts the AP curve from below, the AP curve begins to fall.
E) AP is at its minimum when MP = AP.
9. In the long run, decreasing returns can be caused by
A) specialization.
B) TP begins to decrease when AP begins to decrease.
C) when MP > AP, AP is decreasing.
D) when the MP curve cuts the AP curve from below, the AP curve begins to fall.
E) AP is at its minimum when MP = AP.
9. In the long run, decreasing returns can be caused by
A) specialization.
B) management diseconomies.
C) a decrease in factor prices.
D) decreasing costs.
E) diminishing returns to the variable factor.
C) a decrease in factor prices.
D) decreasing costs.
E) diminishing returns to the variable factor.
10. The point of tangency between the short-run average total cost (SRATC) curve and the long-run
average cost (LRAC) curve occurs
A) at the output level where the fixed factors are at the optimum quantity.
B) at the point of minimum SRATC.
C) at a point where average total cost is falling but the marginal cost is rising.
D) at a point where both the average total cost and the marginal cost is rising.
E) only when the LRAC curve is at its minimum.
A) at the output level where the fixed factors are at the optimum quantity.
B) at the point of minimum SRATC.
C) at a point where average total cost is falling but the marginal cost is rising.
D) at a point where both the average total cost and the marginal cost is rising.
E) only when the LRAC curve is at its minimum.
