Economic Analysis of Production and Profit Quiz
Test your knowledge on production functions, market structures, and profit calculation. Explore economic concepts efficiently!
#1
Which of the following is not a factor of production?
#2
Which of the following is a characteristic of perfect competition?
Many buyers and one seller
One buyer and many sellers
Few buyers and few sellers
Many buyers and many sellers
#3
What is the primary goal of a firm in the long run according to the theory of profit maximization?
To maximize total revenue
To maximize total profit
To maximize total output
To minimize total cost
#4
Which of the following is a characteristic of a monopoly?
Many buyers and many sellers
Product differentiation
No barriers to entry
Single seller
#5
What is a production function?
A function that describes how inputs are transformed into outputs in the production process
A function that describes how outputs are transformed into inputs in the production process
A function that describes how prices are determined in the market
A function that describes how firms maximize profits
#6
What does the law of diminishing returns state?
As the quantity of a factor input increases, the marginal product of that input decreases
As the quantity of a factor input increases, the marginal product of that input increases
As the quantity of a factor input increases, the average product of that input decreases
As the quantity of a factor input increases, the average product of that input increases
#7
What is the difference between explicit and implicit costs?
Explicit costs are incurred for factors of production, while implicit costs are the opportunity costs of using self-owned resources
Implicit costs are incurred for factors of production, while explicit costs are the opportunity costs of using self-owned resources
Explicit costs are associated with self-owned resources, while implicit costs are associated with factors of production
There is no difference between explicit and implicit costs
#8
Which market structure is characterized by a few large firms dominating the market and having the ability to set prices?
Perfect competition
Monopoly
Monopolistic competition
Oligopoly
#9
What is the formula to calculate profit?
Total revenue minus total cost
Total revenue divided by total cost
Total cost minus total revenue
Total cost divided by total revenue
#10
What is the relationship between marginal cost (MC) and average variable cost (AVC) when AVC is at its minimum?
MC < AVC
MC = AVC
MC > AVC
MC is undefined at the minimum point of AVC
#11
What is the relationship between total cost (TC) and total variable cost (TVC)?
TC = TVC + TFC
TC = TVC - TFC
TC = TVC / TFC
TC = TVC * TFC
#12
What is the formula for total revenue (TR)?
TR = P × Q
TR = TC - TVC
TR = AVC × Q
TR = TC / Q
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