#1
Which of the following is not a factor of production?
Profit
ExplanationProfit isn't a factor of production.
#2
Which of the following is a characteristic of perfect competition?
Many buyers and many sellers
ExplanationMany buyers and sellers characterize perfect competition.
#3
What is the primary goal of a firm in the long run according to the theory of profit maximization?
To maximize total profit
ExplanationMaximize total profit in the long run.
#4
Which of the following is a characteristic of a monopoly?
Single seller
ExplanationMonopoly: single seller.
#5
What is a production function?
A function that describes how inputs are transformed into outputs in the production process
ExplanationDescribes input-output transformation in production.
#6
What does the law of diminishing returns state?
As the quantity of a factor input increases, the marginal product of that input decreases
ExplanationMarginal product decreases with increased factor input.
#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
ExplanationExplicit costs are for factors, implicit are opportunity costs.
#8
Which market structure is characterized by a few large firms dominating the market and having the ability to set prices?
Oligopoly
ExplanationOligopoly: few large firms set prices.
#9
What is the formula to calculate profit?
Total revenue minus total cost
ExplanationProfit equals revenue minus cost.
#10
What is the relationship between marginal cost (MC) and average variable cost (AVC) when AVC is at its minimum?
MC = AVC
ExplanationMC equals AVC at its minimum.
#11
What is the relationship between total cost (TC) and total variable cost (TVC)?
TC = TVC + TFC
ExplanationTotal cost equals total variable plus total fixed cost.
#12
What is the formula for total revenue (TR)?
TR = P × Q
ExplanationTotal revenue formula: price times quantity.