Microeconomics - Factor Markets and Production Theory Quiz

Test your knowledge on factor markets, production theory, & microeconomics concepts with this quiz. Learn about factor intensity reversal, marginal cost, Cobb-Douglas function & more!

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In microeconomics, what does the term 'factor market' refer to?

Market for goods and services

Market for factors of production

Market for financial assets

Market for consumer durables

Which of the following is NOT considered a factor of production?

Land

Labor

Money

Capital

What does the law of diminishing marginal returns state?

As more of a variable input is added to a fixed input, the marginal product of the variable input will eventually decrease.

As more of a variable input is added to a fixed input, the marginal product of the variable input will increase.

As more of a variable input is added to a fixed input, the total product will increase indefinitely.

As more of a variable input is added to a fixed input, the total product will remain constant.

What is the difference between total cost and variable cost?

Total cost includes all costs while variable cost includes only variable costs.

Total cost includes only variable costs while variable cost includes all costs.

There is no difference, they mean the same thing.

Total cost includes only fixed costs while variable cost includes only variable costs.

What is the difference between average product and marginal product?

Average product measures total output while marginal product measures additional output from one more unit of input.

Average product measures additional output from one more unit of input while marginal product measures total output.

Average product measures additional input while marginal product measures total input.

Average product measures total input while marginal product measures additional input.

What does the term 'marginal cost' represent in production theory?

The additional cost of producing one more unit of output.

The total cost of producing a fixed quantity of output.

The average cost of producing one unit of output.

The fixed cost of production.

What is an isoquant curve?

A curve representing various combinations of two inputs that yield the same level of output.

A curve representing the relationship between input and output quantities.

A curve representing the diminishing returns of a single input.

A curve representing the relationship between input prices and output prices.

What is the relationship between marginal cost and marginal product?

They are inversely related.

They are directly proportional.

They are unrelated.

It depends on the level of output.

What is the long-run average cost curve in the long-run production process?

A curve that shows the relationship between the long-run average cost and the quantity of output produced when all inputs are variable.

A curve that shows the relationship between the short-run average cost and the quantity of output produced when some inputs are fixed.

A curve that shows the relationship between the average cost and the quantity of output produced when all inputs are fixed.

A curve that shows the relationship between the marginal cost and the quantity of output produced when all inputs are fixed.

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What is meant by economies of scale?

The cost advantages that a business can exploit by expanding its scale of production.

The cost disadvantages that a business faces as it increases its scale of production.

The point at which the long-run average cost reaches its minimum level.

The point at which the marginal cost equals the average total cost.