#1
Which of the following is a characteristic of perfect competition?
Homogeneous products
ExplanationProducts are identical across firms.
#2
Which of the following is a fixed cost?
Rent for factory space
ExplanationCosts that do not vary with output.
#3
What is the formula for calculating total cost in economics?
Total cost = Fixed cost + Variable cost
ExplanationSum of fixed and variable costs.
#4
Which of the following is NOT a type of cost in economics?
Normal cost
ExplanationNot a recognized cost category.
#5
Which of the following represents a factor of production in economics?
Capital
ExplanationResource used in production.
#6
Which of the following is NOT a short-run cost?
Fixed cost
ExplanationCost unaffected by short-term production changes.
#7
In economics, what does the law of diminishing marginal returns state?
As more units of a variable input are added to fixed inputs, eventually the additional output decreases
ExplanationAdding more of a variable input leads to declining incremental gains.
#8
What is the relationship between average product and marginal product when average product is at its maximum?
Marginal product equals average product
ExplanationMarginal and average product are equal.
#9
In the short run, a firm's average variable cost curve is typically _____?
U-shaped
ExplanationInitially decreases, then increases.
#10
What does the concept of economies of scale refer to?
When average total cost decreases as output increases
ExplanationCost advantages as production increases.
#11
What is the relationship between marginal cost and marginal product in the short run?
Marginal cost increases as marginal product increases
ExplanationAs output increases, additional costs rise.
#12
Which of the following statements is true regarding the long run in economics?
There are no fixed costs
ExplanationAll costs are variable.
#13
What does the production function represent?
The relationship between input and output quantities
ExplanationHow inputs translate into outputs.
#14
What does the term 'isoquant' refer to?
A curve showing various combinations of inputs that produce the same level of output
ExplanationCombination of inputs for equal output.
#15
What is the slope of the total product curve when marginal product is at its maximum?
Zero
ExplanationAdditional output plateaus.
#16
What does the term 'marginal rate of technical substitution' refer to?
The rate at which one input can be substituted for another while keeping output constant
ExplanationSubstitution rate for inputs.
#17
What is the primary assumption of the law of diminishing marginal returns?
At least one input is fixed
ExplanationFixed input quantity assumption.
#18
In economics, what is the long-run average cost curve often shaped like?
U-shaped
ExplanationInitially declining, then increasing.