#1
Which of the following represents the relationship between output and inputs in the short run?
Total product curve
ExplanationShows how total output changes with changes in the quantity of inputs.
#2
In economics, 'marginal cost' refers to:
The cost of the last unit of output produced
ExplanationCost of producing one more unit of a good or service.
#3
The term 'marginal product' refers to the:
Additional output produced by one more unit of input
ExplanationChange in output from one additional unit of input.
#4
Which of the following represents the relationship between marginal product and total product?
Total product curve
ExplanationShows how marginal product changes with changes in total product.
#5
What is the relationship between total cost and total variable cost?
Total variable cost is a part of total cost
ExplanationTotal cost includes both fixed and variable costs, with total variable cost being a part of it.
#6
Which of the following is a characteristic of a perfectly competitive market?
Firms are price takers
ExplanationFirms have no influence over market price.
#7
Which of the following represents the relationship between average product and marginal product?
Average product equals marginal product
ExplanationWhen average product equals marginal product, average product is at its maximum.
#8
In the long run, all costs are:
Variable
ExplanationCosts that change with the level of output.
#9
Economies of scale occur when:
Average total cost decreases as output increases
ExplanationCosts per unit decrease as production increases.
#10
What happens to average variable cost as output increases in the short run?
It decreases initially, then increases
ExplanationInitially falls due to increasing returns, then rises due to diminishing returns.
#11
What is the relationship between marginal cost and average variable cost?
Marginal cost equals average variable cost
ExplanationWhen average variable cost is constant, marginal cost equals it.
#12
What is the main objective of cost minimization for a firm?
To minimize total cost
ExplanationTo produce at the lowest possible cost.
#13
In the long run, a firm will continue to produce output as long as:
Marginal cost is less than average total cost
ExplanationTo maximize profit, a firm will produce as long as marginal cost is less than average total cost.
#14
What is the relationship between marginal cost and average total cost?
Marginal cost equals average total cost
ExplanationWhen average total cost is constant, marginal cost equals it.
#15
Which of the following is NOT a characteristic of perfect competition?
Firms have control over prices
ExplanationFirms are price takers, unable to influence prices.
#16
What does the law of diminishing marginal returns state?
As more units of a variable input are added to fixed inputs, marginal product eventually decreases
ExplanationIncreasing one input while holding others fixed eventually leads to diminishing returns.
#17
Which of the following is NOT a factor of production?
Profit
ExplanationProfit is the return to entrepreneurship, not a factor of production.
#18
What is the difference between explicit and implicit costs?
Explicit costs are monetary costs, while implicit costs are opportunity costs
ExplanationExplicit costs require an outlay of money, while implicit costs represent forgone opportunities.
#19
In a monopolistically competitive market, firms have some control over price due to:
Product differentiation
ExplanationFirms can differentiate their products to have some pricing power.