#1
Which of the following is not a factor of production?
Money
ExplanationMoney is not a factor of production; land, labor, capital, and entrepreneurship are.
#2
What is the economic term for the combination of land, labor, capital, and entrepreneurship used to produce goods and services?
Factors of production
ExplanationFactors of production refer to the essential inputs for creating goods and services.
#3
Which of the following is an example of a fixed cost in production?
Rent for factory space
ExplanationRent for factory space is a fixed cost that does not change with production levels.
#4
In economics, what does the term 'productivity' refer to?
The efficiency with which resources are used to produce goods and services
ExplanationProductivity indicates how efficiently resources are utilized in generating goods and services.
#5
What does the term 'economies of scope' refer to in production?
When a firm can produce a variety of goods at a lower cost than producing each separately
ExplanationEconomies of scope occur when producing multiple goods together is more cost-effective than producing them individually.
#6
Which of the following best describes economies of scale?
When the average cost of production decreases as output increases
ExplanationEconomies of scale occur when producing more leads to lower average costs.
#7
What is the concept of marginal product of labor in production?
The additional output produced by employing one more unit of labor
ExplanationMarginal product of labor measures the increase in output by adding one more unit of labor.
#8
Which of the following is a characteristic of perfect competition in the market?
Identical products sold by all firms
ExplanationPerfect competition entails identical products offered by multiple firms, leading to price competition.
#9
What is the formula for calculating total cost in production?
Total Cost = Fixed Cost + Variable Cost
ExplanationTotal cost equals the sum of fixed and variable costs incurred in production.
#10
What is the formula for calculating average variable cost in production?
Average Variable Cost = Total Variable Cost / Output
ExplanationAverage variable cost represents variable costs per unit of output and is calculated by dividing total variable cost by output.
#11
What is the Law of Diminishing Marginal Returns?
As more units of a variable input are added to a fixed input, the marginal product of the variable input eventually decreases
ExplanationDiminishing marginal returns state that adding more of a variable input to a fixed input leads to decreasing marginal returns.
#12
What is the concept of opportunity cost in production?
The cost of the next best alternative foregone
ExplanationOpportunity cost refers to the value of the best alternative forgone when choosing one option over another.
#13
Which of the following is an example of a variable cost in production?
Cost of raw materials
ExplanationCost of raw materials varies with production levels and is considered a variable cost.
#14
Which of the following is an example of a semi-variable cost in production?
Utilities
ExplanationUtilities, such as electricity and water, have both fixed and variable components in production costs.
#15
Which of the following is an example of a step fixed cost in production?
Rent for factory space
ExplanationRent for factory space remains constant for certain production ranges but may change when production exceeds certain levels.