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Economics MCQs Set

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Question;As output rises: A. AFC rises.;B. AFC falls.;C. AFC remains the same.;D. There is no way of determining what happens to AFC.;Question 2 of 20 5.0 Points;When average total cost is declining, then: A. marginal cost must be less than average total cost.;B. marginal cost must be greater than average total cost.;C. average total cost must be greater than average fixed cost.;D. average variable cost must be declining.;Question 3 of 20 5.0 Points;The law of diminishing returns: A. is completely invalid.;B. states that if units of a resource are added to a fixed proportion of other resources, eventually marginal output will decline.;C. states that if any two resources are combined, production will fall.;D. states that profit margins decline as output rises.;Question 4 of 20 5.0 Points;If fixed cost is $8,000, variable cost is $5,000 at an output of 2 and $9,000 at an output of 3, how much is marginal cost at an output of 3? A. $3,000;B. $4,000;C. $5,000;D. $8,000;Question 5 of 20 5.0 Points;Which statement is true? A. AFC declines with output.;B. ATC declines with output.;C. AFC - AVC = ATC.;D. Output divided by fixed cost = AFC.;Question 6 of 20 5.0 Points;The average fixed cost curve: A. is a vertical line.;B. is a horizontal line.;C. slopes downward to the right as output rises.;D. is U-shaped (it declines as output rises, reaches a minimum, and then rises).;Question 7 of 20 5.0 Points;As a firm's output expands, the: A. ATC will reach a minimum before the AVC.;B. AVC will reach a minimum before the ATC;C. ATC and AVC will reach minimums at the same output.;D. ATC and AVC will reach maximums at the same output.;Question 8 of 20 5.0 Points;Marginal cost may be defined as the __________ cost that results from producing one more unit of output. A. change in average total;B. change in average variable;C. change in total;D. rate of change in total fixed;Question 9 of 20 5.0 Points;Which is most clearly a fixed cost? A. Insurance premiums;B. Wages of production workers;C. Cost of raw materials;D. Shipping costs;Question 10 of 20 5.0 Points;Fixed cost is sometimes referred to as __________ cost. A. sunk;B. variable;C. total;D. economic;Question 11 of 20 5.0 Points;Adam Smith noted each of the following economies of scale EXCEPT: A. specialization.;B. diminishing returns.;C. saving of time that would otherwise be spent going from one task to another.;D. employment of expensive equipment.;Question 12 of 20 5.0 Points;Parkinson's Law is an example of: A. economies of scale.;B. diseconomies of scale.;C. Adam Smith's pin factory.;D. the firm's search for its most profitable output.;Question 13 of 20 5.0 Points;Which of the following is the most likely to be a variable cost? A. Raw material costs;B. Leasing payments of tour buses for rock and roll bands;C. Interest on bonded indebtedness;D. Real estate taxes;Question 14 of 20 5.0 Points;As long as there are __________ costs, we are in the short run. A. variable;B. fixed;C. marginal;D. average;Question 15 of 20 5.0 Points;If price is between the break-even point and the shutdown point, in the long run the firm will: A. operate.;B. make a profit.;C. stay in business.;D. go out of business.;Question 16 of 20 5.0 Points;Adam Smith used a pin factory to demonstrate: A. the advantages of economies of scale.;B. diseconomies of scale.;C. the long-run average cost curve.;D. the advantage of being established.;Question 17 of 20 5.0 Points;When output is 0, total cost equals __________ cost. A. total variable;B. total fixed;C. marginal;D. average variable;Question 18 of 20 5.0 Points;At an output of 1, marginal cost is: A. $0.;B. $200.;C. $300.;D. $400.;Question 19 of 20 5.0 Points;The law of diminishing marginal returns implies: A. the more hours you spend studying economics the less you will know.;B. your understanding of economics will be increased by decreasing your marginal study time.;C. after a certain point, the more hours you spend studying economics per day, the less you will learn with each added hour.;D. the more hours you spend studying economics per day, the more you will learn with each added hour.;Question 20 of 20 5.0 Points;Which of the following cost curves will NOT shift downward if the price of a variable input decreases? A. Total cost;B. Average cost;C. Marginal cost;D. Average fixed cost

 

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