Economics MCQs

Page No. 277

The total costs are Rs2000 and 10 units are produced. The marginal cost of an 11th unit is Rs1300 Which of the following is true ?


a The average cost increase from Rs20 to Rs30


bThe total costs for 11 units are Rs700


cThe average cost for 10 units is Rs1300


dThe average cost for 11 units is Rs1300



In the short term a firm will produce provided the revenue ?


a covers fixed costs


b covers variable costs


ccovers total costs


dcovers revenue



If firms earn normal profits ?


aThey will aim to leave the industry


bOther firms will join the industry


cThe revenue equal total costs


dNo profit is made is accounting terms



If the marginal revenue is less than the marginal cost then to profit maximise a firm should ?


a Reduce output


b Increase output


cLeave output where it is:


d Increase costs


View Answer Reduce output

Total increase from Rs500 to Rs600 When output increases from 20 to 30 units Fixed costs are Rs200 Which of the following is true ?


a Marginal cost is Rs20


bAverage cost rises


cVariable cost rises by Rs200


dAverage fixed cost was Rs10originally


View Answer Average cost rises

If marginal cost is positive and falling ?


a Total cost is falling


bTotal cost is increasing at a falling rate


cTotal cost is falling at a falling rate


dTotal cost is increasing at an increasing rate



The first level of output at which the long run average cost are minimized is called ?


a The Minimum Efficient Scale


bThe Minimum External Scale


cThe Maximum External Scale


dThe Maximum Effective Scale



The law of diminishing returns assumes ?


aThere are no fixed factors of production


bThere are no variable factors of production


c Utility is maximised when marginal product falls


d Some factors of production are fixed



An outward shift of the production possibility frontier may be caused by ?


a An increase in demand


b More government spending


c Better training of employees


d Productive inefficiency



The resources in an economy are ?


a Constantly increasing


bFixed at any moment


cConstantly decreasing


d Able to be transferred easily between industries


View Answer Fixed at any moment

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