Economics MCQ Quiz Hub

1. Negative returns in the short run imply that:
Average product is negative
Total product is negative
Marginal is negative
Total cost is falling

2. Economies of scale:
Occur when an increase in input causes a less than proportionate increase in output
Suggest that firm s marginal cost curve lies above its average cost curve
Suggest that the firm s marginal cost curve lies above its average cost curve
None of these

3. In law of diminishing returns at least one factor:
Must be constant
Must be owned by the firm
Must be purchasable
Must be efficient

4. Economies of scale are of two kinds:
Temporary and permanent
Internal and external
Managerial and industrial
Natural and artificial

5. During short period, diminishing returns may follow because:
Quantity of labour is fixed
Quantity is fixed
Quantity of capital is fixed
Quantity of any one factor is fixed

6. When a firm using a fixed amount of land and capital takes on more workers, it finds that marginal product (MP) of labour falls but the average product (AP) of labour rises. This can be explained by the factors that:
The MP of labour is greater than AP of labour
The additional workers are more efficient
MP and AP always moves in opposite directions
None of these

7. Which of the following is example of external economies of scale?
Discount on purchases of raw materials
Technical progress leads to development of machines at low price
Hiring of specialized staff due to increase in scale of production
A firm starts producing by products

8. The maximum point on TP curve is at quantity of labour where:
Average physical product of labour is equal to 1
MPP of labour is at its maximum
Curves of APP and MPP of labour intersect
MPP of labour is zero

9. When a firm using a fixed amount of land and capital takes on more workers, it finds that marginal product (MP) of labour falls but the average product (AP) of labour rises. This can be explained by the factors that:
The MP of labour is greater than AP of labour
The additional workers are more efficient
MP and AP always moves in opposite directions
(b) and (c)

10. In an economy government constructed a new water reservoir for the purpose of irrigation; this might be taken as:
Increase in supply of capital
Increse in supply of land
Increase in supply of land and supply of capital
None of these