1. A firm using two inputs, X and Y, is using them in the most efficient manner when
A. MPX = MPY
B. PX = PY and MPX = MPY
C. MPX/PY = MPY/PX
D. MPX/MPY = PX/PY
2. Which of the following indicate when State I ends and State II begins in the short run production?
A. When AP= 0
B. When MP = 0
C. When MP = AP
D. When MP starts to diminish
3. Which of the following is the best example of two inputs that would exhibit a constant marginal rate of technical substitution?
A. Trucks and truck drivers
B. Natural gas and oil
C. Personal computers and clerical workers
D. Company employed computer programmers and temporary supplemental computer programmers.
4. If MRP>MLC, it means that a firm should
A. Use less labor
B. Use more labor
C. Increase its fixed capacity
D. decrease its fixed capacity
5. Which of the following cost functions indicates that the law of diminishing returns takes effect as soon as production begins?
A. 1000 + 2.5Q + 0.05Q2
B. 1000 + 2.5Q
C. 1000 + 2.5Q -1.2Q2 + 0.03Q3
D. Not enough information to determine this.
6. Economists consider which of the following costs to be irrelevant to a short-run business decision?
A. Opportunity cost
B. Out-of-pocket cost
C. Historical cost
D. Replacement cost
7. Which of the following actions has the best potential for experiencing economies of scope?
A. Producing a product that has appeal to a wider segment of the market
B. Producing computers and software
C. Producing spaghetti and soft drinks
D. Producing cars and trucks
8. Which of the following products is the best example of perfect competition:
A. automobiles
B. apples
C. aircraft
D. Designer clothing
9. A perfectly competitive firm sells 15 units of output at the going market rate of . Suppose its average cost is and its average variable cost is . Its contribution margin (i.e. contribution to fixed cost) is
A.
B. 0
C. 5
D. Cannot be determined from the above information
10. Which of the following is true for a monopoly?
A. P=MC
B. P=MR
C. P>MR
D. P<MR
Credit:ivythesis.typepad.com
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