Question

QUESTION 1

1. In the short run, the ATC curve is _____ above the AVC curve.

   		A. always
   		B. sometimes
   		C. never

2 points   

QUESTION 2

1. 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.

2 points   

QUESTION 3

1. 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.

2 points   

QUESTION 4

1. Which statement is true?

   		A. The marginal cost curve intersects both the average variable cost curve and the average total cost curve at their minimum points.
   		B. The marginal cost curve intersects neither the average variable cost curve nor the average total cost curve at their minimum points.
   		C. The marginal cost curve intersects the average variable cost curve at its minimum point, but it does not intersect the average total cost curve at its minimum point.
   		D. The marginal cost curve intersects the average total cost curve at its minimum point, but it does not intersect the average variable cost curve at its minimum point.

2 points   

QUESTION 5

1. The law of diminishing returns states that as output rises, eventually _____ output will decline.

   		A. total
   		B. average
   		C. fixed
   		D. marginal

2 points   

QUESTION 6

1. 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.

2 points   

QUESTION 7

1. 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.

2 points   

QUESTION 8

1. If marginal output is rising it is possible to have

   		A. diminishing returns.
   		B. negative returns.
   		C. both diminishing returns and negative returns.
   		D. neither diminishing returns nor negative returns.

2 points   

QUESTION 9

1. If fixed cost is P5,000, and, at an output of 3 variable cost is P4,000, how much is average total cost at an output of 3?

   		A. P1,333.33
   		B. P3,000
   		C. P4,500
   		D. P9,000
   		E. There is not enough information to determine ATC at an output of 3.

2 points   

QUESTION 10

1. If fixed cost is P8,000, variable cost is P5,000 at an output of 2 and P9,000 at an output of 3, how much is marginal cost at an output of 3?

   		A. P3,000
   		B. P4,000
   		C. P5,000
   		D. P8,000
   		E. There is not enough information to determine marginal cost at an output of 3.

Answer 1

Ans.1- (A)

Ans.2- (B)

Ans.3- (A)

Ans.4- (A)

Ans.5- (D)

Ans.6- (C)

Ans.7- (B)

Ans.8- (D)

Ans.9- (B)

Ans.10-(B)

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