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Multiple Choice Quiz
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1.
Economic profit equals:
A)TR - explicit costs.
B)TR - implicit costs.
C)TR - explicit and implicit costs.
D)None of the above is true.
2.
A production function describes:
A)the maximum amount of output attainable from a given combination of factor inputs.
B)the quantity of output demanded by consumers
C)the profits that result from various production outputs.
D)how management and labor work in cooperation to increase production.
3.
An improvement in technology:
A)shifts the short-run production function to the right.
B)shifts the short-run production function to the left.
C)shifts the short-run production function downward
D)shifts the short-run production function upward.
4.
Which of the following statements is true?
A)The marginal physical product of labor is the addition to total output resulting from the addition of one more unit of labor.
B)Marginal physical product consists of work that is minimally or marginally acceptable.
C)Marginal physical product applies to manufactured goods but not to services
D)The marginal physical product of labor continues to increase as more and more workers are added.
5.
You are cramming for a key economics exam and your only concern is to earn the maximum possible grade. Accordingly, you should continue to study:
A)until your marginal physical product starts to diminish.
B)as long as your marginal physical product is greater than zero.
C)only as long as your marginal physical product is greater than the average physical product.
D)only as long as average physical product is rising.
6.
In the short run an increase in fixed cost:
A)causes no change to a firm's profit-maximizing output since it has no effect on marginal cost.
B)causes output to fall since firms produce less when costs increase.
C)reduces short-run profit but has no effect on short-run output.
D)Both (a) and (c) are true.
7.
When average cost is falling:
A)marginal product is larger than average product and marginal cost is lower than average cost.
B)marginal product is smaller than average product and marginal cost is larger than average cost.
C)average product is falling but marginal product is larger than average product.
D)marginal cost is constant.
8.
Which of the following AC/MC relationships is true?
A)When MC = ATC, then ATC is at its lowest point.
B)When MC is at its minimum, ATC is also at its minimum.
C)There is no relationship between ATC and MC.
D)When MC is greater than ATC, then ATC is decreasing.
9.
Compared to accounting costs:
A)economic costs are less inclusive.
B)economic costs are equally inclusive.
C)economic costs are always smaller.
D)economic costs are more inclusive.
10.
Improvements in technology:
A)shift both the production function and the cost curves upward.
B)shift the production function upward but have no effect on the cost curves.
C)shift the production function upward but shifts the cost curves downward.
D)shift the production function to the right but shifts the cost curves to the left.
11.
Which of the following is not a factor of production?
A)Land
B)Labor
C)Capital
D)A good or service.
12.
When more resources are added, the additional output decreases. This is called the:
A)law of diminishing marginal utility.
B)law of diminishing returns.
C)law of demand.
D)law of supply.
13.
As output increases, fixed costs ______.
A)increase
B)decrease
C)do not change
D)None of the above is true.
14.
Which of the following curve is U-shaped?
A)Fixed Cost
B)Variable Cost
C)Total Cost
D)Average Total Cost
15.
Marginal cost is:
A)the additional cost to produce another unit of a good.
B)the change in total cost when one more unit of output is produced.
C)the change in total cost divided by the change in total output.
D)All of the above are true.
16.
There are no fixed costs in the ______.
A)short run
B)long run
C)present
D)None of the above is true.
17.
As output increases, variable costs ______.
A)increase
B)decrease
C)do not change
D)None of the above is true.
18.
Economic cost refers to:
A)explicit costs only.
B)implicit costs only.
C)explicit costs and implicit costs.
D)None of the above is true.
19.
Fixed costs are graphed as a(n) ______ line.
A)horizontal
B)vertical
C)u-shaped
D)upward sloping
20.
As more inputs are added, at first the short-run production function ______.
A)increases slowly.
B)increases rapidly.
C)does not change.
D)None of the above is true.
21.
Marginal physical product (MPP) is equal to the change in total output _____ the change in input quantity.
A)plus
B)minus
C)times
D)divided by
22.
Where there is no output produced, variable costs are:
A)zero.
B)negative.
C)equal to fixed costs.
D)None of the above is true.
23.
Which of the following terms represents the cost of an additional unit of ouput?
A)Total Cost
B)Average Total Cost
C)Marginal Cost
D)Fixed Cost
24.
In economics the word "marginal" means:
A)total.
B)satisfaction.
C)extra or additional.
D)responsiveness.
25.
Which of the following is not a factor of production?
A)your economics professor
B)your college campus
C)your laptop computer
D)your money in the bank





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