McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Arts in Economics (MA Economics) .
| 51. |
A game that involves interrelated decisions that are made over time is a |
| A. | sequential game |
| B. | repeated game |
| C. | zero-sum game |
| D. | nonzero-sum game |
| Answer» A. sequential game | |
| 52. |
A game that involves multiple moves in a series of identical situations is called a |
| A. | sequential game |
| B. | repeated game |
| C. | zero-sum game |
| D. | nonzero-sum game |
| Answer» B. repeated game | |
| 53. |
Sequential games can be solved using |
| A. | tit-for-tat |
| B. | dominated strategies |
| C. | backward induction |
| D. | risk averaging |
| Answer» C. backward induction | |
| 54. |
A firm that is threatened by the potential entry of competitors into a market builds excess production capacity. This is an example of |
| A. | a prisoners’ dilemma |
| B. | collusion |
| C. | a credible threat |
| D. | tit-for-tat |
| Answer» C. a credible threat | |
| 55. |
Implicit costs are: |
| A. | equal to total fixed costs |
| B. | comprised entirely of variable costs |
| C. | “payments” for self-employed resources |
| D. | always greater in the short run than in the long run |
| Answer» C. “payments” for self-employed resources | |
| 56. |
Which would be an implicit cost for a firm? The cost: |
| A. | of worker wages and salaries for the firm |
| B. | paid for leasing a building for the firm |
| C. | paid for production supplies for the firm |
| D. | of wages foregone by the owner of the firm. |
| Answer» D. of wages foregone by the owner of the firm. | |
| 57. |
If a firm’s revenues just cover all its opportunity costs, then: |
| A. | normal profit is zero |
| B. | economic profit is zero |
| C. | total revenues equal its explicit costs |
| D. | total revenues equal its implicit costs |
| Answer» B. economic profit is zero | |
| 58. |
Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true? |
| A. | the firm will earn accounting and economic profits |
| B. | the firm will face accounting and economic losses |
| C. | the firm will face an accounting loss, but earn economic profits |
| D. | the firm may earn accounting profits, but will face economic losses |
| Answer» D. the firm may earn accounting profits, but will face economic losses | |
| 59. |
The short run is a time period in which: |
| A. | all resources are fixed |
| B. | the level of output is fixed |
| C. | the size of the production plant is variable |
| D. | some resources are fixed and others are variable |
| Answer» D. some resources are fixed and others are variable | |
| 60. |
The law of diminishing returns states that: |
| A. | as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase |
| B. | as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease |
| C. | in the short run, the average total costs of the firm will eventually diminish |
| D. | in the long run, the average total costs of the firm will eventually diminish |
| Answer» B. as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease | |
| 61. |
The law of diminishing returns only applies in cases where: |
| A. | there is increasing scarcity of factors of production |
| B. | the price of extra units of a factor is increasing |
| C. | there is at least one fixed factor of production |
| D. | capital is a variable input |
| Answer» C. there is at least one fixed factor of production | |
| 62. |
The marginal product of labour curve shows the change in total product resulting from a: |
| A. | one-unit increase in the quantity of a particular resource used, letting other resources vary |
| B. | one-unit increase in the quantity of a particular resource used, holding constant other resources |
| C. | change in the cost of a variable resource |
| D. | change in the cost of a fixed resource |
| Answer» B. one-unit increase in the quantity of a particular resource used, holding constant other resources | |
| 63. |
When the total product curve is falling, the: |
| A. | marginal product of labor is zero |
| B. | marginal product of labor is negative |
| C. | average product of labor is increasing |
| D. | average product of labor must be negative |
| Answer» B. marginal product of labor is negative | |
| 64. |
When marginal product reaches its maximum, what can be said of total product? |
| A. | total product must be at its maximum |
| B. | total product starts to decline even if marginal product is positive |
| C. | total product is increasing if marginal product is still positive |
| D. | total product levels off |
| Answer» C. total product is increasing if marginal product is still positive | |
| 65. |
Variable costs are: |
| A. | sunk costs |
| B. | multiplied by fixed costs |
| C. | costs that change with the level of production |
| D. | defined as the change in total cost resulting from the production of an additional unit of output. |
| Answer» C. costs that change with the level of production | |
| 66. |
Which is not a fixed cost? |
| A. | monthly rent of rs.1,000 contractually specified in a one-year lease |
| B. | an insurance premium of rs.50 per year, paid last month |
| C. | an attorney\s retainer of rs.50,000 per year |
| D. | a worker\s wage of rs.15 per hour |
| Answer» D. a worker\s wage of rs.15 per hour | |
| 67. |
If you know that with 8 units of output, average fixed cost is Rs.12.50 and average variable cost is Rs.81.25, then total cost at this output level is: |
| A. | rs.93.75 |
| B. | rs.97.78 |
| C. | rs.750 |
| D. | rs.880 |
| Answer» C. rs.750 | |
| 68. |
With fixed costs of Rs.400, a firm has average total costs of Rs.3 and average variable costs of Rs.2.50. Its output is: |
| A. | 200 units |
| B. | 400 units |
| C. | 800 units |
| D. | 1600 units |
| Answer» C. 800 units | |
| 69. |
The reason the marginal cost curve eventually increases as output increases for the typical firm is because: |
| A. | of diseconomies of scale |
| B. | of minimum efficient scale |
| C. | of the law of diminishing returns |
| D. | normal profit exceeds economic profit |
| Answer» C. of the law of diminishing returns | |
| 70. |
If the short-run average variable costs of production for a firm are rising, then this indicates that: |
| A. | average total costs are at a maximum |
| B. | average fixed costs are constant |
| C. | marginal costs are above average variable costs |
| D. | average variable costs are below average fixed costs |
| Answer» C. marginal costs are above average variable costs | |
| 71. |
If a more efficient technology was discovered by a firm, there would be: |
| A. | an upward shift in the avc curve |
| B. | a downward shift in the afc curve |
| C. | an upward shift in the afc curve |
| D. | a downward shift in the mc curve |
| Answer» D. a downward shift in the mc curve | |
| 72. |
The firm’s short-run marginal-cost curve is increasing when: |
| A. | marginal product is increasing |
| B. | marginal product is decreasing |
| C. | total fixed cost is increasing |
| D. | average fixed cost is decreasing |
| Answer» B. marginal product is decreasing | |
| 73. |
A firm encountering economies of scale over some range of output will have a: |
| A. | rising long-run average cost curve |
| B. | falling long-run average cost curve |
| C. | constant long-run average cost curve |
| D. | rising, then falling, then rising long-run average cost curve |
| Answer» B. falling long-run average cost curve | |
| 74. |
When a firm doubles its inputs and finds that its output has more than doubled, this is known as: |
| A. | economies of scale |
| B. | constant returns to scale |
| C. | diseconomies of scale |
| D. | a violation of the law of diminishing returns |
| Answer» A. economies of scale | |
| 75. |
The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of: |
| A. | economies of scale |
| B. | normative economies |
| C. | diminishing marginal returns |
| D. | an increasing marginal product of labour |
| Answer» A. economies of scale | |
| 76. |
If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be: |
| A. | economies of scale |
| B. | diseconomies of scale |
| C. | constant returns to scale |
| D. | increasing average total costs. |
| Answer» C. constant returns to scale | |
| 77. |
______ shows the overall output generated at a given level of input: |
| A. | cost function |
| B. | production function |
| C. | iso cost |
| D. | marginal rate of technical substitution |
| Answer» B. production function | |
| 78. |
Isoquants are equal to: |
| A. | product lines |
| B. | total utility lines |
| C. | cost lines |
| D. | revenue lines |
| Answer» A. product lines | |
| 79. |
The marginal product curve is above the average product curve when the average product is : |
| A. | increasing |
| B. | decreasing |
| C. | constant |
| D. | none |
| Answer» A. increasing | |
| 80. |
Increasing returns to scale can be explained in terms of: |
| A. | external and internal economies |
| B. | external and internal diseconomies |
| C. | external economics and internal diseconomies |
| D. | all of these |
| Answer» A. external and internal economies | |
| 81. |
An isoquant is ______ to an iso cost line at equilibrium point: |
| A. | convex |
| B. | concave |
| C. | tangent |
| D. | perpendicular |
| Answer» C. tangent | |
| 82. |
At the point of inflexion, the marginal product is: |
| A. | increasing |
| B. | decreasing |
| C. | maximum |
| D. | negative |
| Answer» C. maximum | |
| 83. |
Diminishing marginal returns implies: |
| A. | decreasing average variable costs |
| B. | decreasing marginal costs |
| C. | increasing marginal costs |
| D. | decreasing average fixed costs |
| Answer» C. increasing marginal costs | |
| 84. |
If the marginal product of labour is below the average product of labour. It must be true that: |
| A. | marginal product of labour is negative |
| B. | marginal product of labour is zero |
| C. | average product of labour is falling |
| D. | average product of labour is negative |
| Answer» C. average product of labour is falling | |
| 85. |
Law of variable proportion is valid when: |
| A. | only one input is fixed and all other inputs are kept variable |
| B. | all factors are kept constant |
| C. | all inputs are varied in the same proportion |
| D. | none of these |
| Answer» A. only one input is fixed and all other inputs are kept variable | |
| 86. |
A significant property of Cobb Douglas production function is that the elasticity of substitution between inputs is |
| A. | equal to 1 |
| B. | more than 1 |
| C. | less than 1 |
| D. | 0 |
| Answer» A. equal to 1 | |
| 87. |
CES production function is |
| A. | homogeneous |
| B. | linearly homogeneous |
| C. | linearly non homogeneous |
| D. | none of the above |
| Answer» B. linearly homogeneous | |
| 88. |
--------- goods violate the law of demand after prices have risen above a certain level |
| A. | normal goods |
| B. | snob goods |
| C. | veblen goods |
| D. | bandwagon goods |
| Answer» C. veblen goods | |
| 89. |
According to ----------- when income increases by a small increment, it leads to increasing marginal utility of income |
| A. | kaldor |
| B. | hicks |
| C. | markowitz |
| D. | friedman and savage |
| Answer» C. markowitz | |
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