Tag: economics

Quizzes (361) Questions (3598)

Questions Related to economics

Multiple choice computer and ms office mathematical methods for economics economics

A has three children in his family, the probability of all the children being a girl child is _____

  1. $\dfrac{1}{2}$
  2. $\dfrac{1}{3}$
  3. $\dfrac{1}{8}$
  4. $\dfrac{3}{8}$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For each child, the probability of being a girl is 1/2. For three children, the probability of all being girls is (1/2) * (1/2) * (1/2) = 1/8.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

Which of these can be described as implicit cost of production?

  1. National rent of own office building

  2. Payment of wages to workmens

  3. Normal profit on capital employed

  4. Interest on loan
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Implicit costs are the opportunity costs of using resources already owned by the firm, such as the rent that could have been earned from an owned building.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

The difference between the least cost output and actual output level is termed as____.

  1. Excess capacity

  2. Unbalanced capacity

  3. Balance capacity

  4. Bottleneck capactiy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The least cost output is the level of optimal efficiency. This is achieved when all factors of production are employed in their most productive form. Thus when the average cost is higher than least cost it signifies the presence of inefficiencies in the economy. and thus the gap is termed as excess capacity as all resources are not employed in the most optimal way.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In which stage of production are the Average Product and Marginal Product decreasing with the Marginal Product above zero (positive)?

  1. In the stage of Constant Returns

  2. In the stage of Decreasing Returns

  3. In the stage of Increasing Returns

  4. Both (a) and (c)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the stage of diminishing returns, both Average Product and Marginal Product are declining, but Marginal Product remains positive until it hits zero at the end of the stage.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In the stage of Diminishing Returns, Marginal Product (MP)-

  1. First increases, reaches a maximum and then decreases

  2. Decreases

  3. Increases

  4. Remains constant
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

By definition, the stage of diminishing returns is characterized by a declining marginal product of the variable factor.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If Stage I = Increasing Returns, Stage II = Diminishing Returns, and Stage III = Negative Marginal Returns, answer the questions:
A Rational Producer will not operate in Stage I due to the reason that -

  1. There is more scope for making the best use of the Fixed Factor

  2. Total Output still shows an increasing trend

  3. Optimal Combination of Fixed and Variable Factors is not yet achieved

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In Stage I, the fixed factor is underutilized, and increasing the variable factor improves efficiency, meaning the producer has not yet reached the optimal combination.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

In which stage of production would a rational entrepreneur like to operate?

  1. Stage 1 where MP is maximum

  2. Stage 2 where both MP and AP are decreasing, but both are positive

  3. Stage 3 where MP is negative

  4. Either Stage 2 or 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A rational producer operates in Stage 2 because this is where the marginal product is positive but declining, allowing for efficient allocation of resources.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

A Rational Producer intends to work in-

  1. Stage of Constant Returns

  2. Stage of Increasing Returns

  3. Stage of Diminishing Returns

  4. Stage of Negative Returns
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A rational producer avoids Stage 1 (underutilization) and Stage 3 (negative marginal returns), choosing to operate in Stage 2, which is the stage of diminishing returns.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

You are given the following data:

Factor Output
0 0
1 15
2 35
3 60
4 92
5 140

The above data is an example of:

  1. Decreasing returns to scale.

  2. Constant returns to scale.

  3. Increasing returns to scale.

  4. Positive fixed costs.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Calculating marginal product: 15, 20, 25, 32, 48. Since the marginal product is increasing, this indicates increasing returns to scale.

Multiple choice economics laws of returns - returns to a factor and returns to scale total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function

If a change in scale inputs leads to a proportional change in the output, it is a case of-

  1. Increasing Returns to Scale

  2. Constant Returns to Scale

  3. Diminishing Returns to Scale

  4. Variable Returns to Scale
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Constant returns to scale occur when a proportional increase in all inputs leads to an exactly proportional increase in output.