Micro Economics-Online Practice Exam 4

# Question

1) In CES production function elasticity of factor substitution is______

Unity

Zero

Infinite

Can take any positive constant value

# Question

2) In the second stage of the law of variable prodution_____

Marginal product diminishes and average product increases

Average product diminishes and average product increases

Both marginal product and average product diminish

Both marginal product and average product increase

# Question

3) Under the law of variable proportion stage is known as the stage of increasing returns because_____

Marginal product of the variable factor increases through out this stage

Marginal product increase at the increasing rate through out this stage

Average product of the variable factor increases through out this stage

Total product increase at the increasing rate throughout this stage

# Question

4)  Point of inflexion is the point at which_____

Marginal product increase

Marginal product decrease

Marginal product is at its maximum

Marginal product becomes zero

# Question

5) Which of tge following is correct regarding long run cost?

1. It is least cost of producing each level of out put
2. LAC curve is envelope of SAC curves.
3. LAC is U shaped

1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

# Question

6) The efforts and sacrifices made by the owners of factors of prodution used in the prodution of commodity is known as_____

Opportunity cost

Implicit cost

Explicit cost

Real cost

# Question

7) Opportunity cost refers to_____

Money expenses incurred on factors

The imputed value of the input owned by the firms

The next best alternative

None of these

# Question

8) Economics cost consists of_____

1. Implicit cost
2. Explicit cost
3. Normal profit

1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

# Question

9) An increase in supply of a commodity causes ____

An increase in equilibrium price and increase in equilibrium quantity

A decrease in equilibrium price and increase in equilibrium quantity

A increase equilibrium price and decrease in equilibrium quantity

A decrease equilibrium price and decrease in equilibrium quantity

# Question

10) Condition for the producer’s equilibrium is____

1. Isoquant should be tangent to the is -cost line.
2. Isoquant should be tangent to the iso-cost line.