Economics Multiple Choice Questions – Chapter 3 – Theory of Production

Economics Multiple Choice Questions, which are covered in this chapter, relate to the topic, Theory of Production. Economics Multiple Choice Questions Test contains 10 questions. Answers to Economics Multiple Choice Questions are available at the end of the last question.

1. ______ 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

2. If LAC curve falls as output expands, this is due to _____:

(a)    Law of diminishing retains

(b)    Economics of scale

(c)     Law of variable proportion

(d)    Diseconomics of scale

3. Isoquants are equal to:

(a)    Product Lines

(b)    Total utility lines

(c)     Cost lines

(d)    Revenue lines



4. The marginal product curve is above the average product curve when the average product is :

(a)    Increasing

(b)    Decreasing

(c)     Constant

(d)    None

5. 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

6. An isoquant is ______ to an iso cost line at equilibrium point:

(a)    Convex

(b)    Concave

(c)     Tangent

(d)    Perpendicular

7. At the point of inflexion, the marginal product is:

(a)    Increasing

(b)    Decreasing

(c)     Maximum

(d)    Negative

8. Diminishing marginal returns implies:

(a)    Decreasing average variable costs

(b)    Decreasing marginal costs

(c)     Increasing marginal costs

(d)    Decreasing average fixed costs




9. 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

10. 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

ANSWERS

1.  (b) Production function

2. (b) Economics of scale

3. (a) Product Lines

4. (a) Increasing

5. (a) External and internal economies

6. (c) Tangent

7. (c) Maximum

8. (c) Increasing marginal costs

9. (c) Average product of labour is falling

10 (a) Only one input is fixed and all other inputs are kept variable

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