Economics Multiple Choice Questions, which are covered in this chapter, relate to the topic, Theory of Production. Economics Multiple Choice Questions Test contains 20 questions. Answers to Economics Multiple Choice Questions are available after clicking on the answer.
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
Answer
Answer: (b) Production function
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) Diseconomies of scale
Answer
Answer: (b) Economics of sale
3.Isoquants are equal to:
(a) Product Lines
(b) Total utility lines
(c) Cost lines
(d) Revenue lines
Answer
Answer: (A) Product 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
Answer
Answer: (A) Increasing
5.Increasing returns to scale can be explained in terms of:
(a) External and internal economies
(b) External and internal diseconomies
(c) External economies and internal diseconomies
(d) All of these
Answer
Answer: (A) External and internal economies
Economics Multiple Choice Questions – Chapter 3 – Theory of Production
6.An isoquant is ______ to an iso cost line at equilibrium point:
(a) Convex
(b) Concave
(c) Tangent
(d) Perpendicular
Answer
Answer: (c) Tangent
7.At the point of inflexion, the marginal product is:
(a) Increasing
(b) Decreasing
(c) Maximum
(d) Negative
Answer
Answer: (c) Maximum
8.Diminishing marginal returns implies:
(a) Decreasing average variable costs
(b) Decreasing marginal costs
(c) Increasing marginal costs
(d) Decreasing average fixed costs
Answer
Answer: (c) Increasing marginal cost
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
Answer
Answer: (c) Average product of labour is falling
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
Answer
Answer: (A) Only one input is fixed and all other inputs are kept variable
Economics Multiple Choice Questions – Chapter 3 – Theory of Production
11.During IInd stage of law of Diminishing returns:
(a) MP and TP is maximum
(b) MP and AP are decreasing
(c) AP is negative
(d) TP is negative
Answer
Answer: (b) MP and AP are decreasing
12.Consider the following table:
| Labour | Total Output | Marginal Product |
| 0 | ||
| 1 | 100 | 100 |
| 2 | 80 | |
| 3 | 240 |
What is the total output, when 2 labour are employed?
(a) 80
(b) 100
(c) 180
(d) 200
Answer
Answer: (c) 180
13.Who has given the concept of Innovative Entrepreneurship?
(a) Robbins
(b) Adam Smith
(c) Schumpeter
(d) Sweezy
Answer
Answer: (c) Schumpeter
14.At 10 units Total Cost → Rs. 200
20 units Total Cost → Rs. 600
Marginal Cost = ?
(a) 50
(b) 40
(c) 30
(d) 400
Answer
Answer: (b) 40
15.Average Fixed Cost = Rs. 20
Quantity Produced = 10 units
What will be the Average Fixed Cost of 20th unit?
(a) 10
(b) 20
(c) 5
(d) None
Answer
Answer: (A) 10
Economics Multiple Choice Questions – Chapter 3 – Theory of Production
16.What is Production in Economics:-
(a) Creation / Addition of Utility
(b) Production of food grains
(c) Creation of services
(d) Manufacturing of goods
Answer
Answer: (A) Creation / Addition of Utility
17.External Economies of Scale are obtained by
(a) a firm
(b) a group of firm
(c) Small Production
(d) Society
Answer
Answer: (b) a group of firm
18.If a firm’s output is zero, then
(a) AFC will be positive
(b) AVC will be zero
(c) Both of (a) and (b)
(d) None of (a) and (b)
Answer
Answer: (c) Both of (a) and (b)
19.Functions of the entrepreneur are :
(a) Risk bearing
(b) Initiating a business enterprise and resource coordinating
(c) Introducing new innovations
(d) All of the above
Answer
Answer: (d) All of the above
20.Law of diminishing returns to applicable in:
(a) Manufacturing industry
(b) Agriculture
(c) Neither (a) nor (b)
(d) Any economic activity at a point of time.
Answer
Answer: (d) Any economic activity at a point of time.
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