11th Grade > Economics - 1
THE THEORY OF THE FIRM MCQs
Total Questions : 25
| Page 2 of 3 pages
Answer: Option A. -> MC of the 251st samosa
:
A
On taking any economic decisions, only the marginal quantities are important. In this case, the relevant decision variable is the marginal quantity of the 251st samosa.
:
A
On taking any economic decisions, only the marginal quantities are important. In this case, the relevant decision variable is the marginal quantity of the 251st samosa.
Answer: Option A. -> Fixed cost
:
A
For the short run shutdown decision, the fixed costs are treated as sunk costs because they must be paid regardless of whether output is being produced or not.
:
A
For the short run shutdown decision, the fixed costs are treated as sunk costs because they must be paid regardless of whether output is being produced or not.
Answer: Option B. -> Minimum point of AVC
:
B
A firm should shut down temporarily if the price is less than the minimum point of the average variable cost. Hence the minimum point of AVC is the shutdown point.
:
B
A firm should shut down temporarily if the price is less than the minimum point of the average variable cost. Hence the minimum point of AVC is the shutdown point.
Answer: Option C. -> P < AVC
:
C
In the short run, fixed costs are treated as sunk costs. Hence, a firm should shut down temporarily if P<AVC. If AVC<P<SAC, the firm should remain operational.
:
C
In the short run, fixed costs are treated as sunk costs. Hence, a firm should shut down temporarily if P<AVC. If AVC<P<SAC, the firm should remain operational.
Answer: Option B. -> False
:
B
The diminishing marginal product of a variable factor implies that the amount of variable factor required per unit of output increases. Hence, the statement is false.
:
B
The diminishing marginal product of a variable factor implies that the amount of variable factor required per unit of output increases. Hence, the statement is false.
Answer: Option D. -> Rs 3000
:
D
TR=P×Q=300×10=Rs3000
:
D
TR=P×Q=300×10=Rs3000
Answer: Option B. -> False
:
B
Producing atthe output level corresponding to MR=MC will guarantee profits if and only if the price is greater than the minimum value of SAC. Hence, the statement is false.
:
B
Producing atthe output level corresponding to MR=MC will guarantee profits if and only if the price is greater than the minimum value of SAC. Hence, the statement is false.
Answer: Option B. -> revenue is not high enough to cover the variable costs
:
B
Some restaurants are closed during some parts of the day because revenue is not high enough to cover the variable costs and hence meets the short-run shutdown condition.
:
B
Some restaurants are closed during some parts of the day because revenue is not high enough to cover the variable costs and hence meets the short-run shutdown condition.
Answer: Option D. -> Rs 6000
:
D
Profit=(P−SAC)×q=(300−250)×120=Rs6000
:
D
Profit=(P−SAC)×q=(300−250)×120=Rs6000
Answer: Option A. -> Diseconomies of scale.
:
A
The positively sloped (i.e. rising) part of the long run average total cost curve is due to diseconomies of scale
:
A
The positively sloped (i.e. rising) part of the long run average total cost curve is due to diseconomies of scale
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