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11th Grade > Economics - 1

THE THEORY OF THE FIRM MCQs

Total Questions : 25 | Page 3 of 3 pages
Question 21. A firm encountering economies of scale over some range of output will have a 
  1.    rising long-run average cost curve 
  2.    falling long-run average cost curve 
  3.    constant long-run average cost curve 
  4.    rising, then falling, then rising long-run average cost curve 
 Discuss Question
Answer: Option B. -> falling long-run average cost curve 
:
B
A firm encountering economies of scale over some range of output will have a falling long-run average cost curve.
Question 22. Which of the following statements is correct?  
  1.    Fixed costs vary with change in output
  2.    If we add total variable cost and total fixed cost we get the average cost
  3.    Marginal cost is the result of total cost divided by number of units produced
  4.    Total cost is obtained by adding up the total fixed cost and the total variable cost
 Discuss Question
Answer: Option D. -> Total cost is obtained by adding up the total fixed cost and the total variable cost
:
D
TC = TFC + TVC
Question 23. Adil and Kratu are joining a master's program in management. Adil has freshly graduated out of college and has a job offer worth Rs 5 lakhs from a company. Kratu quit his job which earned him Rs 4 lakhs per year. Whose opportunity cost is more?
  1.    Adil
  2.    Kratu
 Discuss Question
Answer: Option A. -> Adil
:
A
The opportunity cost for Adil is Rs 5 lakhs and for Kratu it is 4 lakhs.
Question 24. The difference between average total cost and average variable cost:
  1.    is constant
  2.    is the total fixed cost
  3.    increases as the output decreases
  4.    Is the average fixed cost
 Discuss Question
Answer: Option D. -> Is the average fixed cost
:
D
The difference between average total cost and average variable cost is the average fixed cost.
Question 25. The marginal cost of the sixth unit of output is :
OutputTC0240133024103480454056106690
  1.    Rs. 133
  2.    Rs. 75
  3.    Rs. 80
  4.    Rs.450
 Discuss Question
Answer: Option C. -> Rs. 80
:
C
MPn=TPn−TPn−1=690−610=80

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