Q. Which one of the following is also known as plant curves? A. Long-run average cost (LAC) curves B. Short-run average cost (SAC) curves C. Average variable cost (AVC) curves D. Average total cost (ATC) curves Answer: Short-run average cost (SAC) curves
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Q. Some economists refer to iso-product curves as: Engels curve Production indifference curve Budget line Ridge line Answer: Production indifference curve
Q. Which of the following is not a feature of iso-product curves? Iso-product curves: A. Are downward sloping to the right B. Show different input combination producing the same output C. Intersect each other D. Are convex to the origin Answer: Intersect each other
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Q. The horizontal demand curve parallel to x-axis implies that the elasticity of demand is: Zero Infinite Equal to one Greater than zero but less than infinity Answer: Infinite
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Q. The production techniques are technically efficient: A. Below the lower ridge line B. Above the upper ridge line C. Between the two ridge lines D. On the upper ridge line Answer: Between the two ridge lines
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Q. A significant property of the Cobb – Douglas production function is that the elasticity of substitution between inputs is: A. Equal to unity B. More than unity C. Less than unity D. Zero Answer: Equal to unity
Q. In the short term, when the output of a firm increases, its average fixed cost: A. Increase B. Decrease C. Remains constant D. First declines and then rises Answer: Decrease
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Q. Total costs in the short-term are classified into fixed costs and varibale costs. Which one of the following is a variable cost? A. Cost of raw materials B. Cost of equipment C. Interest payment on past borrowing D. Payment of rent on buildings Answer: Cost of raw materials
Q. Which of the following cost curves is never Un-shaped? A. Average cost curve B. Marginal cost curve C. Average variable cost curve D. Average fixed cost curve Answer: Average fixed cost curve
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Q. Which cost increases continuously with the increase in production? A. Average cost B. Marginal cost C. Fixed cost D. Variable cost Answer: Variable cost
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