Q.     What is the shape of the average fixed cost (AFC) curve? A.           U-shape            B.            Horizontal upto a point and then rising C.            Sloping down towards the right      D.           Rectangular hyperbola Answer: Rectangular hyperbola

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

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

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

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

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

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