Q. According to current thinking, the law of diminishing returns applies to: A. All fields of production B. Agriculture C. Mining D. Manufacturing Answer: All fields of production
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Q. The cost of one thing in terms of the alternative given up is known as: A. Production cost B. Physical cost C. Real cost D. Opportunity cost Answer: Opportunity cost
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Q. Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its: A. Demand B. Price C. Costs of production D. State of technology Answer: Price
Q. An increase in the supply of a commodity is caused by: A. Improvements in its technology B. Fall in the prices of other commodities C. Fall in the prices of factors of production D. All of the above Answer: All of the above
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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
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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
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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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