( Best 300+ ) Micro Economics MCQ

by Mr. DJ

Micro Economics MCQ

Micro Economics MCQ Definition: Microeconomics is the study of individuals, households and firms’ behavior in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues.

Micro Economics MCQ

71. If a more efficient technology was discovered by a firm, there would be:
A) An upward shift in the AVC curve.
B) An upward shift in the AFC curve.
C) A downward shift in the AFC curve.
D) A downward shift in the MC curve.

Answer:D

72. The firm’s short-run marginal-cost curve is increasing when:
A) Marginal product is increasing.
C) Total fixed cost is increasing.
B) Marginal product is decreasing.
D) Average fixed cost is decreasing.

Answer:B

73. A firm encountering economies of scale over some range of output will have a:
A) Rising long-run average cost curve.
B) Falling long-run average cost curve.
C) Constant long-run average cost curve.
D) Rising, then falling, then rising long-run average cost curve.

Answer:B

74. When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
A) Economies of scale.
B) Constant returns to scale.
C) Diseconomies of scale.
D) A violation of the law of diminishing returns.

Answer:A

75. The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:
A) Economies of scale.
B) Normative economies.
C) Diminishing marginal returns.
D) An increasing marginal product of labour.

Answer:A

76. If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:
A) Economies of scale.
B) Diseconomies of scale.
C) Constant returns to scale.
D) Increasing average total costs.

Answer:C

77. Economies and diseconomies of scale explain why the:
A) Short-run average fixed cost curve declines so long as output increases.
B) Marginal cost curve must intersect the minimum point of the firm’s
average total cost curve.
C) Long-run average total cost curve is typically U-shaped.
D) Short-run average variable cost curve is U-shaped.

Answer:C

78. In any production process the marginal product of labour equals:
A) Total output divided by total labour inputs.
B) Total output minus the total capital stock.
C) The change in total output resulting from a ‘small’ change on the labour
input.
D) Total output produced by labour inputs.

Answer:C

79. Which of the following statements best describes the general form of a production function:
(i) It is a purely technological relationship between quantities of input and
quantities of output.
(ii) It represents the technology of an organisation, sector of an economy.
iii) Prices of inputs or of the output do not enter into the production function.
(iv) It is a flow concept describing the transformation of inputs into output per unit
of time.
A) (i),(ii) and (iv)
B) (i) and (ii)
C) (i) and (iv)
D) All of the above

Answer:D

80. Which of the following statements describes the presence of diminishing returns. Holding at least one factor constant …….
A) The marginal product of a factor is positive and rising.
B) The marginal product of a factor is positive but falling.
C) The marginal product of a factor is falling and negative.
D) The marginal product of a factor is constant.

Answer:B

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