Lecture Notes on Economic Principles | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

Multiple choice – topic 6, 7
1) Economic profits are calculated by subtracting:
A: explicit costs from total revenue.
B: implicit costs from total revenue.
C: implicit costs from normal profits.
: explicit and implicit costs from total revenue.
2) To economists, the main difference between ‘the short run’ and ‘the long run’ is that:
A: the law of diminishing returns applies in the long run, but not in the short run.
: in the long run, all resources are variable, while in the short run, at least one resource is fixed.
C: fixed costs are more important to decision making in the long run than they are in the short run.
D: in the short run all resources are fixed, while in the long run, all resources are variable.
3) The law of diminishing returns indicates that:
as extra units of a variable resource are added to a fixed resource, the extra or marginal
product will decline beyond some point.
B: because of economies and diseconomies of scale, a competitive firm's long-run average cost curve will be U-shaped.
C: the demand for goods produced by purely competitive industries is downsloping.
D: beyond some point, the extra utility derived from additional units of a product will yield for
the consumer smaller and smaller extra amounts of satisfaction.
4)The following is output data for a firm. Assume that the amounts of all non-labour resources are fixed. Number of Units of workers output 0 0 1 40 2 90 3 126 4 150 5 165 6 180
Refer to the above information. Diminishing returns become evident with the addition of: A: the fourth worker. : the third worker. C: the second worker. D: the first worker.
5) Marginal cost may be defined as the:
A: rate of change in total fixed cost which results from producing one more unit of output.
: change in total cost which results from producing one more unit of output.
C: change in average variable cost which results from producing one more unit of output.
Test bank t/a Economic Principles by Jackson et al. 5-1
D: change in average total cost which results from producing one more unit of output.
6) The vertical distance between ATC and AVC reflects:
: the average fixed cost at each level of output.
B: marginal cost at each level of output.
C: the presence of economies of scale. D: implicit costs.
7) Assume that in the short run, a firm which is producing 100 units of output has average total
costs of $200 and average variable costs of $150. The firm's total fixed costs are: : $5 000. B: $500. C: $0.50. D: $50.
8) The following is the total output and cost data for a firm. Output Total Cost($) 0 24 1 33 3 41 3 48 4 54 5 61 6 69
Refer to the above cost data. The marginal cost of producing the sixth unit of output: A: is $24. B: is $16. : is $8.
D: cannot be determined from the information given.
9) The demand schedule, or curve, confronted by the individual purely competitive firm is:
A: relatively elastic, that is, the elasticity coefficient is greater than unity. : perfectly elastic.
C: relatively inelastic, that is, the elasticity coefficient is less than unity. D: perfectly inelastic.
10) Assume a graph where dollars are measured on the vertical axis and output on the horizontal
axis. For a purely competitive firm, total revenue:
: graphs as a straight, upsloping line.
B: is a straight line, parallel to the vertical axis.
C: is a straight line, parallel to the horizontal axis.D: graphs as a straight, downsloping line.
Test bank t/a Economic Principles by Jackson et al. 5-2
11) If a firm, in a purely competitive industry, is confronted with an equilibrium price of $5, its marginal revenue:
A: may be either greater or less than $5. : will also be $5. C: will be less than $5. D: will be greater than $5.
Test bank t/a Economic Principles by Jackson et al. 5-3