2016 E.

C 3rd Term Economics Final Exam for Grade 10

Time Allowed 1:hrs
I. Write ‘True’ if the statement is correct or ‘False’ if the statement is incorrect.
1. When MP > AP, this means that AP is falling.
2. When TP increases at an increasing rate, MP increases.
3. An isoquant is a curve representing the various combinations of two inputs
that produce different amounts of output.
4. Higher isoquants represents larger output.
5. MRTS increases as more and more labour is substituted for capita
6. Technological progress shifts the production function downward.
7. In the short run, the AVC curve is U-shaped.
8. Production and cost are directly related to each other in the short run.
9. The costs of fixed inputs can only be adjusted in the long run.
10.In the long run, all inputs are variable.
11.Oligopoly market is a market with single buyers.
12.A pure monopolist is a price-taker
II. Match the following:
Column "A" Column "B"
13. Pure monopoly A. High degree of interdependence
14.Monopolistic competition B. Product differentiation
15.Oligopoly C. P = MR = AR
16. Perfect competition D. Firm and industry are same
III. For each of the following, four or five choices are given, but only one of them
is correct. Choose the correct one.
1. The short run is a time period in which:
A) all resources are fixed. B) The level of output is fixed.
C) The size of the production plant is variable.
D) Some resources are fixed and others are variable.
2. The law of diminishing returns states that:
A) as a firm uses more of a variable resource, given the quantity of fixed resources,
the
Average product of the firm will increase.
B) In the short run, the average total costs of the firm will eventually diminish.
C) As a firm uses more of a variable resource, given the quantity of fixed resources,
marginal product of the firm will eventually decrease.
D) In the long run, the average total costs of the firm will eventually diminish.
3. The law of diminishing returns only applies in cases where:
A) there is increasing scarcity of factors of production.
B) The price of extra units of a factor is increasing.
C) There is at least one fixed factor of production.
D) Capital is a variable input.
4. The marginal product of labor curve shows the change in total product resulting from
A) one-unit increase in the quantity of a particular resource used, letting other
Resources vary.
B) one-unit increase in the quantity of a particular resource used, holding constant
Other resources.
C) Change in the cost of a variable resource.
D) Change in the cost of a fixed resource.
5. When the total product curve is falling, the:
A) marginal product of labor is zero.
B) Average product of labor is increasing.
C) Marginal product of labor is negative.
D) Average product of labor must be negative.
6. When marginal product reaches its maximum, what can be said of total product?
A) total product must be at its maximum
B) total product starts to decline even if marginal product is positive
C) total product is increasing if marginal product is still positive
D) total product levels off
7. Variable costs are:
A) sunk costs.
B) Multiplied by fixed costs.
C) Defined as the change in total cost resulting from the production of an additional
Unit of output.
D) costs that change with the level of production
8. Which is not a fixed cost?
A) a worker's wage of $15 per hour
B) an insurance premium of $50 per year, paid last month
C) an attorney's retainer of $50,000 per year
D) monthly rent of $1,000 contractually specified in a one-year lease
9. If you know that with 8 units of output, average fixed cost is $12.50 and average
variable cost is $81.25, then total cost at this output level is:
A) $93.75. B) $750 C). $97.78 D) $880
10. With fixed costs of $400, a firm has average total costs of $3 and average variable
costs of $2.50. Its output is:
A) 200 units. B) 400 units. C) 800 units. D) 1,600 units.
11.If the short-run average variable costs of production for a firm are rising, then this
indicates that:
A) Average variable costs are below average fixed costs.
B) Average fixed costs are constant.
C) Average total costs are at a maximum.
D) Marginal costs are above average variable costs.
12.If a more efficient technology was discovered by a firm, there would be:
A) an upward shift in the AVC curve. C) A downward shift in the AFC curve.
B) An upward shift in the AFC curve. D) A downward shift in the MC curve.
13.The firm's short-run marginal-cost curve is increasing when:
A) Marginal product is decreasing C) Total fixed cost is increasing.
B). marginal product is increasing D) Average fixed cost is decreasing.
14. All of the following curves are “U” shaped except:
A. the AVC curve B. The AFC curve
C. The ATC curve D. The MC curve
15.A hat maker pays $500 per month in rent for his production facility. This cost is best
described as …
A. an opportunity cost. B. an external cost.
C. a fixed cost. D. a variable cost. E. a marginal cost.
16.When a firm doubles its inputs and finds that its output has more than doubled, this is
known as:
A). Diseconomies of scale. B) Constant returns to scale.
C) Increase returns to scale D) a violation of the law of diminishing returns.
17. 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. C) Increasing average total costs.
B) Diseconomies of scale. D) Constant returns to scale.
18.Which of the following statements is true?
A. In computing marginal cost, we can ignore fixed costs.
B. Long-run average cost is calculated by multiplying marginal cost by the unit of
time in question
C. Constant returns to scale result from increasing marginal returns to production.
D. diseconomies of scale occur when long-run average cost declines with rising output.
E. Increasing factory size always leads to decreasing marginal costs
19. In economics, the “long run” is a time period in which …
A. all inputs are paid for. B. all inputs are variable
C. all outputs are determined. D. all loans are repaid. E. all interest is paid.
20. In the case of constant marginal costs, the total cost curve will be …
A. a flat line B. a straight line sloping downward
C. a straight line sloping upward D. a curved line sloping upward
E. a curved line sloping downward
21. The total cost function of a firm is given by
C = 10,000 + 5Q3 + 10Q2 + 100Q Where C = total cost, Q = output
Which of the following is not true?
A. The total fixed cost is 10000.
B. The marginal cost is 15Q2 + 20Q + 100.
C. The average total cost is 10000/Q + 5Q2 + 10Q + 100.
D. When the output increases, the total cost increases.
E. None of the above
22.The process of using different factors of production in order to make goods
and services available is known as:
A. Investment B. Consumption
C. Production D. Resource
23. Any good or service that comes out of a production process, is known as:
A. Output B. Input
C. Labour D. Economic resource
24.When the short-run average product of labour is declining but positive, the
marginal product of labour is:
A. Negative B. Declining
C. Zero D. Any of these is possible
25.When the short-run marginal product of labour is greater than the average
product of labour:
A. APL is equal to zero B. APL decreasing
C. APL is increasing D. None of these
26.When the short-run, MP L is negative:
A. TP is also negative B. TP is rising at a constant rate
C. TP is declining D. TP is rising but at a diminishing rate
27. Suppose the average product of 6 workers is 150 units of a good and that of
7 workers is 170 units. The MP of the seventh worker equals:
A. 200 B. 270 C. 220 D. 290
28. The efficient scale of production is the output that minimizes
A. average total cost B. average fixed cost
C. average variable cost D. marginal cost
E. the answers B and C are both true
29.Price competition is usually found in:
A. Oligopoly B. Perfect competition
C. Monopolistic competition D. All of the above
30. In the third stage of production,
A. A rational firm prefers to operate. B. Marginal product is positive.
C. Marginal product is negative D. All of the above

ANSWER SHEET
Name ------------------------------------------- Grade----------------No………
T/F CHOOSE
1 6 11 16 1 6 11 16 21 26
2 7 12 17 2 7 12 17 22 27
3 8 13 18 3 8 13 18 23 28
4 9 14 19 4 9 14 19 24 29
5 10 15 5 10 15 20 25 30