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- 1. Multiple Choice
What is the name given to the period when quantities of land and capital are fixed?
Fixed capital formation
Time lag
Short run
Long run
- 2. Multiple Choice
Which of the following describes an eventual decline in the productivity of factor inputs as additional units of variable factors are added to fixed resources?
Law of diminishing marginal utility
Law of diminishing marginal returns
Laffer curve
Law of diminishing total product
- 3. Multiple Choice
What happens to total product when marginal product becomes negative?
Increases
Decreases
Remains unchanged
Reaches a peak
- 4. Multiple Choice
What is the average product with 1 labourer?
1 unit
4 units
5 units
10 units
- 5. Multiple Choice
What is the total product with 2 labourers?
10 unit
10.5 units
11 units
11.5 units
- 6. Multiple Choice
What is the marginal product with 3 labourers?
5 unit
5.5 units
6 units
7 units
- 7. Multiple Choice
Which of the following statements is not true?
Marginal costs decline and rise from a point of diminishing returns
Marginal product increases and falls from a point of diminishing returns
There are no fixed inputs/factors of production in the long run
All are true
- 8. Multiple Choice
The law of diminishing marginal returns is not relevant to the long run because
the quantity of labour is variable in the long run
in the long run, no factor inputs are fixed
in the long run, no factor inputs are variable
the law of diminishing marginal returns applies in the long run
- 9. Multiple Choice
The marginal cost curve best resembles a
inverted Nike Swoosh
V
U
Nike Swoosh
- 10. Multiple Choice
All of the below are Factors of Production EXCEPT
Land
Enterprise
Labour
Government
Capital
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