1 Opportunity cost is Points 25 the potential profit from a

1. \"Opportunity cost\" is (Points : 2.5)

       the potential profit from a new venture
       what the resource could earn in the highest paying alternative use
       the amount of profit a firm is losing by not maximizing its profit
       what a resource is being paid in its current use
       none of the above

Question 2.2. In the rational range of a production function, as use of the variable input increases, (Points : 2.5)

       total product decreases
       marginal product decreases but is positive
       total product increases at an increasing rate
       average product increases at a decreasing rate
       none of the above.

Question 3.3. A production function describes the relationship between units of a variable input used in combination with a bundle of fixed factors and (Points : 2.5)

       marginal physical product
       total product
       value of the total product
       marginal cost
       none of the above

Question 4.4. A difference between economic profits and accounting profits would arise in the case of (Points : 2.5)

       production efficiency
       taxes paid
       hired labor
       land rent paid
       opportunity cost

Question 5.5. Output per unit of the fixed factor of production is called (Points : 2.5)

       average product
       total product
       total fixed cost
       marginal cost
       average fixed cost

Question 6.6. Which of the following is NOT an assumption of perfect competition? (Points : 2.5)

       large number of buyers
       large number of sellers
       perfect knowledge
       differentiated product
       ease of entry

Question 7.7. At the initial phase (i.e., at the lowest output levels) of a production function, output (Points : 2.5)

       increases at a decreasing rate
       decreases at an increasing rate
       decreases at a decreasing rate
       increases at an increasing rate
       is constant

Question 8.8. For a perfectly competitive, profit maximizing firm, an increase in the fixed costs, ceteris paribus, would cause the (Points : 2.5)

       firm to use less of the variable input
       price of the product to increase
       firm to increase production to cover the additional costs
       profits of the firm to fall
       firm to reduce its output level

Question 9.9. At prices above the shut-down price, (Points : 2.5)

       the firm will produce
       the firm will always earn economic profits
       the firm will always suffer economic losses
       the firm will shut down
       none of the above

Question 10.10. If the price of the product increases, ceteris paribus, the profit maximizing firm will use ________ of the variable input and produce ________ of output.
(Points : 2.5)

       more; more

       the same amount; the same amount

       less; less

       more; less

       none of the above

1. \"Opportunity cost\" is (Points : 2.5)

1) Ans is B. Opportunity cost is the second best alternate forgone

2) ans is B. In second stage/ rational stage MP is positive but decreases and TP increases at a decreasing rate

3)ans is B. Production function is a technical relationship between input and output.

4)ans is E. Opportunity cost is the part of internal cost

5)ans is A. Average product is the ratio of total product/No. Of worker

$1. \$