CBSE Class 12 Economics Numerical of production and cost Assignment

Question. At Shut-Down Point -
(a) Price is equal to AVC
(b) Total Revenue is equal to TVC
(c) Total Loss of the Firm is equal to TFC
(d) All of the above
Answer: B

Question. What are conditions when the Firm earns Super—Normal Profit?
(a) Average Revenue is more than Average Cost
(b) Average Cost is more than Average Revenue
(c) MC Curve has negative slope
(d) MR Curve has positive slope
Answer: A

Question. Generally, Average Revenue (AR) Curve —
(a) Is parallel to X Axis
(b) Is parallel to Y Axis
(c) Slopes upward from left to right
(d) Slopes downward from left to right
Answer: D

Question. If Price = Z 50 and Quantity is 1,200 units, then Total Revenue =
(a) Z 1,250
(b) Z 1,150
(c) 6 0 , 0 0 0
(d) Z 50,000.
Answer: C

Question. Marginal Revenue (MR) —
(a) Will have positive values only
(b) Will have negative values only
(c) Can be positive or zero, but not negative.
Answer: C

Question. When Price is Z 10, 5 units can be sold. When price is reduced to Z 9, 6 units can be sold.
Here, Marginal Revenue will be —
(a) Z 10
(b) ! 9
(c) Z 1
(d) Z 4
Answer: D

Question. When Price is Z 5, 40 units can be sold. When price is reduced to Z 4, 60 units can be sold.
Here, Marginal Revenue will be —
(a) Z 120
(b) Z 40
(c ) Z 60
(d) Z 2
Answer: B

Question. When Price is Z 50, 12 units can be sold. When price is reduced to Z 48, 15 units can be sold. Here, Marginal Revenue will be —
(a) Z 120
(b)Z 40
(c) Z 60
(d) Z 2
Answer: A

Question. When Price = Z 20, quantity demanded is 9 units, and when Price = Z 19, quantity demanded is 10 units. What is the Marginal Revenue resulting from an increase in output from 9 units to 10 units?
(a) Z 20
(b) 19
(c) Z 10
(d) 1
Answer: C

Question. If Marginal Revenue = MR, Price Elasticity of Demand = 'e', and e > 1, then MR will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: A

Question. Marginal Revenue is equal to —
(a) The change in price divided by the change in output
(b) The change in quantity divided by the change in price
(c) hThe change in P x Q due to a one unit change in output
(d) Price, but only if the Firm is a price searcher
Answer: C

Question. When Price = Z 20, quantity demanded is 15 units, and when Price = 18, quantity demanded is 16 units. What is the Marginal Revenue resulting from an increase in output from 15 units to 16 units?
(a) Z 18 negative
(b) 18 positive
(c) Z 12 negative
(d) Z 12 positive
Answer: C

Question. Price X Quantity = .........
(a) Total Revenue
(b) Average Revenue
(c) Marginal Revenue
(d) Zero Revenue
Answer: A

Question. Total Revenue =
(a) Money which a Firm realises by selling certain units of a commodity.
(b) Revenue earned per unit of output
(c) Change in Total Revenue (TR) resulting from the sale of an additional unit of the commodity.
(d) None of the above
Answer: A

Question. In the long-run, any Firm will eventually leave the industry if -
(a) Price does not at least cover Average Total Cost
(b) Price does not equal Marginal Cost
(c) Economies of Scale are being reaped
(d) Price is greater than Long Run Average Cost
Answer: A

Question. Generally, Marginal Revenue (MR) Curve —
(a) Is parallel to X Axis
(b) Is parallel to Y Axis
(c) Slopes upward from left to right
(d) Slopes downward from left to right
Answer: D

Question. If Marginal Cost = MC, and Marginal Revenue = MR, then, for achieving equilibrium output —
(a) MC Curve should cut MR Curve from above.
(b) MC Curve should cut MR Curve from below.
(c) MC Curve should not cut MR Curve at all.
(d) MC Curve should be tangent to MR Curve.
Answer: B

Question. When Price is Z 20, 5 units can be sold. When price is reduced to Z 19, 6 units can be sold.
Here, Marginal Revenue will be —
(a) Z 14
(b) Z 27
(c) Z 20
(d) Z 19
Answer: A

Question. Generally, as quantity sold increases, Marginal Revenue (MR) Curve —
(a) Increases
(b) Decreases
(c) Remains constant
(d) Cannot be ascertained
Answer: B

Question. For earning super—normal profits, the condition is at the point when MC = MR (MC cutting from below)
(a) AR > AC
(b) AR = AC
(c) AR < AC
(d) None of the above.
Answer: A

Question. If Total Revenue (TR) decreases, Marginal Revenue (MR) will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: B

Question. The firm will attain equilibrium at a point where MC curve cuts _ curve from below
(a) AR
(b) MR
(c) AC
(d) AVC
Answer: B

Question. Let, Marginal Revenue = MR and Average Revenue = AR. Generally, as quantity sold increases —
(a) AR falls quickly than MR
(b) AR falls slowly than MR
(c) AR and MR fall at the same rate
(d) AR and MR do not change
Answer: B

Question. If Total Revenue = Z 2,00,000 when 20,000 units are sold, then Average Revenue =
(a) Z 1,00,000
(b) Z 20,000
(c) Z 10
(d) Z 1,20,000
Answer: C

Question. If Total Revenue = Z 1,00,000 when 20,000 units are sold, then Average Revenue =
(a) Z 1,00,000
(b) Z 20,000
(c) Z 5
(d) Z 1,20,000
Answer: C

Question. Marginal Revenue will be negative if Elasticity of Demand is —
(a) Less than one.
(b) More than one.
(c) Equal to one.
(d) Equal to zero.
Answer: A

Question. Average Revenue (AR) —
(a) Will have positive values only
(b) Will have negative values only
(c) Can be positive or zero, but not negative.
(d) Can be positive or zero or even negative.
Answer: C

Question. If Total Revenue (TR) increases, Marginal Revenue (MR) will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: A

Question. If Average Revenue (AR) Curve is depicted on a graph with Quantity on X axis —
(a) AR will not go below the X axis.
(b) AR may go below the X axis.
(c) AR cannot be depicted on the graph at all.
(d) None of the above
Answer: A

Question. Generally, as quantity sold increases, Marginal Revenue (MR) and Average Revenue (AR) Curve —
(a) MR and AR increase
(b) MR and AR decrease
(c) MR increases but AR decreases
(d) MR decreases but MR increases
Answer: B

Question. If a Seller gets Z 10,000 by selling 100 units and Z 14,000 by selling 120 units, his Marginal Revenue is
(a) Z 4,000
(b) Z 450
(c) Z 200
(d) Z 100
Answer: A

Question. If TR = Total Revenue, and Q = Quantity sold, then TR ÷Q refers to —
(a) Total Revenue
(b) Average Revenue
(c) Marginal Revenue
(d) Zero Revenue
Answer: B

Question. If Marginal Revenue = MR, Price Elasticity Demand = `e', and e < 1, then MR will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: B

Question. In the short run, as the prices are fixed, Firms can maximize their profit when they operate at
(a) MC = MR
(b) MC > MR
(c) MC < MR
(d) MC = AC
Answer: A

Question. If a seller obtains Z 3,000 after selling 50 units and Z 3,100 after selling 52 units then MR will be—
(a) 59.62
(b) 50.00
(c) 60.00
(d) 59.80
Answer: B

Question. If Marginal Revenue (MR) Curve is depicted on a graph with Quantity on X axis —
(a) MR will not go below the X axis.
(b) MR may go below the X axis.
(c) MR cannot be depicted on the graph at all.
(d) None of the above
Answer: B

Question. Suppose that a Sole Proprietorship is earning Total Revenue of Z 1,50,000 and is incurring Explicit Costs of Z 75,000. If the Owner could work for another Company for Z 30,000 a year, it can be concluded that
(a) The Firm is incurring an Economic Loss
(b) Implicit Costs are Z 25,000
(c) Total Economic Costs are Z
(d) The individual is earning an economic profit of Z 45,000
Answer: D

Question. Given AR=5, Elasticity of demand =2 find MR—
(a) 2.5
(b) -2.5
(c) L 5
(d) 2.0
Answer: A

Question. In the short run, if the Firm cannot cover its Total Variable Cost —
(a) It continues its operations
(b) It shuts down its operations temporarily
(c) It shuts down its operations forever
(d) It makes more investments to make the operations viable
Answer: B

Question. Let Marginal Cost = MC, and Marginal Revenue MR. If MC Curve cuts MR from above, it means —
(a) MC Curve is parallel to X Axis
(b) MC Curve is parallel to Y Axis
(c) MC Curve has a negative slope
(d) MC Curve has a positive slope
Answer: C

Question. If Marginal Cost = MC, and Marginal Revenue = MR, then, for achieving equilibrium output —
(a) MC > MR
(b) MC < MR
(c) MC = MR
(d) None of the above,
Answer: C

Question. A firm will close down in the short period, if AR is less than
(a) AVC
(b) AC
(c) MC
(d) None
Answer: B

Question. Average Revenue =
(a) Money which a Firm realises by selling certain units of a commodity.
(b) Revenue earned per unit of output
(c) Change in Total Revenue (TR) resulting from the sale of an additional unit of the commodity.
(d) None of the above
Answer: B

Question. If Average Revenue (AR) = ! 30, Price Elasticity of Demand (e) = 1.5, then MR will be
(a) Z 1 0
(b) Z 2 0
(c) Z 3 0
(d) Z Nil
Answer: A

Question. What should Firm do if Total Revenue from its product does not equal or exceeds its Total Variable Cost?
(a) Firm should carry production
(b) Firm should stop the production
(c) Firm should carry production and at least try to get revenues equal to fixed cost
(d) None of these
Answer: B

Question. Marginal Revenue =
(a) Money which a Firm realises, by selling certain units of a commodity.
(b) Revenue earned per unit of output
(c) Change in Total Revenue (TR) resulting from the sale of an additional unit of the commodity.
(d) None of the above
Answer: C

Question. If Average Revenue (AR) = Z 30, Demand (e) = 1, then MR will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: C

Question. If AR < AVC and the Firm continues production, then
(a) Losses will be reduced
(b) Profits will be reduced
(c) Losses will increase
(d) Profits will increase
Answer: C

Question. If Total Revenue (TR) is maximum, Marginal Revenue (MR) will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: C

Question. If Marginal Revenue = MR, Price Elasticity of Demand = `e', and e = 1, then MR will be —
(a) Positive
(b) Negative
(c) Zero
(d) Infinity
Answer: C

Question. Suppose that a Sole Proprietorship Firm is earning Total Revenues of Z 120,000 and is incurring Explicit Costs of Z 90,000. If theOwner could work for another Company for Z 50,000 a year, we would conclude that
(a) The Firm is incurring an Economic Loss
(b) Implicit Costs are Z 90,000
(c) The total Economic Costs are Z 100,000
(d) The Individual is earning an Economic Profit of Z 25,000
Answer: A

Question. If TR = Total Revenue, Q = Quantity sold, and A is the rate of change, then ATR refers to —
(a) Total Revenue
(b) Average Revenue
(c) Marginal Revenue
(d) Zero Revenue
Answer: C

Question. Which of the following is correct?
(a) If Marginal Revenue is positive and falling, Total Revenue will rise at a decreasing rate.
(b) Total Revenue is equal to price times the quantity sold.
(c) Marginal Revenue and Average Revenue can be calculated from Total Revenue.
(d) All of the above.
Answer: D

Question. If P = Price, and Q = Quantity sold, which of the following statements are correct?
(a) Total Revenue = P x Q
(b) Average Revenue= P x Q
(c) Marginal Revenue= P x Q
(d) Zero Revenue = P x Q
Answer: A

Question. As quantity increases, Total Revenue (TR) Curve —
(a) Always increases
(b) Always decreases
(c) First increases, reaches a maximum, and then decreases.
(d) First decreases, reaches a minimum, and then increases.
Answer: C

Question. Let, Marginal Revenue = MR and Average Revenue = AR. Generally, as quantity sold increases —
(a) MR falls quickly than AR
(b) MR falls slowly than AR
(c) MR and AR fall at the same rate
(d) MR and AR do not change
Answer: A

Question. If Marginal Cost = MC, and Marginal Revenue = MR, then, for achieving equilibrium output, the conditions are —
(a) MC = MR
(b) MC Curve should cut MR Curve from below.
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: C

Question. Let Average Cost = AC, and Average Revenue = AR. If AC < AR, it means that the Firm —
(a) Is earning Super—Normal Profits.
(b) Is earning Normal Profits.
(c) Is making Losses.
(d) Has to shut—down.
Answer: A

Question. Let Marginal Cost = MC, and Marginal Revenue = MR. If MC Curve cuts MR from below, it means —
(a) MC Curve has a negative slope
(b) MC Curve has a positive slope
(c) MC Curve is parallel to X Axis
(d) MC Curve is parallel to Y Axis
Answer: B

Question. Isoquant represents
(a) Constant quantity of input
(b) Variable quantity of input
(c) Variable quantity of output
(d) Constant quantity of output
Answer: D

Question. Which is the first order condition for the profit of a Firm to be maximum?
(a) AC = MR
(b) MC = MR
(c) MR = AR
(d) AC = AR
Answer: B

Question. Which of the following statements is true?
(a) All points on a Budget Line would cost the Firm the same amount.
(b) Whatever the combination of Factor Inputs the Firm chooses, the Total Cost to the Firm remains the same.
(c) A change in the relative Input Price will cause a change in the slope of the Isocost Line.
(d) All the above
Answer: D

Question. When does a Firm earn Normal Profits?
(a) When MR = MC
(b) When AR = AC
(c) When MR = AR = AC = AC
(d) None of these
Answer: B

Question. If Average Revenue (AR) = Z 30, Price Elasticity of Demand (e) = 0.5, then MR will be —
(a) Z 30 positive
(b) Z 30 negative
(c) Nil
(d) Infinity
Answer: B

Question. In the long-run, if the Firm is unable to cover the Average Total Cost then it -
(a) Decreases the Selling Price
(b) Increases the Labour to increase production
(c) Decreases the Labour to decrease prediction
(d) Moves out of the business
Answer: D

Question. Average Revenue (AR) Curve denotes—
(a) Demand
(b) Supply
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: A

Question. If Marginal Cost = MC, and Marginal Revenue = MR, and MC < MR, the Firm should —
(a) Increase its output.
(b) Reduce its output
(c) Operate at the present level itself.
(d) Should shut down.
Answer: A

Question. If Marginal Revenue = MR, Price Elasticity of Demand = `e', and MR = 0, e will be
(a) e > 1
(b) e < 1
(c) e = 1
(d) e = zero
Answer: C

Question. When a Market is in equilibrium —
(a) No shortages exist.
(b) Quantity demanded equals quantity supplied.
(c) A price is established that clears the market.
(d) All of the above are correct.
Answer: D

Question. The term "Iso" means —
(a) Single
(b) Unequal
(c) Equal
(d) Similar
Answer: C

Question. Isoquants
(a) Are concave to the origin
(b) Touched both the axis
(c) Are non—intersecting
(d) Are positively sloped
Answer: C

Question. If Average Revenue (AR) = 300, Price Elasticity of Demand (e) = 2.5, then MR will be
(a) 180
(b) 120
(c) 300
(d) Nil
Answer: A

Question. If Marginal Cost = MC, and Marginal Revenue = MR, then, for achieving equilibrium output —
(a) MC Curve should have positive slope
(b) MC Curve should have negative slope
(c) MC Curve should be parallel to X Axis
(d) MC Curve should be parallel to Y Axis
Answer: A

Question. If Marginal Revenue = MR, Price Elasticity of Demand = `e', and MR is negative (i.e. MR < 0), e will be
(a) e > 1
(b) e < 1
(c ) e = 1
(d) e = zero
Answer: B

Question. What should Firm do when Marginal Revenue is greater than Marginal Cost?
(a) Firm should expand output
(b) Efforts should be made to make then equal
(c) Prices of the products should be lowered down
(d) All of the above
Answer: A

Question. If Marginal Revenue = MR, Price Elasticity of Demand = `e', and MR is positive (i.e. MR > 0), e will be
(a) e > 1
(b) e < 1
(c ) e = 1
(d) e = zero
Answer: A

Question. A Firm encounters its "Shut—Down Point" when—
(a) Average Total Cost equals price at the profit—maximizing level of output.
(b) Average Variable Cost equals Price at the profit—maximizing level of output.
(c) Average Fixed Cost equals price at the profit-maximizing level of output.
(d) Marginal Cost equals Price at the profit-maximizing level of output.
Answer: B

Question. What is the relationship between AR and MR?
(a) AR and MR both are negatively sloped
(b) MR Curves always lies half—way between AR Curve and Origin
(c) AR and MR both can be zero or negative
(d) All of these
Answer: A

Question. Long-Run Normal Prices is that which is likely to prevail
(a) Al l the times
(b) In market period
(c) In short -run period
(d) In long-run period
Answer: D

Question. If AR < AVC then the Firm —
(a) Will continue and make profits
(b) Will have losses but will not shut down
(c) Will increase the output
Answer: B

Question. If Average Revenue (AR) =300, Price Elasticity of Demand (e) = 4, then MR will be —
(a) 105
(b) 225
(c) 300
(d) Nil
Answer: C

Question. Let Marginal Cost = MC, and Marginal Revenue = MR. If MC Curve cuts MR from above, it means —
(a) Firm is at equilibrium output level.
(b) Firm is below equilibrium output level.
(c) Firm is above equilibrium output level.
(d) Firm does not operate at all.
Answer: B

Question. Let Marginal Cost = MC, and Marginal Revenue MR. If MC Curve cuts MR from below, it means —
(a) Firm is at equilibrium output level.
(b) Firm is below equilibrium output level.
(c) Firm is above equilibrium output level.
(d) Firm does not operate at all.
Answer: A

Question. Let Average Cost = AC, and Average Revenue = AR. If AR = AC, it means that the Firm —
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses
(d) Has to shut—down
Answer: B

Question. The Average Profit is the difference between—
(a) AC and TC
(b) AC and VC
(c) AC and AR
(d) AC and TR
Answer: C

Question. If the Total Product Cost for manufacturing of a commodity is Z 1,50,000. Out of this, Implicit Cost is Z 55,000 and Normal Profit is Z 25,000, what will be Explicit Cost?
(a) Z 95,000
(b) Z 1,25,000
(c) Z 80,000
(d) Z 70,000
Answer: D

Question. Let Average Variable Cost = AVC, and Average Revenue = AR. If AR < AVC, it means that the Firm
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses but need not shut—down
(d) Has to shut—down
Answer: D

Question. When ... , the Firm will be earning just Normal Profits.
(a) AC = AR
(b) MC = MR
(c) AR = MR
Answer: A

Question. When AR= Z 10 and AC=Z 8, the Firm makes—
(a) Normal Profit
(b) Net Prof it
(c) Gross Prof it
(d) Super—Normal Profit
Answer: D

Question. Price = .............
(a) Total Revenue
(b) Average Revenue
(c) Marginal Revenue
(d) Zero Revenue
Answer: B

Question. Generally, as quantity sold increases, Average Revenue (AR) Curve —
(a) Increases
(b) Decreases
(c) Remains constant
(d) Cannot be ascertained
Answer: B

Question. If any unit of production adds more to revenue than to cost it will result into —
(a) Increase in Profit
(b) Decrease in Profit
(c) No change
(d) Loss
Answer: A

Question. Isoquants are also called —
(a) Equal—Product Curves
(b) Production Indifference Curves
(c) aIso product Curves
(d) All the above
Answer: D

Question. For having economic losses, the condition is at the point when MC = MR (MC cutting from below)
(a) AR > AC
(b) AR = AC
(c) AR < AC
(d) None of the above.
Answer: C

Question. "I am making a loss, but with the rent I have to pay, I can't afford to shut down at this point of time." If this Entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short-run is
(a) Rational, if the Firm is covering its Variable Cost.
(b) Rational, if the Firm is covering its Fixed Costs.
(c) Irrational, since Plant Closure is necessary to eliminate losses.
(d) Irrational, since Fixed Costs are eliminated if a Firm shuts down.
Answer: A

Question. Which of the following statements is incorrect?
(a) If Marginal Revenue exceeds Marginal Cost, the Firm should increase output.
(b) If Marginal Cost exceeds Marginal Revenue the Firm should decrease output.
(c) Economic Profits are maximized when Total Costs are equal to Total Revenue.
(d) Profits are maximized when Marginal Revenue equals Marginal Cost.
Answer: C

Question. Suppose the Total Cost of Production of Commodity X is Z 1,25,000. Out of this Cost, ImplicitCost is Z 35,000 and Normal Profit is Z 25,000. What will be the Explicit Cost of Commodity X?
(a) Z 90,000
(b) Z 65,000
(c) Z 60,000
(d) Z 1,00,000
Answer: B

Question. In the long-run, Firms will exit the market if the price of the good offered for sale is less than -
(a) Marginal Revenue
(b) Marginal Cost
(c) Average Total Cost
(d) Average Revenue
Answer: C

Question. If AR < AVC and the Firm stops production, then —
(a) There is no profit no loss
(b) There is a Loss equivalent to Fixed Costs
(c) There is a Prof it
(d) None of the above
Answer: B

A Competitive Firm sells as much as of its product as it chooses at a Market Price of 2100 per unit. Its Fixed Costs are 2300 and its Variable Costs for different levels of production are shown in the following table.
Use the following table and answer the next 14 questions. 

Question. When Production is 20 units, AVC will be -
(a) Z 50 .00
(b) Z 47 . 00
(c) Z 46 . 67
(d) Z 49 .00
Answer: D

Question. When Production is 20 units, AC will be -
(a) Z 50 .00
(b) Z 64 . 00
(c) Z 77 . 00
(d) Z 88 . 00
Answer: B

Question. When Production is 40 units, AVC will be -
(a) Z 85 . 00
(b) Z 82 . 50
(c) Z 92 .50
(d) Z 95 .00
Answer: A

Question. MC Curve will cut AC Curve when output is -
(a) 10 units
(b) 20 units
(c) 30 units
(d) 40 units
Answer: B

Question. When Production is 30 units, AVC will be -
(a) Z 56 . 67
(b) Z 61 .67
(c) Z 46 .67
(d) Z 66 .67
Answer: B

Question. If the Market Price drops from Z 100 to Z 56, the Firm's short run response should be -
(a) Shut down
(b) Produce 5 units
(c) Produce 20 units
(d) Continue to produce the same number of units as before the drop in price.
Answer: C

Question. When Production is 40 units, AC will be -
(a ) Z 85.00
(b) 8 2 . 50
(c) Z 92.50
(d) 95 . 00
Answer: C

Question. When Production is 30 units, AC will be -
(a) Z 6 6 .67
(b) 7 1 . 67
(c) Z 56 .67
(d) Z76 . 67
Answer: B

Question. When Production is 50 units, AVC will be -
(a) Z 100.00
(b) Z 110.00
(c) Z 119.00
(d) Z 125.00
Answer: C

Question. When Production is 50 units, AC will be -
(a) Z 100.00
(b) Z 110.00
(c) Z 119.00
(d) Z 125.00
Answer: D

Question. AC is minimum when output is -
(a) 10 units
(b) 20 units
(c) 30 units
(d) 40 units
Answer: B

Question. When Production is 10 units, AVC will be -
(a) Z 50 . 00
(b) Z 47 .00
(c) Z 46 .67
(d) Z 49 .00
Answer: B

Question. To maximize Profit, the Firm should produce -
(a) 15 units
(b) 30 units
(c) 35 units
(d) 50 units
Answer: B

Question. When Production is 10 units, AC will be
(a) Z 50 . 00
(b) Z 97 . 00
(c) Z 77 . 00
(d) ! 110 .00
Answer: C

Use Table to answer the following 4 questions.
Bozzo's burgers is a small restaurant and a price taker. The table below provides the data of Bozzo's output and costs in Rupees. 

Question. What is average fixed cost when 20 burgers are produced?
(a) Z 5
(b) Z 3.33
(c) Z 10
(d) Z 2.5
Answer: A

Question. Between 10 to 20 burgers, what is the marginal cost (per burger)?
(a) Z 11
(b) Z 13
(c) Z 14
(d) Z9
Answer: D

Question. If burgers sell for Rs14 each, what is Bozzo's profit maximizing level of output :
(a) 10 burgers
(b) 40 burgers
(c) 50 burgers
(d) 60 burgers
Answer: B

Question. What is the total variable cost when 50 burgers are produced?
(a) Z 690
(b) 2960
(c) 2110
(d) Z 440
Answer: A

Use Table to answer the following 5 questions.
The following table provides cost and price information for an individual firm. The first two columns represent the demand curve that the firm faces. The firm has a fixed amount of capital equipment, but can change the level of other inputs. such as labour and materials.
Calculate the missing values in the table, and use the table to answer the below questions.
(Make sure you answer each question using the production level specified.) 

Question. To maximize its profit, the firm should produce:
(a) 0 units.
(b) 3 units.
(c) 5 units.
(d) 7 units.
Answer: D

Question. When production equals 7 units, the firm's profit is:
(a) +6Z 0
(b) Z 41.57
(c) Z 291
(d) Z 336
Answer: C

Question. When production equals 4 units, the firm's:
(a) Fixed cost is 100 and its variable cost is 93.
(b) Fixed cost is 193 and its variable cost is 0.
(c) Fixed cost is 0 and its variable cost is 193,
(d) Fixed cost is 45 and its variable cost is 148.
Answer: D

Question. When production equals 6 units, the firm's marginal revenue is:
(a) Z 384
(b) Z 94
(c) Z 64
(d) Z 2.
Answer: C

Question. When production equals 5 units, the firm's Total Revenue is:
(a) Z 100
(b) Z 270
(c) Z 324
(d) Z 500
Answer: D

Question. A line joining tangency points of Isoquants and I so costs is called
(a) Expansion Path
(b) Contraction Path
(c) Constant Path
(d) None of the above
Answer: A

Question. If any unit of production adds more to cost than to revenue it will result into —
(a) Increase in Profit
(b) Decrease in Profit
(c) No change
(d) Loss
Answer: B

Question. Let Average Cost = AC, and Average Revenue = AR. If AR > AC, it means that the Firm —
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses
(d) Has to shut—down
Answer: A

Question. At which of the following points, does theMargina l Cost Curve meet the Average Variable Cost Curve?
(a) Shut Down Point
(b) Break Even Point
(c) Equi l ibrium Point
(d) Profit Maximization Point
Answer: A

Question. When the Firm is said to be in equilibrium?
(a) When it maximizes its Profit
(b) When it maximizes its Losses
(c) When Revenue is equal to Cost
(d) None of these
Answer: A

Question. For earning normal profits, the condition is at the point when MC = MR (MC cutting from below)
(a) AR > AC
(b) AR = AC
(c) AR < AC
(d) None of the above.
Answer: B

Question. If Marginal Cost = MC, and Marginal Revenue = MR, and MC > MR, the Firm should —
(a) Increase its output
(b) Reduce its output
(c) Operate at the present level itself
(d) Should shut down
Answer: B

Question. Isocost Lines are also called —
(a) Equal cost Lines
(b) Budget Line -
(c) Budget constraint Line
(d) All the above
Answer: D

Question. Which of these is a condition for shut— down of a Firm?
(a) AR > AVC
(b) AR > AC
(c) AR < AC
(d) AR < AVC
Answer: D

Question. Let Average Cost = AC, and Average Revenue =mAR. If AC = AR, it means that the Firm —
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses
(d) Has to shut—down
Answer: B

Question. Suppose a Firm is producing a level of output such that MR>MC. What should be Firm do to maximize its profits?
(a) The Firm should do nothing
(b) The Firm should hire less labour
(c) The Firm should increase price
(d) The Firm should increase output
Answer: D

Question. Let Average Cost = AC, and Average Revenue = AR. If AR < AC, it means that the Firm —
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses in the economic sense
(d) Has to shut—down.
Answer: C

Question. When , we know that the Firms are earning just Normal Profits.
(a) AC = AR
(b) MC = MR
(c) MC = AC
(d) AR = MR
Answer: A

Question. inputs which are capable of producing the same level of output.
(a) Isoquant
(b) Isocost
(c) Isoprice
(d) None of the above
Answer: A

Question. In the long run, there is enough time for the Firm to cover its Losses and earn Normal Profits. This is because in the long run, all inputs are -
(a) Ident ical
(b) Homogenous
(c) Variable
(d) Fixed
Answer: C

Question. ________ shows the various alternative combinations of two Factor Inputs, which a Firm can buy with given amount of money.
(a) Isocost Lines
(b) Isoproduct Lines
(c) Isoprice Lines
(d) Isoquant lines
Answer: A

Question. The point of tangency between any Isoquant and anI socost Line gives the
(a) highest—cost combination of inputs and maximum level of output that can be produced
(b) lowest—cost combination of inputs and minimum level of output that can be produced
(c) lowest—cost combination of inputs and maximum level of output that can be produced
(d) highest—cost combination of inputs and minimum level of output that can be produced
Answer: C

Question. Let Average Cost = AC, and Average Revenue = AR. If AC > AR, it means that the Firm —
(a) Is earning Super—Normal Profits
(b) Is earning Normal Profits
(c) Is making Losses in the economic sense
(d) Has to shut—down
Answer: C