..8..objective.

Question 1 Which one of the following statements is true? a) If the marginal cost is greater than the average cost the average cost falls b) If the marginal cost is greater than the average cost the average cost increases c) If the marginal cost is positive total costs are maximized d) If the marginal cost is negative total costs increase at a decreasing rate if output increases Question 2 According to the law of diminishing returns: a) The marginal product eventually fallsas more units of a variable factor are added to a fixed factor b) Marginal utility falls as more units of aproduct are consumed c) The total product falls as more units of a variable factor are added to a fixed factor d) The marginal product eventually increases as more units of a variable factor are added to a fixed factor Question 3 The law of diminishing returns assumes: a) There are no fixed factors of production b) There are no variable factors of production c) Utility is maximized when marginal product falls d) Some factors of production are fixed Question 4 When internal economies of scale occur: a) Total costs fall b) Marginal costs increase c) Average costs fall d) Revenue falls Question 5 The first level of output at which the long run average costs are minimized iscalled: a) The Minimum Efficient Scale b) The Minimum External Scale c) The Maximum External Scale d) The Maximum Effective Scale Question 6 The average variable cost curve: a) Is derived from the average fixed costs b) Converges with the average cost as output increases c) Equals the total costs divided by the output d) Equals revenue minus profits Question 7 If marginal cost is positive and falling: a) Total cost is falling b) Total cost is increasing at a falling rate c) Total cost is falling at a falling rate d) Total cost is increasing at an increasing rate