TMA4/ECO232

TMA Quiz Questions TMA: TMA4/ECO232 Matric Number:  SCORE=10.00 ECO232 - Micro Economic Theory II Mr. Adedeji Abiodun Liadi (aliadi@noun.edu.ng ) 1 In a market economy with five goods and four resources, there would be a need for five markets four markets six markets nine markets 2 The optimal input combination will occur where the MRTS is equal to the price of capital MRTS = w/r MRTS = - w/r the marginal products are at a maximum 3 When the law of diminishing returns begins to operate, the TVC curve begins to fall at an increasing rate, rise at a decreasing rate fall at a decreasing rate rise at an increasing rate 4 Normally, long run and short run expansion path will intersect only once be congruent never intersect intersect at two output levels 5 MC is given by the slope of the TFC curve the slope of the TVC curve but not by the slope of the TC curve the slope of the TC curve but not by the slope of the TVC curve either the slope of the TVC curve or the slope of the TC curve 6 At the point of producer equilibrium the isoquant is tangent to the isocost the MRTSLK equals PL/PK MPL/PL = MPK/PK all of the above 7 The imposition of an effective price ceiling will increase price and quantity supplied reduce price and quantity supplied increase price and reduce quantity supplied reduce price and increase quantity supplied 8 The dimensions of the production box in the Edge-worth geometric approach are determined by the PPF the fixed quantities of inputs available the state of technology quantities of goods produced 9 Which of the following is not a necessary condition for a pareto efficient allocation of resources MRTS= MRS production efficiency MRT = MRS consumption efficiency 10 The break-even point is the minimum MC point the minimum AVC point the minimum AFC point the minimum ATC point 11 The shutdown point is the minimum MC point the minimum AVC point the minimum AFC point the minimum ATC point 12 As output increases, which of the following declines steadily? MC AFC AVC ATC 13 If a firm’s AFC equals N20 and total cost equals N1000, when output is twenty units, then AVC for twenty units is N20 N30 N50 none of the above 14 Which of the following do economists consider a productive economic resource? money capital capital goods interest profit 15 The price paid for a natural resource that is completely fixed in supply is profit interest rent a risk payment 16 In total, the supply of land is perfectly inelastic of unitary elasticity perfectly elastic elastic but not perfectly elastic 17 Which is the minimum return or payment necessary to retain the entrepreneur in some specific line of production? normal profit explicit real interest rate pure rate of interest 18 The demand for health care is price elastic price inelastic income elastic income inelastic 19 According to the theory of second best, eliminating a monopoly from one market in the economy will improve the welfare of the society will decrease the welfare of the society will not change welfare of society may increase or decrease social welfare 20 The locus of Pareto optimality in production and consumption is given by the social welfare function the utility-possibility curve the transformation curve the grand utility-possibility curve