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Microeconomics Endterm Q1

This document contains instructions for a Microeconomics end-term examination consisting of two sections. The first section has 10 multiple choice questions worth 1 mark each. The second section has 4 descriptive questions worth 5 marks each. Students have 1.5 hours to complete the exam, which is out of a total of 30 marks.

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74 views2 pages

Microeconomics Endterm Q1

This document contains instructions for a Microeconomics end-term examination consisting of two sections. The first section has 10 multiple choice questions worth 1 mark each. The second section has 4 descriptive questions worth 5 marks each. Students have 1.5 hours to complete the exam, which is out of a total of 30 marks.

Uploaded by

Sports at it's best
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© © All Rights Reserved
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SCHOOL OF ECONOMICS, RV UNIVERSITY

END-TERM EXAMINATION
MICROECONOMICS
1. All the questions are to be answered and are compulsory.
2. The duration of the exam is 1.5 hours.
3. The question paper consists of two sections. The first section consists of 10 Multiple
Choice Questions, followed by 4 Descriptive questions in the second section.
4. Each multiple choice question will be awarded one mark and the descriptive question
will be awarded 5 marks each.
5. The total marks for the exam are 30.

Section I
1. The major task of the firms in conducting business is:
a. Organization
b. Co-ordination
c. Delivery
d. Hiring
2. The production function of a firm describes the relation between:
a. The inputs used and the output produced
b. Labor and capital inputs
c. Purchased service inputs and capital
d. Average cost and marginal cost
3. The average product of the labor describes:
a. The output produced per unit of the labor employed
b. The average of the input level
c. The average of the capital used
d. The average of the labor level used
4. The marginal product of the labor can be defined as the:
a. The additional output produced per one additional unit of labor employed
b. The marginal labor employed
c. The marginal capital employed
d. The combination of inputs for the firm
5. The returns to scale describes:
a. The rate at which the output changes as inputs are changed proportionately
b. The output and input relationship
c. The process of converting inputs to outputs
d. The relation between average and marginal product
6. The type of cost that matters to economists in a firms is:
a. Economic cost
b. Opportunity cost
c. Accounting cost
d. Both a & b
7. State whether the following is true or false: “The sunk cost of a firm is immaterial to
decision-making process of the firm.”
a. True
b. False
8. State whether the following is true or false: “The fixed cost of a firm can be zero, only
when the firm shuts down or stops operating”
a. True
b. False
9. State whether the following is true or false: “Whether a cost to the firm is variable or
fixed depending on the timing considered”
a. True
b. False
10. State whether the following is true or false: “ Average fixed cost is the fixed cost
divided by the total level of the output”
a. True
b. False

Section II – Descriptive questions


1. Please describe the steps involved in the production decision of firm.
2. Please describe the relation between the marginal and average product of an input.
3. The "Greasy Wrench" shop specializing in auto repairs rents a building at the corner
of 77th and Moonawalker. In the short run, it can vary its output (the number of cars
fixed) only by varying the number of mechanics it employs. Each Greasy Wrench
employee is paid a fixed wage. Over the years, Wu Wei, the owner of "Greasy
Wrench", has tried hiring different numbers of workers. The data about the average
productivity of each worker (also known as the Average Product of Labor) for each
number of workers are given in the table below:
Number of workers Total product
1 5
2 14
3 30
4 44
5 50
6 54

a. Find the average product of labor with respect to each number of workers.
b. Find the marginal product of labor with respect to each number of workers.
4. What are returns to scale? Explain the different types of returns to scale.

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