# TMA3/ECO231 – Micro Economic Theory I

TMA Quiz Questions
TMA: TMA3/ECO231
Matric Number:  SCORE=9.50
ECO231 – Micro Economic Theory I
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
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