Practice Microeconomics Section Tests Questions and Answers

• The coefficient of regression of Y on X is byx = 1.2 , If A = (X-300)/4 and C = (Y-500)/6 find bCA
• Two people enter a bus. Two adjacent cramped seats are free. Each person must decide whether to sit or stand. Sitting alone is more comfortable than sittin...
• A firm should increase investment when :
• Consider a Keynesian Cross Model with following features, Consumption Function: C= C0 + b (Y – T)   Tax Function: T = T0 + tY   Income Identity: Y = ...
• Suppose we regress the dependent variable y on four independent variables x1, x2, x3, and x4. After running the regression on n = 16 observations, ...
• Which of the following defines ambient standards in an environmental policy
• Which of the following statements are correct about trilemma in monetary policy A. It is related to closed economy model. B. It involves exchange rate, c...
• Which of the following applies to the physical linkage approach for the valuation of environmental benefits
• Give below are two statements: Statement - I: The terms of trade of a nation are defined as the ratio of the cost of its export commodity to the price of...
• Which of the following defines ambient standards in an environmental policy
• Which of the following statements are correct about trilemma in monetary policy A. It is related to closed economy model. B. It involves exchange rate, c...
• Consider a Keynesian Cross Model with following features, Consumption Function: C= C0 + b (Y – T)   Tax Function: T = T0 + tY   Income Iden...
• Two people enter a bus. Two adjacent cramped seats are free. Each person must decide whether to sit or stand. Sitting alone is more comfortable than sittin...
• Suppose we regress the dependent variable y on four independent variables x1, x2, x3, and x4. After running the regression on...
• A firm’s production function is Q = 10 * L to the power of 0.5 * K to the power of 0.5. If the firm uses 16 units of Labor and 25 units of Capital, what ...
• Given the Total Cost function TC = 100 + 10Q + 2Q squared, what is the Marginal Cost (MC) when output Q is 5?
• If the production function is Q = L raised to 0.75 * K raised to 0.25, and the price of Labor (w) is 30 and the price of Capital (r) is 10, the cost-minimi...
• A firm’s total fixed cost is 500. When output is 50 units, the total variable cost is 1000. What is the Average Total Cost (ATC) at 50 units?
• In a Cobb-Douglas production function Q = L raised to 0.6 * K raised to 0.8, the returns to scale are:
• If the demand function is P = 100 - 2Q, what is the Marginal Revenue (MR) at Q = 10?
• A firm produces 100 units at an average variable cost of 5 and an average total cost of 12. What is the firm's Total Fixed Cost?
• If the Marginal Product of Labor (MPL) is 20 and the MRTS of Labor for Capital is 4, what is the Marginal Product of Capital (MPK)?
• A firm's TC = 50 + 5Q. What is the Average Variable Cost (AVC) when Q = 10?
• The price elasticity of demand is 2. If the price of the product is 20, what is the Marginal Revenue (MR)?
• If a production function is homogeneous of degree n, the Marginal Rate of Technical Substitution (MRTS) will be:
• In the context of a CES (Constant Elasticity of Substitution) production function, if the substitution parameter rho approaches zero, the function collapse...
• The "Output Elasticity of Total Cost" (Ec) is defined as the ratio of Marginal Cost to Average Total Cost (MC/ATC). If Ec < 1, the firm is experiencing:
• Under the condition of "Product Exhaustion" (Euler's Theorem), if a firm operates under Increasing Returns to Scale and pays each factor its marginal produ...
• A "Homothetic" production function is a monotonic transformation of a homogeneous function. For such functions, the Expansion Path is always:
• According to the Shephard’s Lemma in cost theory, the partial derivative of the cost function with respect to an input price (e.g., wage) gives:
• The "Elasticity of Substitution" for a Leontief Production Function is:
• In the short run, if a firm’s production function is Q = K^0.5 * L^0.5 and Capital (K) is fixed at 100 units, the Short-Run Marginal Cost (SRMC) curve wi...
• If the Elasticity of Scale (epsilon) is exactly 1.2 at a specific level of output, a 10% increase in all inputs will lead to:
• The "Cessation of Production" or the Long-run Exit Condition for a firm occurs when: