Practice Microeconomics Section Tests Questions and Answers

• 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: