Question 1

Mannheim defines ________as the sum of those methods by which a society tries to influence human behavior to maintain a given order.&#10;A)social control&#10;B)constitution&#10;C)policing&#10;D)democracy

Accepted Answer

Mannheim defines social control as the sum of those methods by which a society tries to influence human behavior to maintain a given order. This encompasses various mechanisms, formal and informal, used to enforce norms and laws, ensuring societal cohesion and compliance.

Question 2

Implicit costs are:&#10;A)equal to total fixed costs.&#10;B)comprised entirely of variable costs.&#10;C)&#34;payments&#34; for self-employed resources.&#10;D)always greater in the short run than in the long run.

Accepted Answer

Implicit costs are considered the opportunity costs of utilizing resources that a firm already owns for production instead of renting, selling, or lending them. They represent the foregone income from these resources, such as the income an entrepreneur could have earned if they worked for another company instead of running their own business.

Question 3

Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true?&#10;A)the firm will earn accounting and economic profits.&#10;B)the firm will face accounting and economic losses.&#10;C)the firm will face an accounting loss, but earn economic profits.&#10;D)the firm may earn accounting profits, but will face economic losses.

Accepted Answer

Selling a product at a price lower than the opportunity cost of the inputs means the firm is not covering its total costs, leading to economic losses. However, it might still cover its explicit costs, thus potentially earning accounting profits.

Question 4

Suppose that a firm produces 200,000 units a year and sells them all for Rs.10 each. The explicit costs of production are Rs.1,500,000 and the implicit costs of production are Rs. 300,000. The firm has an accounting profit of:

A)rs. 500,000 and an economic profit of rs. 200,000.
B)rs. 400,000 and an economic profit of rs. 200,000.
C)rs. 300,000 and an economic profit of rs. 400,000.
D)rs. 200,000 and an economic profit of rs. 500,000.

Accepted Answer

Accounting profit is calculated as total revenue minus explicit costs. Here, total revenue is 200,000 units * Rs.10 = Rs.2,000,000. Subtracting the explicit costs of Rs.1,500,000 gives an accounting profit of Rs.500,000. Economic profit subtracts both explicit and implicit costs from total revenue, so Rs.2,000,000 - Rs.1,500,000 (explicit costs) - Rs.300,000 (implicit costs) = Rs.200,000.

Question 5

The short run is a time period in which:&#10;A)all resources are fixed.&#10;B)the level of output is fixed.&#10;C)the size of the production plant is variable.&#10;D)some resources are fixed and others are variable.

Accepted Answer

In the short run, some resources (like capital) are fixed, meaning they cannot be easily changed, while others (like labor) are variable and can be adjusted to meet changes in demand.

Question 6

The marginal product of labor curve shows the change in total product resulting from:&#10;A)one-unit increase in the quantity of a particular resource used, letting other resources vary.&#10;B)one-unit increase in the quantity of a particular resource used, holding constant other resources.&#10;C)change in the cost of a variable resource.&#10;D)change in the cost of a fixed resource.

Accepted Answer

The marginal product of labor curve illustrates the additional output generated by adding one more unit of labor, assuming all other inputs remain constant. This concept is fundamental in understanding how varying the amount of labor affects total production under the ceteris paribus condition (all other factors being held constant).

Question 7

If you know that with 8 units of output, average fixed cost is Rs. 12.50 and average variable cost is Rs. 81.25, then total cost at this output level is:&#10;A)rs. 93.75.&#10;B)rs. 97.78.&#10;C)rs. 750.&#10;D)rs. 880.

Accepted Answer

Total cost = Average fixed cost * Output + Average variable cost * Output= 12.50 * 8 + 81.25 * 8= 100 + 650= Rs. 750

Question 8

The reason the marginal cost curve eventually increases as output increases for the typical firm is because:&#10;A)of diseconomies of scale.&#10;B)of minimum efficient scale.&#10;C)of the law of diminishing returns.&#10;D)normal profit exceeds economic profit.

Accepted Answer

The law of diminishing returns states that as more units of a variable input (like labor) are added to fixed inputs (like machinery), the additional output produced from each new unit of input will eventually decrease. This principle explains why the marginal cost curve increases after a certain point of production, as it becomes more costly to produce additional units of output due to less efficient use of inputs.

Question 9

Which of the following statements best describes the general form of a production function:(i) It is a purely technological relationship between quantities of input and quantities of output.(ii) It represents the technology of an organisation, sector of an economy.(iii) Prices of inputs or of the output do not enter into the production function.(iv) It is a flow concept describing the transformation of inputs into output per unitof time.

A)(i),(ii) and (iv)
B)(i) and (ii)
C)(i) and (iv)
D)all of the above

Accepted Answer

The general form of a production function describes a purely technological relationship between quantities of input and output (i), represents the technology of an organization or sector (ii), does not include prices of inputs or output (iii), and is a flow concept describing the transformation of inputs into output per unit of time (iv).

Question 10

Which of the following statements describes the presence of diminishing returns. Holding at least one factor constant &#8230;....&#10;A)the marginal product of a factor is positive and rising.&#10;B)the marginal product of a factor is positive but falling.&#10;C)the marginal product of a factor is falling and negative.&#10;D)the marginal product of a factor is constant.

Accepted Answer

Diminishing returns occur when the marginal product of a factor of production is positive but decreasing as more of the factor is utilized, assuming other factors are held constant. This reflects a decrease in the additional output gained from using one more unit of the factor.

Question 11

Which of the following statements describes increasing returns to scale:&#10;A)doubling the inputs used leads to double the output.&#10;B)increasing the inputs by 50% leads to a 25% increase in output.&#10;C)increasing inputs by 1/4 leads to an increase in output of 1/3.&#10;D)none of the above.

Accepted Answer

The answer of Which of the following statements describes increasing...

Question 12

Economies of scale exist if:&#10;A)as the amount of capital increases, the cost of producing per unit rises&#10;B)as the amount of capital increases, the cost of producing per unit falls&#10;C)as the amount of capital increases, the marginal cost rises&#10;D)as the amount of capital increases, the marginal physical product falls

Accepted Answer

The answer of Economies of scale exist if:&#10;A)as the amount...

Deck 3: Economic Concepts and Principles in Business Operations