TNPSC General Economics MCQ - 3

41. Returns to scale refers to the production function where
A. All factors are fixed
B. Some factors are fixed and others are variable
C. All factors are variable
D. None of the above

42. In the case of diminishing returns to scale, a given proportionate  increase in all factors causes
A. A more than proportionate increase in output
B. An equal proportionate increase in output
C. A less than proportionate increase in output
D. None of the above

43. Increasing returns to scale occurs due to
A. Division of labour C. Economies of scale
B. Specialization D. All of the above

44. The cause for diminishing returns to scale is:
A. Improper proportion of factors of production
B. Difficulty in the combination of certain factors
C. Excess combination of certain factors
D. All of the above

45. The solution to diminishing returns to scale is :
A. Technical progress
B. Expansion of resources
C. Proper combination or resources
D. All of the above

46. Economies of scale refers to:
A. Advantages resulting from large scale production
B. Disadvantages resulting from large scale production
C. Advantages resulting from the increase in the number of consumers
D. All of the above

47. Which one of the following is not related to economies of scale:
A. Scope for division of labour and specialization
B. Scope for getting inputs at cheaper rates
C. Difficulty faces by the managers to coordinate the business
D. Scope for better storage facilities

48. The law of Diminishing returns is applicable to:
A. Agriculture only C. In short-run only
B. Industry only D. Universally

49. Let a firm employs 5 labourers and produces 120 units of output. When  6 labourers are employed the firm produces 136 units of output. Then the marginal product is________
A. 120 C. 6
B. 136 D. 16

50. A firm produces 200 units of commodity X by employing 10 workers and  240 units of the same commodity by employing 12 workers. Then the  Average Product of the worker is _______
A. 200 C. 20
B. 240 D. 40

51. Other things remaining the same, the quantity of a product demanded  increases with __________ in price.
A. Increase
B. Decrease
C. Variation
D. None of the above

52. When total utility is maximum, marginal utility is:
A. Maximum
B. One
C. Zero
D. Infinite

53. For complementary goods, the cross elasticity of demand:
A. Positive
B. Negative
C. Zero
D. None

54. Relation between price of a commodity and demand for another
 commodity is measured by:
A. Price elasticity
B. Income elasticity
C. Cross elasticity
D. Elasticity of substitution

55. When TU falls, MU is:
A. Rises
B. Zero
C. Positive
D. Negative

56. Demand varies ________ with price.
A. Directly
B. Positively
C. Inversely
D. None of the above

57. When Q = f (P), the elasticity coefficient is measured by:
A. ∆Q/∆P / P/Q
B. ∆P/∆Q * Q/P
C. ∆Q/∆P * P/Q
D. ∆P/∆Q / Q/P 

58. Income elasticity of demand for inferior good is:
A. Negative
B. Positive
C. Zero
D. Unity

59. In the case of luxury goods, the income elasticity of demand will be:
A. Less than unity
B. Unity
C. More than unity
D. All the above

60. Income elasticity is positive, but less than unity in the case of:
A. Necessity
B. Luxury
C. Inferior
D. Substitutes 

Answer Keys
41 C 42 C 43 D 44 D 45 D 46 A 47 C 48 D 49 D 50 C
51 B 52 C 53 B 54 C 55 D 56 C 57 C 58 A 59 C 60 A 

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