ThatQuiz Test Library Take this test now
AIC SS 2 ECONOMICS REVISION Test
Contributed by: College
  • 1. The production possibility curve illustrates............
A) The maximum level of production an economy can achieve
B) The level of production that is most efficient
C) The minimum level of production an economy can achieve
D) The average level of production in an economy
  • 2. The law of variable proportion states that.........
A) As more input is added to production, the output will increase at a constant rate
B) As more input is added to production, the output will increase at an increasing rate
C) As more input is added to production, the output will decrease
D) As more input is added to production, the output will increase at a decreasing rate
  • 3. The concept of total productivity refers to........
A) The difference between total revenue and total cost
B) The minimum level of productivity required for firms to stay in business
C) The average level of productivity in an economy
D) The total output produced by a firm or an economy
  • 4. The concept of average productivity refers to...............
A) The total output multiplied by the total number of units of input
B) The total output divided by the total number of units of input
C) The total revenue divided by the total cost
D) The difference between total revenue and total cost
  • 5. The concept of marginal productivity refers to........
A) The difference between total revenue and total cost
B) The total revenue divided by the total cost
C) The additional output produced by adding one more unit of input
D) The total output divided by the total number of units of input
  • 6. Which of the following is NOT an assumption of the production possibility curve?
A) Resources are fixed in quantity and quality
B) Production is efficient and maximized
C) Technology is constant
D) The economy is operating at full employment
  • 7. The law of variable proportion is also known as...........
A) The law of diminishing marginal returns
B) The law of variable marginal returns
C) The law of constant marginal returns
D) The law of increasing marginal returns
  • 8. The concept of total cost includes................
A) The cost of marketing and advertising
B) The cost of materials and labor needed for production
C) The cost of land and capital equipment
D) All of the above
  • 9. The concept of average cost refers to..................
A) The cost of producing one additional unit of output
B) The total cost divided by the total number of units produced
C) The cost of producing the last unit of output
D) The difference between total revenue and total cost
  • 10. The concept of marginal cost refers to............
A) The total cost divided by the total number of units produced
B) The cost of producing one additional unit of output
C) The cost of producing the last unit of output
D) The difference between total revenue and total cost
  • 11. The production possibility curve is concave to the origin because
A) Resources are fixed in quantity and quality
B) The law of diminishing marginal returns applies to production
C) The economy is operating at full employment
D) Technology is constant
  • 12. The law of diminishing marginal returns states that............
A) As more input is added to production, the output will increase at an increasing rate
B) As more input is added to production, the output will remain constant
C) As more input is added to production, the output will increase at a constant rate
D) As more input is added to production, the output will increase at a decreasing rate
  • 13. Which of the following is NOT a factor of production?
A) Capital
B) Land
C) Money
D) Labor
  • 14. The production possibility curve represents.............
A) The ratio of resources used in production
B) The trade-offs that occur when an economy produces two goods
C) The different combinations of goods an economy can produce with limited resources
D) The historical record of production in an economy
  • 15. In economics, the term "production" refers to...........
A) The process of selling goods and services
B) The process of consuming goods and services
C) The process of creating goods and services
D) The process of saving and investing money
  • 16. Which of the following best defines the meaning of cost to an accountant?
A) The expenses incurred to produce a product or service.
B) The total expenses minus the revenue generated from sales.
C) The monetary value of resources used in production.
D) The amount that needs to be paid to suppliers and employees.
  • 17. What is the meaning of cost to an economist?
A) The monetary value of resources used in production.
B) The amount that needs to be paid to suppliers and employees.
C) The total expenses incurred to produce a product or service.
D) The amount of money spent on advertising and marketing.
  • 18. Which of the following is considered a fixed cost (FC)?
A) Energy consumption
B) Wages of production workers
C) Rent for a production facility
D) Raw materials
  • 19. What does Total Cost (TC) represent?
A) The sum of fixed cost and variable cost
B) The cost of raw materials only
C) The cost of marketing and advertising
D) The cost of producing one unit of a product
  • 20. Which of the following is a variable cost (VC)?
A) Depreciation of machinery
B) Rent for a production facility
C) Salary of the production manager
D) Cost of raw materials
  • 21. What is Average Fixed Cost (AFC)?
A) The difference between total cost and variable cost
B) The ratio of total fixed cost to the quantity of output
C) The sum of fixed cost and variable cost
D) The cost of producing one additional unit of a product
  • 22. What does Average Variable Cost (AVC) represent?
A) The cost of producing one additional unit of a product
B) The ratio of total variable cost to the quantity of output
C) The sum of fixed cost and variable cost
D) The difference between total cost and variable cost
  • 23. Which of the following represents Marginal Cost (MC)?
A) The cost of producing one additional unit of a product
B) The ratio of total fixed cost to the quantity of output
C) The difference between total cost and variable cost
D) The sum of fixed cost and variable cost
  • 24. What is the relationship between Marginal Cost (MC) and Average Variable Cost (AVC)?
A) MC and AVC are equal at all levels of output
B) MC is always lesser than AVC
C) MC is always greater than AVC
D) MC is inversely related to AVC
  • 25. Which type of cost is not affected by changes in the level of production?
A) Variable Cost (VC)
B) Marginal Cost (MC)
C) Fixed Cost (FC)
D) Average Fixed Cost (AFC)
  • 26. When Marginal Cost (MC) is below Average Variable Cost (AVC), what happens to AVC?
A) AVC decreases
B) AVC increases
C) AVC remains constant
D) AVC becomes zero
  • 27. Which cost concept represents the cost of producing one additional unit of a product?
A) Average Fixed Cost (AFC)
B) Marginal Cost (MC)
C) Variable Cost (VC)
D) Total Cost (TC)
  • 28. In the short run, which cost concept must be covered for a firm to continue its operations?
A) Average Fixed Cost (ACF)
B) Variable Cost (VC)
C) Fixed Cost (FC)
D) Total Cost (TC)
  • 29. Which of the following is NOT a type of cost concept?
A) Average Variable Revenue (AVR)
B) Average Fixed Cost (AFC)
C) Total Cost (TC)
D) Marginal Cost (MC)
  • 30. What is the formula for calculating Average Fixed Cost (AFC)?
A) AFC = TC / VC
B) AFC = VC / Output
C) AFC = TC / FC
D) AFC = FC / Output
  • 31. Which of the following options best defines revenue?
A) The total amount of money earned from selling goods and services
B) The cost incurred to produce goods and services
C) The amount of money paid to suppliers and workers
D) The profit earned from a business venture
  • 32. When total revenue exceeds total cost, a business makes
A) Break-even
B) Profit
C) Investment
D) Loss
  • 33. Which of the following is an example of a fixed cost for a business?
A) Rent for a factory
B) Wages for temporary workers
C) Advertising expenses
D) Raw materials
  • 34. Which of the following is an example of variable costs for a business?
A) Depreciation on machinery
B) Insurance premiums
C) Loan repayments
D) Electricity bills
  • 35. The formula for calculating total revenue is..........
A) Total cost minus profit
B) Number of units sold divided by price per unit
C) Number of units sold multiplied by price per unit
D) Total cost divided by profit
  • 36. Which of the following is an example of average revenue?
A) The revenue earned from each unit sold
B) The revenue earned from fixed costs only
C) The total revenue earned from all sales
D) The revenue earned from variable costs
  • 37. Marginal revenue is calculated by............
A) Dividing change in total revenue by change in quantity sold
B) Subtracting total cost from total revenue
C) Multiplying total revenue by price per unit
D) Comparing total revenue to average revenue
  • 38. When marginal revenue is greater than marginal cost, a business should.........
A) Increase production
B) Maintain the current level of production
C) Decrease production
D) Raise prices
  • 39. When average revenue is equal to average cost, a business
A) Expands its product range
B) Incurs a loss
C) Breaks even
D) Makes a profit
  • 40. Which of the following best explains the concept of total revenue?
A) The revenue earned from fixed costs only
B) The revenue earned from a single unit of a product
C) The revenue earned from all sales of a product
D) The revenue earned from variable costs only
  • 41. The concept of revenue is important for businesses because it helps to determine................
A) The amount of profit earned
B) The number of workers employed
C) The price of raw materials
D) The number of units produced
  • 42. Which of the following is an example of a non-revenue generating activity for a business?
A) Research and development of new products
B) Marketing and advertising campaigns
C) Paying salaries to workers
D) Training programs for employees
  • 43. In the short run, a business may experience diminishing marginal revenue due to...............
A) Increased competition
B) Decreased consumer demand
C) Rising variable costs
D) Higher fixed costs
  • 44. A business's revenue can be maximized by setting the price at...............
A) The level that covers total costs
B) The most competitive price in the market
C) The level that covers only variable costs
D) The level that covers only fixed costs
  • 45. Which of the following is an example of revenue from a service industry?
A) Fees charged by a law firm
B) Interest earned from investments
C) Rental income from real estate
D) Sales of agricultural produce
  • 46. What is an economic system?
A) The organization of production, distribution, and consumption of goods and services in a society
B) The political system of a country
C) The physical infrastructure of a country
D) The educational system of a country
  • 47. Which economic system provides the least incentive for innovation and entrepreneurship?
A) Traditional economy
B) Market economy
C) Mixed economy
D) Command economy
  • 48. What is the primary drawback of a traditional economy?
A) Overreliance on technology
B) Slow economic growth
C) Lack of stability
D) Inequality
  • 49. Which of the following is a feature of a market economy?
A) Price determination by central planners
B) Limited role of private enterprise
C) Competition and consumer choice
D) Extensive government control over production and distribution
  • 50. In a mixed economy, who typically owns the means of production?
A) Government
B) International organizations
C) Local communities
D) Private individuals and businesses
Students who took this test also took :

Created with That Quiz — where a math practice test is always one click away.