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JAMB questions for "Economics :: The Theory of Production and Costs"
Q1
Average product is less than marginal product when
A
there is constant returns to scale
B
there is decreasing returns to scale
C
there is increasing returns to scale
D
diminishing returns set in
E
Q2
A firm enjoying economics of scale is said to be
A
reducing average cost as production increases
B
maximizing profits as production increases
C
benefiting from the activities of other firms
D
having an upward-sloping average cost curve
E
Q3
The rising portion of the long-run average cost curve of a firm is an indication that it experiencing
A
increasing efficiency
B
diseconomies of scale
C
economies of scale
D
increasing marginal returns
E
Q4
The primary motive for an individual engaging in production is to
A
make profit
B
redistribute wealth
C
satisfy basic human wants
D
put inputs into use
E
Q5
The choice of the method of production in an economy is determined by the
A
level of income
B
rate of population growth
C
level of technical know-how
D
availability of natural resources
E
Q6
Production takes place when
A
output is transformed into output
B
machines replace human effort
C
input is transformed into output
D
there is specialization and division of labour
E
Q7
The marginal product of the 5th unit of capital is
A
42
B
85
C
114
D
213
E
Q8
Determine the average product of the 4th unit of capital
A
53
B
86
C
212
D
213
E
Q9
Which of the following can be deduced from the law of variable proportions when total output is raising?
A
MP is greater than AP
B
MP is less than AP
C
MP is equal to AP
D
MP is equal to zero
E
Q10
As the level of output increases, the average fixed cost of a firm will
A
continue to increase
B
remain unchanged
C
continue to decrease
D
be equal to the total cost
E
Q11
The shape of the long-run average cost curve is best explained by the
A
law of diminishing returns
B
law of returns to scale
C
cost of fixed inputs
D
cost of variable inputs
E
Q12
If a monopolist is incurring short-run losses, this means that his
A
selling price is above short-run marginal cost
B
selling price is below the short-run marginal cost
C
average revenue is greater than marginal revenue
D
average revenue is less than marginal revenue
E
Q13
The supply curve of a perfectly competitive firm is identical to its
A
total cost
B
marginal cost
C
fixed cost
D
variable cost
E
Q14
The production possibility curve can be used to explain the underlying concepts of
A
scale of preference and choice
B
opportunity cost and choice
C
wants and means
D
opportunity cost and scale of preference
E
Q15
In a perfectly competitive condition, a firm uses 10 units of labour at N25 and 11units at N36, what is the marginal cost labour?
A
N396
B
N323
C
N250
D
N146
E
Q16

From the graph above, point M shows that MC

A

cuts AC at its minimum point

B

and AC rise simultaneously

C

cuts AC at its maximum point

D

is falling

E
Q17

The characteristic of entry and exit ensures that firms

A

earn excess profit

B

earn normal profit

C

break-even

D

expand their operations

E
Q18
The term ceteris paribus implies that
A
resources are scarce
B
human problems can be solved
C
all factors are fully utilized
D
human beings are unpredictable
E
Q19
A characteristic of the linear production function is that
A
the percentage change in output is greater than one
B
the percentage change in output is less than one
C
the percentage change in input exceeds output
D
output and all inputs change by the same percentage
E
Q20
An increase in the marginal cost of production causes
A
a leftward shift of the supply curve
B
a rightward shift of the supply curve
C
a downward movement along the supply curve
D
an upward movement along the supply curve
E
Q21
If the total fixed cost is the same regardless of output, the average fixed cost will be
A
maximum
B
minimum
C
decreasing
D
increasing
E
Q22
What is the marginal productivity when the number of workers is increased from 2 to 3?
A
20kg
B
8kg
C
180kg
D
60kg
E
Q23
The price per unit of a commodity to a buyer is the same as the
A
marginal cost of the commodity
B
normal profit of the seller
C
average revenue of he seller
D
marginal revenue of the seller
E
Q24
If the short-run cost curve of a firm is U-shaped, the marginal and average cost are equal where the
A
average fixed cost is falling
B
average cost is minimum
C
marginal cost is falling
D
average variable cost is minimum
E
Q25
A rising short-run average cost is a result of
A
falling marginal cost
B
rising fixed costs
C
economies of scale
D
diminishing returns
E
Q26
what is the average product when 3 men are employed?
A
100 units
B
120 units
C
180 units
D
540 units
E
Q27
If the price per unit is N2, What is the average revenue when 6 men are employed?
A
N120
B
N110
C
N330
D
N220
E
Q28
The marginal productivity theory applies in a
A
perfectly competitive market
B
monopolist market only
C
unionized labour market
D
monopsonistic market only
E
Q29
Applying the law of comparative cost, how many units of groundnuts will Nigeria produce?
A
7 000 units
B
16 000 units
C
9 000 units
D
8 000 units
E
Q30
The difference in each country's total output on specialization is
A
16 000 units
B
9 000 units
C
8 000 units
D
7 000 units
E
Q31
In economies, production takes place only when
A
producers sell to retailers
B
value has added to a commodity
C
modern equipment is used
D
consumption has taken place
E
Q32
The technical relationship between input combination and maximum attainable output is called
A
a production function
B
an indifference curve
C
an isocost
D
an isoquant
E
Q33
An example of a long-run cost of a firm is
A
fuel and maintenance cost
B
the planned size of plant and equipment
C
the existing size of plant and equipment
D
rent on buildings
E
Q34
Long-run production is called
A
diminishing returns to scale
B
returns to scale
C
external economies of scale
D
economies of scale
E
Q35
For a firm to break even in the long run, the marginal cost curve must cut the
A
average variable cost curve at its highest point
B
average cost curve at any two lowest points
C
total cost curve at its lowest point
D
average cost curve at its lowest point
E
Q36
Given the table above, what is the firm's short-run profit-maximizing output?
A
450kg
B
630kg
C
240kg
D
580kg
E
Q37
At the maximum point of the total product curve of a firm, marginal revenue is
A
zero
B
decreasing
C
increasing
D
constant
E
Q38
A firm operating at full capacity will experience rising short-run total costs when
A
there is a change in management
B
prices of its variable inputs rise
C
labour productivity increases
D
prices of its variable inputs fall
E
Q39
In a textile factory, the cost of cotton used is a typical example of
A
an average cost
B
a fixed cost
C
a total cost
D
a variable cost
E
Q40
Given the cost function C = 160 + 36Q, what is the average cost at 20 units of output?
A
N44.00
B
N216.00
C
N880.00
D
N720.00
E
Q41
In order to increase revenue, the seller of a commodity whose demand is fairly elastic is advised to
A
retain price
B
reduce output
C
increase price
D
reduce price
E
Q42
The final stage in the production process of any commodity involves its movement from the
A
wholesaler to the retailer
B
retailer to the consumer
C
retailer to the wholesaler
D
producer to the wholesaler
E
Q43
For a firm, value added can be defined as the difference between the
A
input prices and product prices
B
value of its output and inputs purchased from other firms
C
value of its output and the cost of production
D
total revenue and total cost
E
Q44
The theory of comparative advantage states that a commodity should be produced in that nation where the
A
absolute money cost is least
B
opportunity cost is least
C
production possibility curve increases
D
absolute cost is least
E
Q45
The long-run average cost curve is called a planning curve because it shows what happens to costs when
A
a bigger size of plant is built
B
different sizes of plants are built
C
variable inputs are increased
D
fixed factors are increased
E
Q46
Short-run period in production is a period too short for a firm to be able to change its
A
scale of operation
B
total revenue
C
variable inputs
D
total outputs
E
Q47
The best method of production in an under-populated country is
A
labour-intensive
B
labour-expensive
C
land-intensive
D
capital-intensive
E
Q48
At 60 units of output, the AVC is
A
N2.50
B
N1.50
C
N90.00
D
N150.00
E
Q49
The ATC at 30 units of output is
A
N3.00
B
N4.00
C
N60.00
D
N120.00
E
Q50
An improvement in technology will enable the country to produce at
A
X
B
V
C
Z
D
W
E
Q51
When two variable are positively related, the graph of the relationship
A
is a downward-sloping curve
B
has a negative intercept
C
is a straight line
D
is an upward-sloping curve
E
Q52
If the country is currently producing at point Y, it can increase production of producer goods by moving to the point
A
W
B
X
C
Z
D
V
E
Q53
As a firm increases its output, the average fixed cost
A
tends to decrease continuously
B
rises and then falls
C
remains constant
D
tends to rise continuously
E
Q54
In the short run, a firm's marginal cost curve above the point of shut-down in its
A
supply curve
B
revenue curve
C
demand curve
D
cost curve
E
Q55
The benefits that accrue to a firm as a result of an improvement in the industry it belongs to are called
A
internal economies of scale
B
market economies
C
external economies of scale
D
economies of scale
E
Q56

In the diagrams above, the opportunity cost of a unit of cotton in terms of cocoa is

A

20 for Ghana; 60 for Nigeria

B

1/4 for Ghana; 1/2 for Nigeria

C

5 for Ghana; 30 for Nigeria

D

4 for Ghana; 2 for Nigeria

E
Q57
A student has N30.00 with which to buy a ruler costing N18.00 and an exercise book costing N25.00. If he buys the exercise book, his opportunity cost is
A
the exercise book
B
N25.00
C
N18.00
D
the ruler
E
Q58
In the long-run, a monopolist maximizes his profit when the mariginal cost equals
A
total revenue
B
marginal revenue
C
average cost
D
price
E
Q59
The long run is a period during which a firm
A
sells inputs to purchase fixed assets
B
varies all its inputs
C
sources all its inputs from within
D
replaces all its inputs
E
Q60
A production function relates
A
cost to output
B
age to profit
C
cost to input
D
output to input
E