Name__________________________________________
8th Economics
Practice Test – Pre-Comp Prep Week 2, Class 1
Answer key on the last page!
1. The law of diminishing returns applies:
a)
b)
c)
d)
e)
In the long run because all inputs are variable
In the short run because some inputs remain fixed
In both the short run and the long run
To fixed inputs in the long run
To fixed inputs in the short run
2. If the total cost of producing 2 pounds of cheese is $6 and the total cost of producing 4
pounds of cheese is $8, then:
a)
b)
c)
d)
e)
Total cost is declining
Average total cost is declining
Average total cost is increasing
Average total cost is constant
Total cost is constant
3. Suppose that the total fixed cost of producing five sailboats is $4,000, the total variable
cost is $4,000, and the total cost of producing six sailboats is $10,000. The marginal cost
of the sixth sailboat is:
a)
b)
c)
d)
e)
$2,000
$4,000
$8,000
$10,000
$6,000
4. When average total cost is at its minimum, it is:
a)
b)
c)
d)
e)
equal to average variable cost
greater than marginal cost
equal to average fixed cost
equal to marginal cost
less than marginal cost
5. The short run refers to a period of time during which:
a)
b)
c)
d)
e)
all the factors are constant
all the factors are variable
the producer can shift from one plant size to another
some factors are fixed while others are variable
the producer cannot change the level of output
6. Suppose that for 20 bicycles, the total fixed cost is $100 and total variable cost is $300.
Then the average fixed cost and average variable cost are:
a)
b)
c)
d)
e)
$5 and $10 respectively
$5 and $15 respectively
$10 and $15 respectively
$15 and $10 respectively
$10 and $5 respectively
7. If a firm doubles its resources and generates an output level which is more than double,
it is said to be experiencing:
a)
b)
c)
d)
e)
economic fluctuations
recession
diseconomies of scale
increasing marginal returns to a factor
economies of scale
8. A firm gets less efficient as it gets bigger if it is experiencing:
a)
b)
c)
d)
e)
economies of scale
constant returns to scale
increasing returns to factors
diseconomies of scale
a period of post war recovery
9. A clothing store can sell two shirts for $20 each or three shirts for $18 each. At a
quantity of three shirts sold, marginal revenue is _____.
a)
b)
c)
d)
e)
$18
$14
$54
$20
$44
For questions 10-13 use the table below showing the costs and revenue of a firm that produces
watermelons to answer the questions.
Quantity of
Watermelons
0
1
2
3
4
5
Total Cost
Total Revenue
100
200
250
350
600
900
0
250
500
750
1000
1250
10. What is the firm’s fixed cost?
a)
b)
c)
d)
e)
$100
$200
$250
$350
$600
11. What is the average variable cost of producing one watermelon?
a)
b)
c)
d)
e)
$200
$350
$150
$400
$100
12. What is the marginal cost of producing three watermelons?
a)
b)
c)
d)
e)
$50
$100
$150
$200
$250
13. When four watermelons are produced how much profit is the firm earning?
a)
b)
c)
d)
e)
$100
$200
$300
$400
$500
Answer Key
1. B
2. B
3. A
4. D
5. D
6. B
7. E
8. D
9. B
10. A
11. E
12. B
13. D