MCQ for CA Foundation ECONOMICS - PART 1 - BUSINESS ECONOMICS - Chapter 3 THEORY OF PRODUCTION AND COST

Sample Multiple Choice Questions (MCQ's) for CA Foundation - Paper 4 - Business Economics and Business and Commercial Knowledge - PART 1 - BUSINESS  ECONOMICS - Chapter 3: THEORY OF PRODUCTION AND COST - For Practice relevant for Dec 22 and May/June 23 Examinations

Q:1 Which of the following is considered production in Economics?

  1. Tiling of soil.
  2. Singing a song before friends.
  3. Preventing a child from falling into a manhole on the road.
  4. Painting a picture for pleasure.

Answer: 1

Q:2 Hours of labour      Total Output      Marginal Product
            0                                    _                      _
            1                                 100                  100
            2                                    _                     80
            3                                  240                    _
What is the total output when 2 hours of labour are employed?

  1. 80
  2. 100
  3. 180
  4. 200

Answer: 3

Q:3 Output (O)    0      1           2       3        4        5        6
 Total Cost (TC) ₹ 240 ₹ 330 ₹ 410 ₹ 480 ₹ 540 ₹ 610 ₹ 690
The average fixed cost of 2 units of output is

  1. 80
  2. 85
  3. 120
  4. 205

Answer: 3

Q:4 A firm producing 7 units of output has an average total cost of ₹ 150 and has to pay ₹ 350 to its fixed factors of production whether it produces or not. How much of the average total cost is made up of variable costs? 

  1. ₹ 200
  2. ₹ 50
  3. ₹ 300
  4. ₹ 100

Answer: 4

Q:5 An isoquant shows 

  1. All the alternative combinations of two inputs that can be produced by using a given set of output fully and in the best possible way.
  2. All the alternative combinations of two products among which a producer is indifferent because they yield the same profit.
  3. All the alternative combinations of two inputs that yield the same total product.
  4. Both (b) and (c).

Answer: 3

Q:6 Suppose the first four units of a variable input generate corresponding total outputs of 200, 350, 450, 500. The marginal product of the third unit of input is: 

  1. 50
  2. 100
  3. 150
  4. 200

Answer: 2

Q:7 The marginal cost for a firm of producing the 9th unit of output is ₹ 20. Average cost at the same level of output is ₹ 15. Which of the following must be true? 

  1. marginal cost and average cost are both falling
  2. marginal cost and average cost are both rising
  3. marginal cost is rising and average cost is falling
  4. it is impossible to tell if either of the curves are rising or falling

Answer: 2

Q:8 Which of the following statements is incorrect? 

  1. The LAC curve is also called the planning curve of a firm.
  2. Total revenue = price per unit x number of units sold.
  3. Opportunity cost is also called alternative cost.
  4. If total revenue is divided by the number of units sold we get marginal revenue.

Answer: 4

 

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