Multiple choice problems in Micro Economics.

1) The owner of a carpet cleaning company realizes which her company is experiencing diminishing marginal product in the short run. As she attempts to do even more carpet cleaning in the short run, illustrate what will happen to the marginal cost of carpet cleaning?

a) increase

b) remain constant

c) decrease

d) approach zero

2)If average total cost is increasing as output increases,

a) average fixed costs will also be increasing)

b) average variable costs must be decreasing)

c) marginal cost must be greater than average total cost.

d) all of the above are true

3) When there is a shortage in a market, prices are likely to rise because:

a) Buyers do not wish to buy as much as sellers want to sell.

b) Some buyers will attempt to outbid other buyers for the available units of output.

c) Higher prices will induce sellers to reduce their production.

d) All the above)

4) David is horrified to see which the price of his favourite beverage has increased) Which of the subsequent would unequivocally (under all conditions) be responsible for this price increase?

a) a simultaneous decrease in demand and decrease in supply.

b) a simultaneous increase in demand and decrease in supply.

c) a simultaneous decrease in demand and decrease in supply.

d) an increase in supply.

5) Which of the subsequent aphorisms best discuss the law of diminishing returns?

a) Don't cry over spilled milk)

b) Too many cooks spoil the soup.

c) You can lead a horse to water but you can't make him drink)

d) A penny saved is a penny earned)