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

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