A large firm may experience diseconomies of scale if there is

• difficulty in coordinating decisions

• division of labour in production

• employment of more specialists

• decrease in the cost of production

Increase return to scale suggests that

• a firm can make more profit by reducing output

• a firm can make more profit by increasing output

• as the producer reduces the quantity of raw materials used, the marginal product will double

• as the producer increases the quantity of raw materials used, the marginal product will fall

Which of the following are intermediate products?

• cement and steel

• Furniture and shirt

• Handkerchiefs and shoes

• Table and door

When an increase in input leads to a more than a proportionate increase in output, there is

• decreasing returns to scale

• increase in marginal product

• increase returns to scale

• constant returns to scale

The short-run in production is the time period when

• techniques of production can easily be changed

• all factors of production are variable

• at least a factor is fixed while others are variable

• variable factors cannot be changed

Which of the following is not emphasized in the production possibility curve?

• scarcity of resources

• economic development

• inefficiency in the use of resources

• unemployment of labour

The organization of productive factors is the responsibility of the

• management

• entrepreneur

• production manager

• labour union

“The larger a firm, the lower its cost of production”. This statement explains the

• law of diminishing returns

• concept of economics of scale

• law of comparative cost advantage

• theory of division of labour

In the long run, a firm must shut down if its average revenue is

• greater than average cost

• less than average variable cost

• equal to the minimum average variable cost

• equal to the average cost

The opportunity cost of a worker going to the university is

• tuition, fees and books

• boarding and lodging

• the wages given up to attend university

• transportation and entertainment