Multiple Choice

1. A firm that manufacturers surfboards presently hires five wokers at a wage rate of R20 per hour. The firm is able to produce 50 surfboards per hour. The firm decide to hire an additional worker. The marginal production of that worker is 30 surfboards per hour. What is the marginal cost of the output associated with hirring the sixth worker?

(a) R1. 50

(b) R20. 00

(c) R2. 00

(d) R0. 67

2. What are the only two conditions that the law of equalisation of weighted marginal utilities holds?

(a) affordability of combinations and equal weighted marginal utilities

(b) equal weighted marginal utilities and prices

(c) income and total utility

(d) equal prices and marginal utilities

3.in terms of consumption behaviour, given that MUx/Px is more than MUy/Py, what consumption patten would be expressed from a rational consumer?

(a) consumption of more of both commodities

(b) consumption of less of Commodity X than of commodity Y

(c) consumption of less of both commodities

(d) consumption of more of Commodity X than of Commodity Y

4. In consumer behavior analysis, what do consumers aim to achieve by using the utility approach?

(a) any total utility levels, provided they are happy

(b) lower utility levels, due to scarce resources

(c) the highest attainable marginal utility level

(d) the highest attainable total utility level

5. In the theory of the firm, what influences the firm's behavior?

(a) a trade maximisation

(b) profit maximisation

(c) revenue maximisation

(d) production maximisation

6. With reference to the shut-down rule in production, which relates average revenue (AR) and the average variable costs(AVC), when should a firm produce?

(a) when AVC and AR are knwon

(b) when AR is equal to or greater than the AVC

(C) When AVC is equal to AR

(d) when AVC is more than AR

7. In the short-run production function, at what point does the firm start experiencing diminishing return?

(a) when the total productivity starts decreasing

(b) when the marginal product starts decreasing

(c) when the average product starts decreasing

(d) when the total production starts decreasing

8. What is the implication of a perfectly elasticit demand curve in a perfect competition market?

(a) it implies that marginal revenue equals average revenue and price

(b) it implies that marginal revenue equals a average revenue multiplied by price

(c)it implies that marginal revenue equals total revenue multiplied by price

(d) it implies that marginal revenue equals total revenue divided by average revenue.