Question 2 [5]

TRUE/FALSE QUESTIONS

Consider the following list of statements. Each statement is either true or false. You must read each statement carefully and then select the option that you believe is correct as your answer.

Write down only the question number and next to the number either "True" or "False".

Example: If you believe sub-question 2.6 is true, then write down: 2.6. True.

2.1. Two methods can be used to approach production and other related costs of the firm. The total production function method can be used in the short and the long run, while the isoquant production function method can be used in the short run only.

2.2. The change in total product resulting from a change in variable input is called marginal product.

2.3. An increase in income, keeping prices constant, can be represented by a change in the slope of the budget line.

2.4. Assume that the quantity of a clothing item is to be represented on the Y- (vertical) axis and the portions of a food item are to be represented on the X- (horizontal) axis of an indifference (or consumer preference) graph. Now, if the slope of the budget line changes and becomes flatter, it means that the price of food increased, while the price of clothing decreased.

2.5. The end points (horizontal and vertical intercepts) of a budget line represent the quantity of each of two goods that could be purchased if all of the budget were allocated to those goods at the respective prevailing prices of each good.