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Section A: Answer ALL Questions (Choose the correct answer)

1. What is Microeconomics?
A. A branch of Economics that is concerned with economic activities of the consumers only
B. A branch of Economics that is concerned with economic activities of the producers only
C. The study of an economy as a whole
D. A branch of Economics that studies the economic decisions of individuals and firms in allocation of resources of production, exchange, and consumption.

2. All the following are the theoretical assumptions of the Cardinalist school except:
A. The consumer is rational
B. Utility is measurable
C. The marginal utility of money changes
D. The marginal utility declines as more units of a commodity are consumed

3. The consumer is at equilibrium if:
A. The price of a commodity is greater than the marginal utility associated with consuming the commodity
B. The additional satisfaction the consumer derives outweighs the price of the commodity
C. The marginal utility of consuming the commodity equals its price
D. The consumer's income equals the utility in consuming the commodity

4. All the following are types of isoquants a producer faces except:
A. Linear isoquant
B. Input-output isoquant
C. Concave isoquant
D. Kinked isoquant

5. The Law of Diminishing Returns states that:
A. All factors of production are variable in the long-run
B. In the short-run some factors are variable while some other factors are fixed
C. All factors are variable in both the short-run and long-run
D. None of the above

6. The producer is said to be at equilibrium if:
A. The ratio of marginal product of the inputs is equated to the ratio of the respective factor prices
B. The ratio of the marginal product of a given factor input to its respective factor price is equated to this same ratio with respect to another factor input
C. None of the above
D. A & B

7. Under the short-run, the traditional theory of cost asserts that:
A. All the cost curves are U-shaped
B. Some are U-shaped while others are L-shaped



Answer :

GinnyAnswer

Final answer:

Microeconomics focuses on individual economic decisions, diminishing returns are a key concept, and producer equilibrium is crucial.


Explanation:

Microeconomics is the branch of economics that focuses on the choices made by individual decision-making units in the economy - typically consumers and firms - and the impacts those choices have on individual markets. It deals with aspects like market analysis, pricing strategies, and resource allocation at the micro level.

The Law of Diminishing Returns in microeconomics states that as more units of a variable input are added to a fixed input, at some point the marginal product of the variable input will decrease.

In microeconomic theory, a producer is at equilibrium when the ratio of marginal product of inputs is equated to the ratio of respective factor prices or when the ratio of marginal product of an input to its respective factor price is equated to the same ratio for another input.


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