Question

1:

The demand for a product tends to be inelastic if

	a.	it is expensive
	b.	a small proportion of consumer's income is spent on the good
	c.	consumers are quick to respond to price changes
	d.	it has many substitutes

2:

Two products are complements if the

	a.	cross-price elasticity of demand is less than zero
	b.	cross-price elasticity of demand equals zero
	c.	cross-price elasticity of demand is greater than zero
	d.	price elasticity of demand for each good is greater than zero

3:

The law of diminishing returns

	a.	deals specifically with the diminishing marginal product of fixed input factors
	b.	states that the marginal product of a variable factor must eventually decline as increasingly more is employed
	c.	can be derived deductively
	d.	states that as the quantity of a variable input increases, with the quantities of all other factors being held constant, the resulting output must eventually diminish

4:

The returns to scale characteristic of a production system

	a.	is measured by the way in which inputs can be varied in an unbroken marginal fashion rather than incrementally
	b.	illustrates the distinct, or "lumpy," pattern of input combination
	c.	shows the relation between output and the variation in all inputs
	d.	is the relation between output and variation in only one of the inputs employed

5:

The marginal product concept is

	a.	used to describe the relation between output and variation in all inputs in a production function
	b.	the change in output associated with a one-unit change in an individual factor
	c.	total product divided by the number input units employed
	d.	the complete output from a production system

6:

Total product divided by the number of units of variable input employed equals

	a.	average product
	b.	marginal revenue product
	c.	returns to scale
	d.	marginal product

Answer 1