4.1.4.3 The law of diminishing returns and returns to scale Quiz: AQA Economics, Unit 1

The 20 questions

1. In microeconomics, what defines the short run for a producing firm?

   • All fixed factors
   • All variable factors
   • Zero factor costs
   • One fixed factor

2. In microeconomics, what defines the long run for a producing firm?

   • All fixed factors
   • Constant output levels
   • One fixed factor
   • All variable factors

3. In the short run, what eventually happens to marginal output as variable factors increase?

   • It rises
   • It stays constant
   • It reaches zero
   • It falls

4. A farm has a fixed amount of land and adds workers. Output data: 1 worker gives 10 tonnes, 2 workers 25, 3 workers 35, 4 workers 40, 5 workers 40. At which worker does diminishing marginal returns first set in?

   • The fifth worker.
   • The third worker.
   • The fourth worker.
   • The second worker.

5. A farm's total output is 10, 25, 35, 40 and 40 tonnes for 1 to 5 workers. What is the average product with 3 workers?

   • 10 tonnes per worker.
   • 11.7 tonnes per worker.
   • 15 tonnes per worker.
   • 35 tonnes per worker.

6. What is the extra output produced by adding one more unit of a variable input?

   • Marginal product
   • Average product
   • Total product
   • Marginal cost

7. Which concept describes how output changes when all inputs are increased in equal proportion?

   • Economies of scope
   • Returns to scale
   • Marginal returns
   • Diminishing returns

8. A firm doubles all its inputs, causing output to more than double. Which returns to scale occur?

   • Diminishing returns
   • Constant returns
   • Decreasing returns
   • Increasing returns

9. A firm doubles all inputs and output exactly doubles. Which type of returns to scale occurs?

   • Decreasing returns
   • Diminishing returns
   • Constant returns
   • Increasing returns

10. A firm doubles all inputs, but output increases by only 60%. Which returns to scale occur?

    • Decreasing returns
    • Constant returns
    • Increasing returns
    • Diminishing returns

11. Which factor is a major cause of increasing returns to scale in the long run?

    • Communication breakdown
    • Labour specialisation
    • Fixed factory space
    • Coordination failure

12. What is a primary cause of decreasing returns to scale in very large firms?

    • Bulk purchasing
    • Technical efficiency
    • Coordination problems
    • Specialisation of labour

13. As diminishing returns set in, what happens to the marginal cost of production?

    • It stays constant
    • It rises
    • It reaches zero
    • It falls

14. Unlike the law of diminishing returns, returns to scale apply in which time period?

    • Very short run
    • Short run
    • Immediate period
    • Long run

15. What happens to total product when marginal product is negative?

    • Average product rises
    • Total product rises
    • Total product is zero
    • Total product falls

16. Which cost curve gets its upward slope in the short run from diminishing marginal returns?

    • Marginal cost
    • Average fixed cost
    • Long-run average cost
    • Total fixed cost

17. If a firm increases all inputs by 50% and output increases by 50%, what is this called?

    • Increasing returns
    • Diminishing returns
    • Decreasing returns
    • Constant returns

18. What overcomes the benefits of initial specialisation to eventually cause decreasing returns to scale?

    • Risk-bearing economies
    • Technical economies
    • Managerial diseconomies
    • Financial economies

19. When diminishing returns begin, what happens to total product as more workers are added?

    • It still rises
    • It immediately falls
    • It equals zero
    • It remains constant

20. In economics, what defines the short run production period for a firm?

    • Exactly one year
    • All variable factors
    • One fixed factor
    • Zero fixed costs

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