Economics Practice Test – Theory of Production (Questions with Answers and Explanations)

If all factors are variable in the long run, firms will experience _____ (JAMB 2012)

A. decreasing returns to scale
B. increasing returns to scale
C. diminishing returns
D. economies of scale

Study the diagram below:

From the diagram above, the optimal point of production is ______ (JAMB 2011)

If the production cost of a large firm is higher than that of a small firm, it is experiencing ______ (JAMB 2014)

A. internal diseconomies of scale
B. external economies of scale
C. external diseconomies of scale
D. internal economies of scale

The law of variable proportions is applicable only ______ (JAMB 2011)

A. to large-scale enterprises
B. to small-scale enterprises
C. in the short-run period
D. in the long-run period.

Division of labour requires that the tasks ¡n a production line can be performed _______ (JAMB 2014)

A. by unskilled labourers
B. by specialists
C. in stages
D. by all workers