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

Firms embark on vertical integration in order to ______ (JAMB 2014)

A. enjoy economies of large-scale production
B. take over markets, formally controlled by other firms
C. prevent other firms from entering the market
D. reduce advertisement and marketing cost

From the table above, the average product of the 3^rd unit of labour is ______ (JAMB 2017)

If a firm doubles all inputs in the long run and the output is less than doubled, this results in _____ (JAMB 2012)

A. diminishing returns
B. constant returns to scale
C. increasing returns to scale
D. decreasing returns to scale

If additional unit of a variable factor input causes a fall in the marginal product, this implies that _____ (JAMB 2016)

A. total product starts declining
B. average product has become zero
C. diminishing returns has set in
D. increasing returns is operating

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