Lesson 3.2.2

3.2.2 Diminishing returns, economies and diseconomies of scale Quiz: OCR Economics, Unit 3

20 questions

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Lesson 3.2.2, Diminishing returns, economies and diseconomies of scale: 20 multiple choice questions for the OCR Economics (H460), Unit 3: Business objectives, written with Revision Ninja.

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The 20 questions

  1. In economics, what characterises the short run for a producing firm?

    • Fixed factors
    • All variable factors
    • Constant returns
    • Long-run growth

  2. What law states marginal output eventually falls as variable factors increase?

    • Diminishing marginal returns
    • Increasing costs
    • Constant returns
    • Economies of scale

  3. If total output rises from 100 to 140 units when hiring one more worker, what is marginal product?

    • 40 units
    • 140 units
    • 100 units
    • 240 units

  4. Which cost curve is typically U-shaped in the long run as a firm expands scale?

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

  5. A car manufacturer uses specialised machinery to produce vehicles faster. Which economy of scale is this?

    • Marketing
    • Managerial
    • Technical
    • Financial

  6. What type of internal economy of scale occurs when buying raw materials in large quantities?

    • Purchasing
    • Managerial
    • Risk-bearing
    • Technical

  7. Large firms often secure lower interest rates on loans than small firms. What is this called?

    • External economy
    • Financial economy
    • Managerial economy
    • Risk-bearing economy

  8. What occurs when a firm's average costs fall due to growth of the entire industry?

    • External economy
    • Internal economy
    • Managerial economy
    • Decreasing returns

  9. What term describes the lowest output level at which long-run average cost is minimised?

    • Profit maximising point
    • Minimum efficient scale
    • Break-even point
    • Maximum capacity point

  10. A giant firm suffers rising average costs due to slow decision-making across departments. What is this?

    • Financial diseconomy
    • Technical diseconomy
    • External diseconomy
    • Managerial diseconomy

  11. What happens to long-run average cost when a firm experiences increasing returns to scale?

    • Average cost rises
    • Average cost falls
    • Cost remains constant
    • Marginal cost rises

  12. Five workers produce a total of 150 units per day. What is the average product of labour?

    • 750 units
    • 30 units
    • 150 units
    • 25 units

  13. What causes a firm's entire long-run average cost curve to shift downwards?

    • Internal economies
    • Diseconomies of scale
    • External economies
    • Diminishing returns

  14. Workers feeling alienated in a vast factory reduce productivity. What type of cost curve effect is this?

    • Technical economy
    • Diminishing marginal returns
    • External diseconomy
    • Internal diseconomy

  15. Why does the short-run average total cost curve eventually slope upwards?

    • Diseconomies of scale
    • Diminishing marginal returns
    • Rising fixed costs
    • Decreasing returns

  16. A conglomerate operates in multiple distinct global markets to offset potential local losses. Which economy is this?

    • Risk-bearing
    • Technical
    • Financial
    • Marketing

  17. If doubling all inputs doubles total output exactly, what returns to scale does the firm experience?

    • Increasing
    • Diminishing
    • Decreasing
    • Constant

  18. When marginal product is greater than average product, what happens to average product?

    • Average product falls
    • It remains constant
    • It turns negative
    • Average product rises

  19. Traffic congestion near an industrial park increases transport costs for all local firms. What is this?

    • Managerial diseconomy
    • External diseconomy
    • Internal diseconomy
    • Diminishing return

  20. An industry where minimum efficient scale requires an extremely high output typically leads to what structure?

    • Perfect competition
    • Monopolistic competition
    • Fragmented market
    • Natural monopoly

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