Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Business & Finance > Finance & Economics

Microeconomics Final Exam Practice Quiz - Challenge Yourself!

Think you can ace accounting profit equals total revenue minus variable costs? Dive in now!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration for microeconomics quiz, revenue calculations and production functions on golden yellow background

Hey future economist! Ready to ace your studies with our free microeconomics final exam practice test? Whether you're reviewing key microeconomics questions or warming up for the big economics final test , this challenge covers it all. Designed to mimic real exam pressure, this interactive quiz offers instant feedback so you can pinpoint areas to strengthen and build confidence. You'll explore accounting profit equals total revenue minus total cost, tackle revenue calculations practice quiz scenarios, navigate cost classifications microeconomics quiz sections, and conquer production functions questions with ease. Perfect for learners seeking extra practice in core concepts and exam-style problems. Jump in now to test your knowledge and boost your score today!

What does marginal cost represent in production?
The change in total cost from producing one additional unit
Total cost divided by total output
Total revenue minus variable cost
Profit earned per unit
Marginal cost measures the additional cost incurred by producing one more unit of output. It is calculated as the change in total cost divided by the change in quantity produced. Firms use marginal cost to decide the optimal level of production where marginal cost equals marginal revenue. Learn more
The law of diminishing marginal returns states that as more of a variable input is added to a fixed input, the marginal product will eventually:
Increase at an increasing rate
Remain constant
Begin to decline
Become negative immediately
The law of diminishing marginal returns holds that adding more of a variable input (like labor) to a fixed input (like capital) will eventually lead to smaller increases in output. Initially, productivity may rise, but after a point each additional unit of input contributes less. This concept is fundamental in short-run production analysis. Learn more
If total variable cost is $200 when output is 50 units, what is the average variable cost?
$2
$4
$0.25
$250
Average variable cost (AVC) is total variable cost divided by output. Here AVC = $200 / 50 = $4 per unit. Firms compare AVC to market price to decide if they should continue operating in the short run. Learn more
What is the total revenue when price is $10 and quantity sold is 30 units?
$300
$30
$3
$310
Total revenue is calculated as price multiplied by quantity sold. In this case, TR = $10 × 30 = $300. Understanding total revenue is key to analyzing a firm’s revenue structure. Learn more
Which cost remains constant regardless of output in the short run?
Fixed cost
Variable cost
Average cost
Marginal cost
Fixed costs do not change with the level of output in the short run, such as rent or insurance. Variable costs change as production levels change. Understanding the distinction helps firms make production decisions. Learn more
If a firm’s total cost is $500 at output of 0 units and $700 at output of 100 units, what is its marginal cost per unit over that range?
$0.2
$2
$200
$5
Marginal cost over a range is the change in total cost divided by the change in quantity: ($700 – $500) / (100 – 0) = $200 / 100 = $2. This average value approximates marginal cost when cost changes are linear. Learn more
Total revenue is defined as:
Price minus quantity
Price multiplied by quantity
Quantity minus price
Price plus quantity
Total revenue equals the market price of a good multiplied by the quantity sold. It represents the total income a firm receives from sales. Analyzing total revenue helps in determining profit levels. Learn more
Which of the following is an example of a variable cost?
Rent on factory building
Utilities that rise with production
Annual insurance premium
Property tax
Variable costs change with the level of output, such as electricity and materials costs. Fixed costs like rent remain constant in the short run. Recognizing variable costs is vital for shutdown and production decisions. Learn more
In the short run, a firm can vary only which input?
Capital
Land
Labor
All inputs are fixed
In the short run, at least one input is fixed (often capital or land), while labor is typically variable. Firms adjust output by changing labor levels. This distinction defines short-run production theory. Learn more
In a perfectly competitive market, a firm’s marginal revenue is equal to:
Price
Market demand
Average cost
Total revenue
In perfect competition, firms are price takers, so each additional unit sold adds exactly the market price to revenue. Therefore marginal revenue equals the market price. This underlies the condition MR = P = AR. Learn more
A firm maximizes profit where:
Average revenue exceeds average cost
Marginal revenue equals marginal cost
Total revenue equals total cost
Price equals average variable cost
Profit maximization occurs where the additional revenue from one more unit (MR) matches the additional cost (MC). Producing beyond that point would incur costs exceeding revenue, reducing profit. This MR = MC rule applies in all market structures. Learn more
If total revenue increases from $500 at 25 units to $540 at 26 units, what is the marginal revenue of the 26th unit?
$40
$20
$500
$1
Marginal revenue is the change in total revenue from selling one more unit: $540 – $500 = $40. Firms use MR to decide output levels by comparing to marginal cost. Learn more
If price rises by 10% and quantity demanded falls by 20%, the price elasticity of demand is:
-0.5
-2
2
0.5
Price elasticity of demand = % change in quantity demanded / % change in price = -20% / 10% = -2. A value of -2 indicates demand is elastic. Elasticity analysis guides pricing decisions. Learn more
For the production function Q = L^0.5K^0.5, if both inputs are doubled, output will:
Double
Increase by ?2
Quadruple
Remain unchanged
Doubling both L and K in Q = ?L?K yields Q_new = (2L)^0.5(2K)^0.5 = 2(L^0.5K^0.5) = 2Q. The function exhibits constant returns to scale. Learn more
Given the production function Q = 10L - L^2, what is the marginal product of labor when L = 3?
4
16
6
1
Marginal product is the derivative of Q with respect to L: MP_L = 10 - 2L. At L = 3, MP_L = 10 - 6 = 4. This measures the additional output from one more unit of labor. Learn more
A firm’s shutdown rule indicates it should cease production if price falls below:
Average fixed cost
Average total cost
Average variable cost
Marginal cost
A firm should shut down in the short run if price < minimum average variable cost, as it cannot cover variable costs. Fixed costs must be paid regardless. Operating would increase losses. Learn more
Which good violates the law of demand by having a positively sloped demand curve?
Giffen good
Normal good
Inferior good
Luxury good
A Giffen good is an inferior good for which demand rises when its price rises, due to strong income effects. This behavior contradicts the typical law of demand. Examples are rare but important conceptually. Learn more
The slope of an isoquant is known as:
Marginal rate of technical substitution (MRTS)
Marginal cost
Average product
Elasticity of substitution
The MRTS is the rate at which a firm can substitute one input for another while keeping output constant. It equals the slope of the isoquant in input space. MRTS = MP_L / MP_K. Learn more
Charging different prices to different consumer groups is an example of:
Perfect competition
Price discrimination
Arbitrage
Collusion
Price discrimination occurs when a firm charges different prices to different customers for the same product, based on willingness to pay. This can increase a monopolist’s profit by capturing surplus. It requires market power and no resale. Learn more
Given a total cost function C(q) = 100 + 5q + 2q², what is the marginal cost at q = 10?
25
45
65
5
Marginal cost is the derivative of total cost: MC(q) = dC/dq = 5 + 4q. At q = 10, MC = 5 + 40 = 45. Firms set output where MC equals MR to maximize profit. Learn more
At cost minimization, the marginal rate of technical substitution (MRTS) equals:
The ratio of input prices (w/r)
The ratio of total costs
Output price divided by cost
Average product ratio
Cost minimization requires MRTS (MP_L/MP_K) to equal the input price ratio w/r. This condition ensures the firm’s isoquant is tangent to the isocost line. It yields the least-cost input combination. Learn more
The production function Q = L + K exhibits which type of returns to scale?
Increasing
Decreasing
Constant
Undefined
Doubling both L and K yields Q_new = 2L + 2K = 2(L + K) = 2Q, so output doubles. This is constant returns to scale. Returns to scale describe how output changes with a proportional change in all inputs. Learn more
A monopolist faces demand P = 100 – Q and constant MC = 20. What price maximizes profit?
$20
$60
$40
$80
Monopolist sets MR = MC. Demand P=100–Q implies MR=100–2Q. Set 100–2Q=20 ? Q=40, then price P=100–40=60. This profit-maximizing price exceeds marginal cost. Learn more
In the long run, all costs are:
Fixed
Variable
Constant
Marginal
In the long run, firms can adjust all inputs, so there are no fixed costs. Every cost becomes variable as firms can change scale of production. This contrasts with the short run where some inputs are fixed. Learn more
For the Cobb-Douglas function Q = A L^0.3 K^0.7, the firm exhibits:
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Variable returns to scale
Sum of exponents 0.3 + 0.7 = 1 indicates constant returns to scale. Doubling both inputs doubles output. Returns to scale classification depends on the sum of exponents in a Cobb-Douglas function. Learn more
What is the marginal cost at q = 5 for the cost function C(q) = q³ – 15q² + 75q + 100?
0
-50
50
100
Marginal cost is dC/dq = 3q² – 30q + 75. At q = 5: 3·25 – 150 + 75 = 75 – 150 + 75 = 0. This shows a point where cost stops changing locally. Learn more
A competitive firm faces price $25 and its average variable cost is $20. In the short run, it should:
Shut down immediately
Produce where MR = MC
Reduce output to zero
Increase price
Since price ($25) exceeds minimum AVC ($20), the firm covers variable costs and contributes to fixed costs. It should produce where MR = MC to maximize profit. Shutting down would incur larger losses equal to fixed costs. Learn more
Which lemma states that the partial derivative of the cost function with respect to an input price gives the conditional demand for that input?
Shephard’s lemma
Hotelling’s lemma
Roy’s identity
Slutsky equation
Shephard’s lemma asserts that the derivative of the cost function with respect to an input price equals the conditional demand for that input. It is a cornerstone of duality in production theory. This result relies on cost functions being derived from optimization. Learn more
Which lemma relates the derivative of the profit function with respect to output price to the firm’s supply function?
Hotelling’s lemma
Shephard’s lemma
Roy’s identity
Slutsky equation
Hotelling’s lemma states that the derivative of the firm’s profit function with respect to output price yields the firm’s supply function. It connects the profit maximization problem to supply behavior. This is a key result in microeconomic theory of the firm. Learn more
Euler’s theorem for functions homogeneous of degree one implies which relationship for a cost function C(w,r,Q)?
w·L + r·K = C(w,r,Q)
MC = AC
MR = MC
P = AR
For cost functions homogeneous of degree one in input prices, Euler’s theorem implies that the sum of each input price times its conditional demand equals total cost: wL + rK = C. This property arises because cost functions are linear in input prices. It underpins duality in production theory. Learn more
0
{"name":"What does marginal cost represent in production?", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"What does marginal cost represent in production?, The law of diminishing marginal returns states that as more of a variable input is added to a fixed input, the marginal product will eventually:, If total variable cost is $200 when output is 50 units, what is the average variable cost?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Study Outcomes

  1. Understand Revenue Calculations -

    Compute total, average, and marginal revenue metrics through targeted revenue calculations practice quiz questions.

  2. Apply Accounting Profit Formula -

    Use the principle that accounting profit equals total revenue minus variable costs to solve real”world microeconomics problems.

  3. Classify Cost Structures -

    Differentiate between fixed and variable costs in a cost classifications microeconomics quiz context to inform profit analysis.

  4. Analyze Production Functions -

    Interpret short”run production functions questions to identify diminishing marginal returns and output optimization.

  5. Evaluate Firm Profitability -

    Assess firm performance by integrating cost and revenue data to determine profitable decision”making strategies.

  6. Enhance Exam Confidence -

    Leverage instant feedback from the microeconomics final exam practice test to pinpoint weaknesses and reinforce core concepts.

Cheat Sheet

  1. Accounting Profit Formula -

    Accounting profit equals total revenue minus variable costs, so Profit = TR - VC. For example, if TR is $120 and VC is $75, accounting profit is $45 (source: University of Minnesota Economics).

  2. Revenue Calculations: MR vs AR -

    Marginal revenue (MR) is the change in total revenue from selling one more unit (ΔTR/ΔQ), while average revenue (AR) is TR divided by quantity (TR/Q). Remember "MR measures the margin, AR averages the amount" (source: Khan Academy).

  3. Cost Classifications -

    Costs are classified as fixed (unchanged with output) or variable (change with output), with total cost (TC) = FC + VC. A handy mnemonic is "FVC: Fixed, Variable, Combine" to recall how to break down cost classifications (source: MIT OpenCourseWare).

  4. Production Functions and Returns -

    A production function like Q = f(L, K) shows output from labor (L) and capital (K), often exhibiting diminishing marginal returns (e.g., each additional unit of L adds less output). Try f(L,K)=L^0.5K^0.5 to see diminishing returns in action (source: Principles of Economics by Case & Fair).

  5. Profit Maximization Rule (MR=MC) -

    In perfect competition, the profit-maximizing output is where MR equals marginal cost (MC), ensuring you don't produce units that lose money. Visualize the intersection of MR and MC curves for a quick graph-based check (source: Investopedia).

Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Finance & Economics Quizzes

Powered by: Quiz Maker