1			Which of the following statements is true about the division of labour?
			A)	It causes the marginal product of labour to increase, but it has no effect on the average product of labour.
			B)	It was first thought of by David Ricardo in his example of a hat factory.
			C)	It is an idea that has little application in the real world.
			D)	Its application results in both the marginal and average products of labour increasing.
2			What is significant about the level of output at which marginal product begins to decline?
			A)	It is the point of maximum average product.
			B)	It is the point of minimum average cost.
			C)	It is the point at which the division of labour begins.
			D)	It is the point at which diminishing returns begins.
3			What will happen to total product after the point of diminishing returns has been reached?
			A)	It will continue to rise until marginal product becomes zero.
			B)	It will continue to rise until marginal product begins to decline.
			C)	It will begin to fall.
			D)	It will start to rise for the first time.
4			What do economists mean by the term “the most productive output”?
			A)	The output where total product is at a maximum
			B)	The output where average product is at a maximum
			C)	The output where marginal product is at a maximum
			D)	The output where marginal cost is at a minimum
			E)	The output where average total cost is at a minimum
5			Which of the following statements regarding total fixed costs is correct?
			A)	When total fixed costs are graphed, the curve will rise from the origin at a constant rate.
			B)	When total fixed costs are graphed, the curve will be horizontal.
			C)	Total fixed costs equal total variable costs less total average costs.
			D)	Total fixed costs rise slowly at first but then more quickly as output increases.
			E)	Total fixed costs equal total marginal costs plus total variable costs.
6			If we assume that the level of output remains unchanged, which of the following could cause a decrease in average total, average variable, and marginal costs?
			A)	A decrease in the price of resources
			B)	An increase in the price of resources
			C)	An increase in the firm’s capacity output
			D)	A decrease in the firm’s capacity output
			E)	A decrease in the firm’s fixed cost

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7			Assuming that the only variable input is labour and all units of labour cost the same, what is the value of marginal cost when it is at a minimum?
			A)	$4
			B)	$5
			C)	$15
			D)	$40

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8			Assuming that the only variable input is labour and all units of labour cost the same, what is the value of average variable cost when it is at a minimum?
			A)	$4
			B)	$4.44
			C)	$15
			D)	$40