Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Economics (CFA520): - Question Paper

(d) Marginal product is negative
(e) Marginal product equals avg. product.
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15. The point beyond which no rational firm would employ labor is
(1 mark)
(a) When the avg. product of labor is equal to marginal product of labor
(b) When the marginal product of labor is maximum
(c) When the marginal product of labor is zero
(d) When the total product of labor is zero
(e) When the avg. product of labor is zero.
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16. If the total cost function is TC = 200 – 4Q + 6Q2 and the output is four units, the marginal cost is
(2 marks)
(a) Rs.24
(b) Rs.32
(c) Rs.44
(d) Rs.35
(e) Rs.41.
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17. The cost schedule of a firm is provided below:
The avg. fixed cost of producing fourth unit of output is
(1 mark)
Output (units) Total Fixed Cost (Rs.) Total Variable Cost (Rs.)
1 100 50
2 100 150
3 100 350
4 100 650
5 100 1, 050
(a) Rs.100
(b) Rs. 50
(c) Rs. 20
(d) Rs. 25
(e) Rs.500.
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18. A firm will shut down its operations in the short run if
(1 mark)
(a) It incur losses
(b) Fixed costs exceed its revenue
(c) avg. variable costs exceed its avg. revenue
(d) Total revenue falls short of total cost
(e) Total fixed cost exceeds its total variable costs.
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19. Mr. Sachin can earn money from different activities. His hourly earnings from cricket is Rs.5,000, acting
Rs.30,000, coaching Rs.10,000 and ceremonies Rs.15,000. The opportunity cost of an hour of coaching
for Sachin is
(1 mark)
(a) Rs. 5,000
(b) Rs.10,000
(c) Rs.15,000
(d) Rs.30,000
(e) Rs.40,000.
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20. Increasing marginal costs with increase of output implies
(1 mark)
(a) Decreasing avg. returns
(b) Decreasing avg. fixed costs
(c) Decreasing avg. variable costs
(d) Decreasing total costs
(e) Decreasing avg. costs.
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21. Lixan Imaging is a Mumbai based image digitization company, specializing in digitizing visual
collections. It has developed a project-based model incorporating best practices into the digitization

Earning:   Approval pending.