#1
Which of the following is a fixed cost?
Raw materials
Labor wages
Rent for factory space
Electricity bill
#2
What does the average variable cost (AVC) represent?
Total variable cost divided by the quantity of output
Total cost divided by the quantity of output
Fixed cost divided by the quantity of output
Marginal cost divided by the quantity of output
#3
Which of the following represents the formula for total cost (TC)?
TC = FC + VC
TC = FC - VC
TC = FC / VC
TC = FC * VC
#4
What is the formula for average fixed cost (AFC)?
AFC = TC / Q
AFC = FC / Q
AFC = VC / Q
AFC = FC * Q
#5
What is the formula for marginal cost (MC)?
MC = ΔTC / ΔQ
MC = TC / Q
MC = FC / VC
MC = AFC * AVC
#6
In the long run, all costs are considered to be:
Fixed costs
Variable costs
Opportunity costs
Sunk costs
#7
Which of the following is a characteristic of a fixed cost?
Varies with the level of production
Incurred only in the short run
Can be eliminated by shutting down
Remains constant regardless of the level of production
#8
What is the formula for average total cost (ATC)?
ATC = AFC + AVC
ATC = TC / Q
ATC = FC / Q
ATC = VC / Q
#9
Which of the following is a characteristic of a variable cost?
Remains constant regardless of production level
Varies with the level of production
Incurred only in the long run
Cannot be affected by changes in output
#10
What does the short-run average total cost (ATC) curve represent when it is U-shaped?
Decreasing returns to scale
Increasing returns to scale
Economies of scale
Constant returns to scale
#11
What is the relationship between marginal cost (MC) and average total cost (ATC) at the minimum point of ATC?
MC = ATC
MC < ATC
MC > ATC
MC is undefined at the minimum point of ATC
#12
In the short run, what happens to fixed costs as output increases?
Fixed costs increase
Fixed costs decrease
Fixed costs remain constant
Fixed costs become variable
#13
What is the shape of the average variable cost (AVC) curve in the short run?
U-shaped
Downward sloping
Upward sloping
Horizontal
#14
What does the marginal cost (MC) curve intersect on the average variable cost (AVC) curve at its minimum point?
Above the AVC curve
Below the AVC curve
At the AVC curve's minimum point
At the AVC curve's maximum point
#15
What is the relationship between marginal cost (MC) and average total cost (ATC) when MC is below ATC?
MC = ATC
MC < ATC
MC > ATC
MC is undefined at this point
#16
What happens to the average fixed cost (AFC) as output increases?
AFC increases
AFC decreases
AFC remains constant
AFC becomes zero
#17
What happens to marginal cost (MC) as output increases in the short run?
MC increases
MC decreases
MC remains constant
MC becomes zero
#18
What does the average total cost (ATC) curve represent when it is U-shaped?
Increasing returns to scale
Constant returns to scale
Decreasing returns to scale
Economies of scale
#19
What is the formula for average variable cost (AVC)?
AVC = TC / Q
AVC = VC / Q
AVC = FC / Q
AVC = AFC * ATC
#20
What happens to the marginal cost (MC) curve when it intersects the average variable cost (AVC) curve at its minimum point?
MC is equal to AVC
MC is greater than AVC
MC is less than AVC
MC is undefined at this point
#21
Economic profit differs from accounting profit because it accounts for which of the following?
Explicit costs only
Implicit costs only
Both explicit and implicit costs
Neither explicit nor implicit costs
#22
What happens to economic profit when accounting profit is positive and explicit costs are greater than implicit costs?
Economic profit is positive
Economic profit is negative
Economic profit is zero
Cannot determine economic profit without more information
#23
What does a negative economic profit indicate?
Losses are being incurred
Profits are being made
Economic profit is zero
Economic profit is positive
#24
What does it mean if economic profit is zero?
Total revenue equals total costs
Total revenue exceeds total costs
Total revenue is less than total costs
Total revenue is greater than explicit costs
#25
What happens to economic profit when accounting profit is positive and implicit costs are greater than explicit costs?
Economic profit is positive
Economic profit is negative
Economic profit is zero
Cannot determine economic profit without more information