#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
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
#7
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
#8
What is the shape of the average variable cost (AVC) curve in the short run?
U-shaped
Downward sloping
Upward sloping
Horizontal
#9
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
#10
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
#11
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
#12
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
#13
What does a negative economic profit indicate?
Losses are being incurred
Profits are being made
Economic profit is zero
Economic profit is positive
#14
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
#15
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