Economic Concepts in Supply and Cost Quiz

Test your knowledge on supply, cost, and market equilibrium with these microeconomics quiz questions. Explore topics like marginal cost, economies of scale, and perfectly competitive markets.

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What does the law of supply state?

As prices decrease, quantity supplied decreases.

As prices increase, quantity supplied decreases.

As prices decrease, quantity supplied increases.

As prices increase, quantity supplied increases.

Which of the following is a fixed cost for a business?

Labor costs

Raw materials

Rent for factory space

Electricity bill

What is the formula to calculate total cost?

Total Cost = Fixed Cost - Variable Cost

Total Cost = Variable Cost / Quantity

Total Cost = Fixed Cost + Variable Cost

Total Cost = Marginal Cost * Quantity

Which of the following is NOT a determinant of supply?

Technology

Cost of inputs

Taxes and subsidies

Consumer preferences

What is the difference between explicit costs and implicit costs?

Explicit costs are monetary payments, while implicit costs are non-monetary opportunity costs.

Explicit costs are non-monetary opportunity costs, while implicit costs are monetary payments.

Explicit costs are incurred in the short run, while implicit costs are incurred in the long run.

Explicit costs are incurred in the long run, while implicit costs are incurred in the short run.

What is the Law of Diminishing Marginal Returns?

As output increases, marginal cost decreases.

As input increases, total output decreases.

As input increases, marginal product decreases.

As input decreases, marginal product increases.

How does a subsidy affect supply?

It decreases supply by increasing costs.

It decreases supply by reducing revenue.

It increases supply by lowering costs.

It increases supply by raising revenue.

What is the concept of 'marginal cost'?

The additional cost of producing one more unit of a good.

The total cost of producing all units of a good.

The average cost of producing one unit of a good.

The cost of raw materials for producing a good.

What is the relationship between average variable cost (AVC) and marginal cost (MC)?

AVC = MC

AVC > MC

AVC < MC

No relationship exists between AVC and MC.

#10

What is the concept of 'economies of scale'?

A situation where average total cost decreases as the quantity of output increases.

A situation where average total cost increases as the quantity of output increases.

A situation where marginal cost exceeds average total cost.

A situation where marginal cost equals average total cost.

#11

What is the relationship between marginal cost (MC) and average total cost (ATC) at the minimum point of ATC?

MC is equal to ATC at the minimum point of ATC.

MC is greater than ATC at the minimum point of ATC.

MC is less than ATC at the minimum point of ATC.

MC is undefined at the minimum point of ATC.

#12

In the short run, a firm will shut down if price falls below what level?

Average fixed cost

Average total cost

Average variable cost

Marginal cost

Economic Concepts in Supply and Cost Quiz

What does the law of supply state?

Which of the following is a fixed cost for a business?

What is the formula to calculate total cost?

Which of the following is NOT a determinant of supply?

What is the difference between explicit costs and implicit costs?

What is the Law of Diminishing Marginal Returns?

How does a subsidy affect supply?

What is the concept of 'marginal cost'?

What is the relationship between average variable cost (AVC) and marginal cost (MC)?

What is the concept of 'economies of scale'?

What is the relationship between marginal cost (MC) and average total cost (ATC) at the minimum point of ATC?

In the short run, a firm will shut down if price falls below what level?

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