#1
What is the definition of economic costs?
Monetary expenses incurred by a business
The total expenses incurred by a society
The opportunity cost of using resources
The profit generated by a business
#2
Which of the following is an example of an implicit cost?
Rent paid for office space
Wages paid to employees
Opportunity cost of using owned equipment
Cost of raw materials
#3
What is the main difference between explicit costs and implicit costs?
Explicit costs are monetary, while implicit costs are opportunity costs
Implicit costs are monetary, while explicit costs are opportunity costs
Both are monetary costs
Both are opportunity costs
#4
Which of the following is an example of a variable cost in the short run?
Property taxes
Salaries of permanent staff
Cost of raw materials
Insurance premiums
#5
What is the primary reason a firm might shut down in the short run?
To minimize variable costs
To avoid fixed costs
To minimize total costs
To maximize profit
#6
In the long run, which factor can a firm adjust to maximize its profit?
Fixed costs
Variable costs
Total costs
All of the above
#7
What is the relationship between marginal cost (MC) and average total cost (ATC) in the short run?
MC is equal to ATC
MC is greater than ATC
MC is less than ATC
MC and ATC are unrelated
#8
What is the formula for calculating economic profit?
Total Revenue - Explicit Costs
Total Revenue - Total Costs
Total Revenue - Implicit Costs
Total Costs - Explicit Costs
#9
In the short run, what happens to fixed costs as production increases?
Fixed costs increase
Fixed costs decrease
Fixed costs remain constant
Fixed costs become variable
#10
What is the concept of diminishing marginal returns in the short run?
Total production increases with each additional unit of input
Marginal product decreases as more units of a variable input are added
The average product is maximized
Total cost decreases as production expands
#11
Which of the following is a characteristic of the long run in economics?
All inputs are fixed
Some inputs are variable
Firms can enter or exit the industry
The production scale is constant
#12
What is the main objective of a firm in the short run?
Maximize profit
Minimize average variable cost
Minimize average total cost
Maximize total revenue
#13
What is the relationship between marginal cost (MC) and average variable cost (AVC) at the point where AVC is at its minimum?
MC is equal to AVC
MC is greater than AVC
MC is less than AVC
MC and AVC are unrelated
#14
In the long run, what happens to the number of firms in a perfectly competitive market when economic profit is positive?
Firms enter the market
Firms exit the market
Number of firms remains constant
Market becomes a monopoly
#15
How does the law of diminishing marginal returns affect the shape of the short-run production curve?
The curve becomes steeper
The curve becomes flatter
The curve shifts to the left
The curve becomes a straight line