#1
Which of the following is a characteristic of perfect competition?
A large number of buyers and sellers
Product differentiation
Significant barriers to entry
Control over market price
#2
What is the formula for calculating total cost?
Total cost = Fixed cost + Variable cost
Total cost = Fixed cost / Variable cost
Total cost = Fixed cost - Variable cost
Total cost = Fixed cost x Variable cost
#3
Which of the following is a fixed cost?
Cost of raw materials
Labor wages
Rent for factory space
Cost of packaging
#4
Which of the following is an example of a variable cost?
Property taxes
Insurance premiums
Utility bills
Cost of raw materials
#5
Which cost is unaffected by changes in the level of output?
Fixed cost
Variable cost
Average cost
Marginal cost
#6
What is the formula for calculating average variable cost?
Average variable cost = Total variable cost / Quantity of output
Average variable cost = Total variable cost - Quantity of output
Average variable cost = Total variable cost + Quantity of output
Average variable cost = Total variable cost x Quantity of output
#7
What does the term 'marginal cost' refer to in economics?
The total cost of producing one more unit of a good
The average cost of producing all units of a good
The fixed cost of producing one unit of a good
The cost of raw materials only
#8
In the short run, what happens to average total cost as output increases?
It remains constant
It decreases
It increases
It fluctuates randomly
#9
Which cost curve is U-shaped in the long run?
Average variable cost
Average total cost
Marginal cost
Average fixed cost
#10
What is the relationship between marginal cost and marginal product of labor?
They are inversely related
They are directly related
There is no relationship between them
Their relationship depends on the level of output
#11
What does the long-run average cost curve show?
The lowest possible cost of producing any given level of output
The relationship between total cost and output in the short run
The relationship between average cost and output in the long run
The relationship between marginal cost and average total cost
#12
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs only, while economic profit includes both explicit and implicit costs
Accounting profit includes both explicit and implicit costs, while economic profit includes explicit costs only
Accounting profit excludes explicit costs only, while economic profit excludes both explicit and implicit costs
Accounting profit and economic profit are the same
#13
What is 'economies of scale'?
When the average cost of production decreases as output increases
When the average cost of production increases as output increases
When the firm produces at the lowest point on its average total cost curve
When the firm is producing at maximum efficiency
#14
What does 'diseconomies of scale' refer to?
When the average cost of production decreases as output increases
When the firm faces increasing average costs as it increases its output
When the firm produces at the lowest point on its average total cost curve
When the firm is producing at maximum efficiency
#15
What is the main implication of the existence of economies of scale?
Large firms can produce more efficiently than small firms
There are no cost advantages to increasing the scale of production
The average cost of production increases as output increases
Firms cannot reach maximum efficiency
#16
What is the relationship between marginal cost and marginal revenue at the profit-maximizing level of output?
Marginal cost equals marginal revenue
Marginal cost is greater than marginal revenue
Marginal cost is less than marginal revenue
There is no relationship between them at the profit-maximizing level
#17
Which of the following is not a characteristic of monopolistic competition?
Many firms selling differentiated products
Low barriers to entry
Each firm has some control over its price
Products are perfect substitutes
#18
What does the law of diminishing marginal returns suggest about the relationship between inputs and output?
As the input increases, the output increases at a constant rate
As the input increases, the output decreases at a decreasing rate
As the input increases, the output increases at a decreasing rate
As the input increases, the output decreases at a constant rate