#1
In the short run, which cost remains constant regardless of the level of output?
Fixed costs
ExplanationCosts that do not change with production levels.
#2
What does the term 'marginal cost' refer to in economics?
The total cost incurred for producing one more unit of output
ExplanationCost of producing an additional unit.
#3
Which of the following is a characteristic of a perfectly competitive market?
Firms are price takers
ExplanationPrices determined by market, not individual firms.
#4
What is the term for the additional revenue generated from selling one more unit of a product?
Marginal revenue
ExplanationRevenue gained per additional unit sold.
#5
What is the relationship between total cost and variable cost?
Total cost is greater than variable cost
ExplanationTotal cost includes fixed and variable costs.
#6
Which of the following is NOT a factor of production?
Money
ExplanationNot directly used to produce goods or services.
#7
Which of the following best defines economies of scale?
Decreasing average total cost as production increases
ExplanationCost efficiency improves with increased production.
#8
Which of the following is NOT a characteristic of perfect competition?
Firms have significant control over prices
ExplanationPrices are set by market forces, not firms.
#9
What is the relationship between average fixed cost and output in the short run?
It decreases as output increases
ExplanationSpread of fixed costs over more units.
#10
What happens to average variable cost as output increases in the short run?
It increases
ExplanationCost per unit rises due to diminishing returns.
#11
In the long run, what can firms do to minimize average total cost?
Select an optimal plant size
ExplanationChoosing the most efficient production scale.
#12
What is the relationship between marginal cost and marginal product of labor?
Marginal cost increases as marginal product of labor increases
ExplanationCost rises as productivity gains diminish.
#13
When does a firm experience economies of scope?
When it produces multiple products using shared resources
ExplanationEfficiency gained from producing diverse products.
#14
Which of the following statements is true regarding the long-run average total cost curve?
It is always downward sloping
ExplanationCosts decrease as production scale increases.
#15
In the long run, what happens to fixed costs as output increases?
They remain constant
ExplanationCosts unaffected by changes in production.
#16
What is the term for the situation when a firm's average total cost is minimized at the quantity of output where average total cost equals marginal cost?
Minimum efficient scale
ExplanationOptimal production scale for cost efficiency.