#1
What does Marginal Cost represent in economics?
The cost of producing one additional unit of a good
The total cost of production
The cost of all goods produced
The fixed costs of production
#2
In the short run, which component of cost primarily influences Marginal Cost?
Fixed cost
Variable cost
Sunk cost
Opportunity cost
#3
In the context of Marginal Cost, what is meant by the term 'marginal'?
It refers to the cost of the last unit produced
It denotes the minimum cost achievable
It signifies the average cost per unit
It represents the total cost of production
#4
How is Marginal Cost calculated?
Change in total cost divided by change in quantity
Total cost divided by total quantity
Average fixed cost plus average variable cost
Total fixed cost divided by change in quantity
#5
Which of the following statements is true about the relationship between Marginal Cost and Average Total Cost when Marginal Cost is less than Average Total Cost?
Average Total Cost is increasing
Average Total Cost is decreasing
Average Total Cost remains unchanged
The company is experiencing economies of scale
#6
In the context of Marginal Cost analysis, what happens when economies of scale are present?
Marginal Cost increases as output increases
Marginal Cost decreases as output increases
Marginal Cost remains constant regardless of output level
Marginal Cost is equal to Average Total Cost
#7
What role does Marginal Cost play in determining the optimal level of production?
It indicates the point where total revenue equals total cost
It helps in maximizing the profit by equating marginal cost to marginal revenue
It determines the fixed cost of production
It calculates the total revenue generated from production
#8
How does a change in input prices affect Marginal Cost?
Marginal Cost is unaffected by changes in input prices
Marginal Cost decreases if input prices increase
Marginal Cost increases if input prices increase
Marginal Cost remains constant as long as output remains the same
#9
Which economic concept is closely associated with Marginal Cost for decision-making in perfectly competitive markets?
Elasticity of demand
Marginal utility
Marginal revenue
Price discrimination
#10
Which of the following factors can cause a shift in the Marginal Cost curve?
Changes in technology
Changes in the price of the product
Changes in consumer preference
All of the above
#11
What is the significance of the Marginal Cost curve intersecting the Average Variable Cost curve from below?
It signifies the shutdown point
It indicates decreasing returns to scale
It marks the point of minimum Average Variable Cost
It represents the break-even point
#12
Under what condition does the Marginal Cost curve become the supply curve for a firm in a perfectly competitive market?
When it is above the Average Total Cost curve
When it intersects the Demand curve
When it is below the Average Variable Cost curve
When it is above the Average Variable Cost curve
#13
How do economies of scale affect the shape of the Marginal Cost curve?
The curve shifts upwards
The curve becomes steeper
The curve flattens
The curve shifts downwards
#14
What happens to the Marginal Cost when a firm operates at its capacity?
Marginal Cost decreases
Marginal Cost remains constant
Marginal Cost increases sharply
Marginal Cost is zero
#15
What role does Marginal Cost play in price setting in a competitive market?
It is irrelevant to price setting
It sets the lower bound for prices
Firms use it to match price with Marginal Revenue for profit maximization
It determines the maximum price a firm can charge