#1
Which of the following is a fixed cost in the context of production?
Labor
Raw materials
Rent for factory building
Electricity bill
#2
Which of the following is a characteristic of perfect competition?
Many sellers and differentiated products
Few sellers and identical products
Few sellers and differentiated products
Many sellers and identical products
#3
What does the short-run average variable cost curve typically exhibit?
U-shaped
L-shaped
Upsloping
Downward-sloping
#4
In the long run, which of the following statements is true for a perfectly competitive firm?
The firm can earn economic profits.
The firm operates at the minimum point of its average total cost curve.
The firm produces where marginal cost equals marginal revenue.
The firm operates where average revenue equals average variable cost.
#5
What is the formula for calculating marginal product of labor?
MPL = ∆Q / ∆L
MPL = Q / L
MPL = Q - L
MPL = Q * L
#6
What does the law of diminishing returns state in microeconomics?
As more units of a variable input are added to fixed inputs, total output will increase at an increasing rate.
As more units of a variable input are added to fixed inputs, total output will increase at a decreasing rate.
As more units of a variable input are added to fixed inputs, total output will remain constant.
As more units of a variable input are added to fixed inputs, total output will decrease.
#7
Which cost concept includes both explicit and implicit costs?
Accounting cost
Economic cost
Opportunity cost
Variable cost
#8
In the short run, a perfectly competitive firm will shut down if:
Total revenue exceeds total cost.
Total revenue is less than total variable cost.
Total revenue equals total variable cost.
Total revenue exceeds total variable cost.
#9
What is the formula for calculating average fixed cost?
AFC = TC / Q
AFC = FC / Q
AFC = VC / Q
AFC = TC - VC
#10
Which cost concept refers to the highest-valued alternative that must be given up to engage in an activity?
Accounting cost
Economic cost
Opportunity cost
Explicit cost
#11
What happens to a firm's average variable cost as production increases in the short run?
It remains constant.
It decreases.
It increases.
It fluctuates.
#12
What is the relationship between marginal cost and average variable cost in the short run?
Marginal cost equals average variable cost.
Marginal cost is always greater than average variable cost.
Marginal cost is always less than average variable cost.
Marginal cost initially falls, then rises, and intersects average variable cost at its minimum point.
#13
What is a characteristic of economies of scale?
Long-run average total cost increases as output increases.
Long-run average total cost remains constant as output increases.
Long-run average total cost decreases as output increases.
Long-run average total cost reaches its minimum point at the lowest level of output.
#14
What is the relationship between marginal cost and average total cost in the short run?
Marginal cost is always greater than average total cost.
Marginal cost is always less than average total cost.
Marginal cost equals average total cost.
Marginal cost initially falls, then rises, and intersects average total cost at its minimum point.
#15
What is the formula for calculating total fixed cost?
TFC = TC - VC
TFC = AFC x Q
TFC = AFC / Q
TFC = FC
#16
What is the relationship between marginal cost and average total cost at the point where marginal cost is at its minimum?
Marginal cost equals average total cost.
Marginal cost is less than average total cost.
Marginal cost is greater than average total cost.
Marginal cost intersects average total cost.
#17
Which of the following best describes diseconomies of scale?
Long-run average total cost decreases as output increases.
Long-run average total cost remains constant as output increases.
Long-run average total cost increases as output increases.
Long-run average total cost reaches its minimum point at the lowest level of output.