#1
Which of the following represents the total opportunity cost of producing one more unit of a good?
Average variable cost
Marginal cost
Total fixed cost
Average total cost
#2
In the short run, which of the following costs is variable?
Rent
Salaries of permanent employees
Raw materials
Machinery
#3
Which of the following statements best describes total cost?
The total cost of producing one more unit of output.
The sum of fixed costs and variable costs.
The additional cost of producing one more unit of output.
The cost per unit of output.
#4
In the long run, a firm can adjust:
Both fixed and variable inputs.
Only fixed inputs.
Only variable inputs.
Neither fixed nor variable inputs.
#5
What does the production function illustrate?
The relationship between input and output.
The relationship between cost and profit.
The relationship between price and quantity demanded.
The relationship between revenue and expenditure.
#6
Which of the following is NOT a factor of production?
#7
What does the law of diminishing marginal returns state?
As output increases, marginal cost decreases.
As input increases, total cost decreases.
As input increases, output increases at a decreasing rate.
As input decreases, marginal cost increases.
#8
When does a firm experience economies of scale?
When the long-run average total cost decreases as output increases.
When the long-run average total cost increases as output increases.
When the long-run average total cost remains constant as output increases.
When the long-run average total cost equals marginal cost.
#9
What does the term 'economies of scope' refer to?
When the cost per unit of output decreases as the scale of production increases.
When a firm produces multiple goods or services using the same resources more efficiently than producing them separately.
When the cost per unit of output increases as the scale of production increases.
When a firm experiences diminishing returns to scale.
#10
What is the formula for calculating average total cost (ATC)?
ATC = Total variable cost / Quantity
ATC = Total fixed cost / Quantity
ATC = Total cost / Quantity
ATC = Marginal cost / Quantity
#11
Which of the following is a characteristic of a perfectly competitive market?
Firms can set prices above market equilibrium.
There is no product differentiation.
There are only a few sellers in the market.
Firms can earn economic profits in the long run.
#12
What happens to a firm's average fixed cost as output increases?
It decreases.
It increases.
It remains constant.
It becomes negative.
#13
What is the relationship between average variable cost (AVC) and marginal cost (MC) when AVC is increasing?
AVC < MC
AVC = MC
AVC > MC
Cannot be determined
#14
When is a firm said to be operating at its shutdown point?
When total revenue equals total cost.
When total revenue exceeds total variable cost.
When total revenue is less than total variable cost.
When total revenue is less than total cost.
#15
What is the relationship between average product (AP) and marginal product (MP) when AP is at its maximum?
AP > MP
AP = MP
AP < MP
AP cannot be compared with MP
#16
What is the relationship between total product (TP) and marginal product (MP) when TP is at its maximum?
TP > MP
TP = MP
TP < MP
TP cannot be compared with MP
#17
What does the average fixed cost (AFC) curve look like as output increases?
It slopes upward.
It slopes downward.
It is horizontal.
It is vertical.