#1
Which of the following represents the total opportunity cost of producing one more unit of a good?
Marginal cost
ExplanationCost of producing one additional unit.
#2
In the short run, which of the following costs is variable?
Raw materials
ExplanationCost that can change in the short term.
#3
Which of the following statements best describes total cost?
The sum of fixed costs and variable costs.
ExplanationCombined fixed and variable expenses.
#4
In the long run, a firm can adjust:
Both fixed and variable inputs.
ExplanationFlexibility in all input adjustments.
#5
What does the production function illustrate?
The relationship between input and output.
ExplanationInput-output relationship.
#6
Which of the following is NOT a factor of production?
Money
ExplanationNot a primary input in production.
#7
What does the law of diminishing marginal returns state?
As input increases, output increases at a decreasing rate.
ExplanationDiminishing productivity with additional input.
#8
When does a firm experience economies of scale?
When the long-run average total cost decreases as output increases.
ExplanationDecrease in cost per unit with increased production.
#9
What does the term 'economies of scope' refer to?
When a firm produces multiple goods or services using the same resources more efficiently than producing them separately.
ExplanationEfficiency gained by producing multiple products.
#10
What is the formula for calculating average total cost (ATC)?
ATC = Total cost / Quantity
ExplanationAverage cost per unit produced.
#11
Which of the following is a characteristic of a perfectly competitive market?
There is no product differentiation.
ExplanationHomogeneous products in market.
#12
What happens to a firm's average fixed cost as output increases?
It decreases.
ExplanationSpread of fixed costs over more units.
#13
What is the relationship between average variable cost (AVC) and marginal cost (MC) when AVC is increasing?
AVC > MC
ExplanationAverage cost per unit exceeds cost of additional unit.
#14
When is a firm said to be operating at its shutdown point?
When total revenue is less than total variable cost.
ExplanationOperating at a loss with no profits.
#15
What is the relationship between average product (AP) and marginal product (MP) when AP is at its maximum?
AP = MP
ExplanationMaximum average equals marginal.
#16
What is the relationship between total product (TP) and marginal product (MP) when TP is at its maximum?
TP = MP
ExplanationMaximum total equals marginal.
#17
What does the average fixed cost (AFC) curve look like as output increases?
It slopes downward.
ExplanationDecreasing average fixed cost.