#1
What is the definition of production in economics?
The process of selling goods in the market
The process of creating goods and services
The process of setting prices for goods
The process of consuming goods and services
#2
What is the difference between fixed costs and variable costs?
Fixed costs change with the level of production, while variable costs remain constant
Fixed costs remain constant regardless of the level of production, while variable costs change
Fixed costs and variable costs both change with the level of production
Fixed costs and variable costs both remain constant regardless of the level of production
#3
What is the definition of total cost?
The cost of producing one additional unit of output
The sum of fixed and variable costs
The difference between average variable cost and average total cost
The cost of producing the last unit of output
#4
What is the law of diminishing marginal returns?
As the quantity of a variable input increases, the marginal product of that input eventually decreases
As the quantity of a variable input increases, the marginal product of that input increases
As the quantity of a variable input increases, the total product increases at a decreasing rate
As the quantity of a variable input increases, the total product remains constant
#5
What is the difference between explicit costs and implicit costs?
Explicit costs are incurred when resources are not fully utilized, while implicit costs are incurred when resources are fully utilized
Explicit costs are opportunity costs of using self-owned resources, while implicit costs are out-of-pocket expenses
Explicit costs involve monetary payments for resources, while implicit costs do not involve monetary payments
Explicit costs are long-term costs, while implicit costs are short-term costs
#6
What is the Law of Diminishing Returns in production?
As production increases, average total cost decreases
As production increases, marginal cost decreases
As more of a variable input is added to a fixed input, marginal product eventually decreases
As more of a variable input is added to a fixed input, total product increases indefinitely
#7
What is the formula for calculating average fixed cost?
AFC = Total Fixed Cost / Quantity of Output
AFC = Total Variable Cost / Quantity of Output
AFC = Total Cost / Quantity of Output
AFC = Quantity of Output / Total Fixed Cost
#8
What is the relationship between marginal product and total product?
When marginal product is increasing, total product is increasing at a decreasing rate
When marginal product is decreasing, total product is decreasing at a decreasing rate
When marginal product is increasing, total product is increasing at an increasing rate
When marginal product is decreasing, total product is increasing at a decreasing rate
#9
What is the shape of the average variable cost curve in the short run?
U-shaped
Downward-sloping
Upward-sloping
Vertical
#10
In the long run, what is the shape of the average total cost curve when experiencing constant returns to scale?
U-shaped
Downward-sloping
Upward-sloping
Horizontal
#11
What does the term 'marginal cost' represent?
The change in total cost resulting from producing one more unit of output
The change in total revenue resulting from selling one more unit of output
The difference between average variable cost and average total cost
The cost of producing the last unit of output
#12
What does the 'U-shaped' average total cost curve indicate?
Decreasing returns to scale
Increasing returns to scale
Constant returns to scale
Economies of scale followed by diseconomies of scale
#13
What is the relationship between marginal cost and average variable cost?
When MC > AVC, AVC is increasing
When MC < AVC, AVC is increasing
When MC = AVC, AVC is constant
When MC > AVC, AVC is constant
#14
What is the difference between economies of scale and diseconomies of scale?
Economies of scale occur when long-run average total cost decreases as output increases, whereas diseconomies of scale occur when long-run average total cost increases as output increases
Economies of scale occur when long-run average total cost increases as output increases, whereas diseconomies of scale occur when long-run average total cost decreases as output increases
Both economies of scale and diseconomies of scale refer to the same concept
Economies of scale occur in the short run, while diseconomies of scale occur in the long run
#15
What is the relationship between average total cost and marginal cost at the minimum average total cost?
Marginal cost is greater than average total cost
Marginal cost is less than average total cost
Marginal cost equals average total cost
There is no relationship between marginal cost and average total cost at the minimum average total cost
#16
Which cost curve must always be U-shaped?
Average total cost curve
Marginal cost curve
Average fixed cost curve
Average variable cost curve
#17
What is the relationship between average total cost and marginal cost when average total cost is increasing?
Marginal cost is greater than average total cost
Marginal cost is less than average total cost
Marginal cost equals average total cost
There is no relationship between marginal cost and average total cost