Principles of Production and Costs Quiz
Explore principles of production, cost calculation, economies of scale, marginal cost, & more in this comprehensive quiz on cost economics.
#1
Which of the following is a fixed cost in production?
Raw materials
Labor wages
Rent for factory space
Electricity usage
#2
What is the role of a production function in economic theory?
To determine market demand
To describe the relationship between inputs and outputs in production
To set government regulations on production
To analyze consumer preferences
#3
What is the significance of the production possibility frontier in economic analysis?
It determines the maximum production capacity of a firm
It illustrates the trade-off between two goods in production
It sets government regulations on production
It determines market demand
#4
In the context of production, what is the role of a cost function?
To analyze consumer preferences
To describe the relationship between inputs and outputs
To set government regulations on production
To determine market demand
#5
What is the formula for calculating total cost in production?
Total Cost = Fixed Cost + Variable Cost
Total Cost = Fixed Cost - Variable Cost
Total Cost = Variable Cost / Fixed Cost
Total Cost = Fixed Cost * Variable Cost
#6
In economics, what does the term 'marginal cost' refer to?
The cost of the last unit produced
The total cost of production
The average cost per unit
The fixed cost of production
#7
What is the concept of economies of scale in production?
The increase in production cost as output decreases
The decrease in production cost per unit as output increases
The constant production cost regardless of output
The increase in production cost per unit as output increases
#8
How does the average variable cost change with an increase in production?
Increases
Decreases
Remains constant
Fluctuates randomly
#9
What is the concept of diseconomies of scale in production?
The decrease in production cost per unit as output increases
The constant production cost regardless of output
The increase in production cost as output decreases
The increase in production cost per unit as output increases
#10
What is the Law of Diminishing Marginal Returns?
As production increases, marginal cost decreases
As production increases, marginal cost increases
As production decreases, marginal cost increases
As production decreases, marginal cost decreases
#11
What is the difference between explicit costs and implicit costs in production?
Explicit costs are visible, while implicit costs are hidden
Explicit costs involve cash payments, while implicit costs do not
Explicit costs are long-term, while implicit costs are short-term
Explicit costs are related to variable costs, while implicit costs are related to fixed costs
#12
What is the relationship between total cost and total variable cost in production?
Total cost is always greater than total variable cost
Total cost is always less than total variable cost
Total cost is equal to total variable cost
Total cost and total variable cost are unrelated
#13
What is the main objective of cost minimization in production?
To maximize profits
To reduce fixed costs
To minimize variable costs
To increase production output
#14
What is the role of technology in reducing production costs?
Increases fixed costs
Decreases variable costs
Increases total costs
Has no impact on production costs
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