#1
Which of the following is an example of explicit cost?
Rent paid for office space
Owner's labor in a small business
Interest income from a savings account
Opportunity cost of using owned equipment
#2
What is the formula for calculating total revenue?
Total Revenue = Price × Quantity
Total Revenue = Price / Quantity
Total Revenue = Price + Quantity
Total Revenue = Quantity - Price
#3
What is the formula for calculating average variable cost?
Average Variable Cost = Total Variable Cost / Quantity
Average Variable Cost = Total Variable Cost - Quantity
Average Variable Cost = Total Variable Cost × Quantity
Average Variable Cost = Total Variable Cost + Quantity
#4
What is the formula for calculating marginal revenue?
Marginal Revenue = Change in Total Revenue / Change in Quantity
Marginal Revenue = Total Revenue / Quantity
Marginal Revenue = Price × Quantity
Marginal Revenue = Change in Quantity / Change in Price
#5
What does the term 'opportunity cost' refer to in economics?
The cost of purchasing goods and services
The cost of producing one more unit of a good or service
The value of the next best alternative foregone
The total expenses incurred by a firm
#6
In microeconomics, what does the term 'marginal cost' refer to?
The additional cost of producing one more unit of a good or service
The total cost of producing a good or service
The fixed cost of production
The average cost of production
#7
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and few sellers
Homogeneous products
High barriers to entry
Significant control over prices by individual firms
#8
What is the relationship between average total cost (ATC) and marginal cost (MC) when ATC is decreasing?
MC < ATC
MC > ATC
MC = ATC
MC is undefined when ATC is decreasing
#9
What happens to a firm's profit when marginal cost (MC) is less than average total cost (ATC)?
Profit decreases
Profit increases
Profit is maximized
Profit is negative
#10
Which of the following is NOT a characteristic of a monopoly market structure?
Single seller
Homogeneous products
Significant control over price
Barriers to entry
#11
Which of the following statements best describes economies of scale?
As production increases, average total cost decreases.
As production increases, average total cost remains constant.
As production increases, average total cost increases.
As production increases, marginal cost decreases.
#12
What does the term 'economic profit' represent?
Total revenue minus explicit costs only
Total revenue minus explicit and implicit costs
Total revenue minus fixed costs
Total revenue minus variable costs
#13
What is the profit-maximizing output level for a firm in perfect competition?
The output level where marginal cost equals marginal revenue
The output level where total revenue exceeds total cost
The output level where average total cost is minimized
The output level where average variable cost equals average fixed cost
#14
What is the relationship between price elasticity of demand (PED) and total revenue?
Total revenue is maximized when PED is elastic
Total revenue is maximized when PED is inelastic
Total revenue remains constant regardless of PED
Total revenue is maximized when PED is unitary elastic
#15
What is the difference between accounting profit and economic profit?
Accounting profit includes implicit costs; economic profit does not.
Economic profit includes explicit costs; accounting profit does not.
Accounting profit includes explicit and implicit costs; economic profit only includes explicit costs.
Economic profit includes explicit and implicit costs; accounting profit only includes explicit costs.
#16
What does the term 'shut down point' represent for a firm in the short run?
The output level where average total cost equals marginal cost
The output level where total revenue equals total variable cost
The output level where total revenue equals total cost
The output level where total revenue equals total fixed cost