Business Costs

Business Costs

by Kendrick Broadus

Multiple Choice

Which of the following describes an eventual decline in the productivity of factor inputs as additional units of variable factors are added to fixed resources?

• Law of diminishing marginal utility

• Law of diminishing marginal returns

• Laffer curve

• Law of diminishing total product

Lets Practice!

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Multiple Choice

The conversion of factors of production into goods and services

• Productivity

• Outputting

• Specialization

• Production

Multiple Choice

Which of the following is NOT a reason why costs are important to a business

• to charge right price for the product

• to keep the employees motivated

• to calculate whether a new business will make profit or not

• to help managers to take major decisions

Multiple Choice

Which one of the following is NOT considered to be a cost?

• rent

• salary

• sales revenue

• insurance

Multiple Choice

Costs that change based on the amount of goods and services produced

• total costs

• fixed costs

• variable costs

• average costs

Multiple Choice

Rent, administrative costs, advertising, employee salary are examples of:

• costs

• total costs

• variable costs

• fixed costs

Multiple Choice

What are costs?

• the money coming into a business when customers buy a product

• the money a business spends on business activities

• the money business invests

Multiple Choice

Loss happens when

• the total costs equal its total revenue

• the total costs are lower than its total revenue

• the total costs are higher than its total revenue

Multiple Choice

Which of the following is TRUE?

• In the short-run all factors of production are variable 

• In the short-run all factors of production are fixed

•  In the long-run all factors of production are fixed 

• In the long-run all factors of production are variable

Multiple Choice

What is short run?

• The short run is when at least one input is fixed while others are variable

• The short run is a concept that states that you will be able to change your plans

• The short run is when you can change capital and labour and any factor of production

Multiple Choice

Period of time when it is not possible to vary the quantities of all the factors of production used in the production process

• Long-run 

• Short-run 

• Average-run

•  Past-continuous

Multiple Choice

Period of time when it is possible to vary the quantities of all the factors of production used in the production process

• Long-run 

• Short-run 

• Average-run

•  Past-continuous

Multiple Choice

Factors that can be altered or changed in the short run or relatively short space of time

• Productive capacity 

• Variable factors 

• Fixed factors 

• Immobile factors

Multiple Choice

Fixed cost + variable cost =

• average costs

• total costs

• marginal costs

• unit costs

Multiple Choice

If a new tax on capital increases a firm’s fixed cost of production, which of the following will occur in the short run?

• Average total cost will increase

• Marginal cost will increase

• Average variable cost will increase

• The profit-maximizing level of output will increase

Multiple Choice

At the level of 5 labors, average production is __________.

• 4 units

• 6 units

• 7 units

• 8 units

Multiple Choice

Costs that change based on the amount of goods and services produced

• total costs

• fixed costs

• variable costs

• average costs

Multiple Choice

The timeframe when some resources are fixed

• Short-term 

• Short-run 

• Long-term

•  Long-run

Multiple Choice

Rent, administrative costs, advertising, employee salary are examples of:

• costs

• total costs

• variable costs

• fixed costs

Multiple Choice

Raw materials, packaging, labour costs, are examples of:

• fixed costs

• variable costs

• total costs

• profit

Multiple Choice

Short run and long run are not specified in terms of days/weeks but relative according to the good being produced

• True

• False

Multiple Choice

Average cost of production = Total cost of production/Total output. TRUE or FALSE?

• TRUE

• FALSE

Multiple Choice

What is profit?

• the same as revenue

• money coming into a business when customers buy the product

• the amount of money a business makes from selling products after all the costs have been paid

• money a business spends on business activities

Multiple Choice

What are fixed expenses?

• Irregular expenses that change from week to week or month to month

• The amount of money in your bank account

• The amount of cash in your purse or wallet

• Expenses that stay the same from week to week or month to month

Multiple Choice

Dara makes bracelets and sells them in her shop. Which is a fixed expense for Dara’s business?

• the cost of the beads

• the cost of the string

• the cost of advertising

• rent for her shop

Multiple Choice

Rent Payment

• Fixed Expense
• Variable Expense

Multiple Select

Which 3 of these are costs?

• Fixed

• Variable

• Operating

• Revenue

Multiple Choice

What is an operating cost?

• Something a business pays before the company starts

• Something the company receives

• Something the company pays for their day to day running

• Something the company cant afford

Multiple Choice

What is a variable cost?

• A cost which does not change

• A cost which they must pay even if they produce nothing

• A cost which changes the more or less the business produces

• A cost the business pays when they start

Multiple Choice

Costs that must be paid regardless of how much of a good or service is produced. They do not change in the short term, regardless of output are called

• Variable costs

• Fixed costs

• Total costs

• The costs

Multiple Choice

Marginal costs is

• the cost added by producing one additional unit

• the change in revenue added by producing one additional unit

• the additional cost