CONCEPTS OF COST

WHICH OF THE FOLLOWING IS CORRECT

• TC = TVC - TFC

• TC = TVC X TFC

• TVC = TC - TFC

• TFC = TVC + TC

IF A FIRM PRODUCES ZERO OUTPUT IN THE SHORT PERIOD, THEN

• TOTAL COST WILL BE ZERO

• VARIABLE COST WILL BE ZERO

• FIXED COST WILL BE ZERO

• NONE

SALARY OF PERMANENT STAFF IS

• VARIABLE AND IMPLICIT COST

• FIXED AND IMPLICIT COST

• FIXED AND EXPLICIT COST

• VARIABLE AND EXPLICIT COST

WHICH OF THE FOLLOWING IS AN EXPLICIT COST ITEM?

• INVESTMENT OF PERSONAL SAVINGS BY A PRODUCER

• HIRED LABOUR

• MANAGEMENT OF BUSINESS BY ITS OWNER

• RENT OF OWN LAND

WHICH OF THE FOLLOWING IS AN IMPLICIT COST ITEM?

• NORMAL PROFIT

• WAGES PAID TO EMPPLOYEES

• PAYMENT OF INSURANCE PREMIUM

• PAYMENT FOR TRANSPORTATION OF GOODS

NORMAL PROFITS EARNED BY A FIRM ARE INCLUDED IN

• VARIABLE COST

• EXPLICIT COST

• FIXED COST

• IMPLICIT COST

WHICH OF THE FOLLOWING IS CORRECT

• AC = TFC -TVC

• AC = AFC + TVC

• AC = TFC + AVC

• AC = AFC + AVC

FILL IN THE BLANKS

_______/ Q - AVC = AFC

• TC

• ATC

• TVC

• TFC

FILL IN THE BLANK

TC / Q - TFC / Q =

• ATC

• AFC

• TVC

• AVC

THE TOTAL COST OF PRODUCING 20 UNITS OF OUTPUT IS 260. IF AVERAGE FIXED COST AT THIS LEVEL OF OUTPUT IS 7, THEN WHAT WILL BE THE TOTAL VARIABLE COST?

• 160

• 140

• 20

• 120