COST OF PRODUCTION

1.         If a firm decides NOT TO PRODUCE any output in the short run, its cost will be            

• A.       zero

• B.       total cost

• C.       fixed cost

• D.      variable cost

         Which of the following curve is not U-shaped?

 

• A.       MC

• B.       ATC

• C.       AFC

• D.      AVC

         A firm is facing a total cost of RM400 when no output produce. The total fixed cost will be              .

• A.       RM100

• B.       RM200

• C.       RM300

• D.      RM400

       Cost of production refers to                   .

 

• A.       the expenses incurred by the producer to produce a particular output

• B.       process of using factors of production to produce goods and services

• C.       the change in total cost that results from producing another unit of output

• D.      the value of the firm’s sales

The difference between average cost and average variable cost is                   .

 

 

• A.       fixed cost

• B.       average fixed cost

• C.       marginal cost

• D.      sunk cost

         At an output level of 10 units, total cost (TC) is RM 900 and total variable cost (TVC) is RM 700. How much is the total fixed cost (TFC)?

 

 

• A.       RM 200

• B.       RM 100

• C.       RM 300

• D.      RM 400

The cost that is independent of output and greater than zero when nothing is produced refers to      .

 

• A.       total cost

• B.       fixed cost

• C.       variable cost

• D.      marginal cost

       When the marginal cost (MC) is greater than the average variable cost (AVC), then the

                  .

• A.       average variable cost is at its minimum

• B.       marginal cost is at its minimum point

• C.       average variable cost will increase with increased output

• D.      average variable cost will decrease with increased output

         Marginal cost shows the cost of a unit of output if total cost is divided evenly over all units produced.

• TRUE

• FALSE

         The marginal cost curve intersects the average total cost (ATC) curve at the ATC curve's maximum point.

• TRUE

• FALSE