COSTS OF THE FIRM

Which of the following is an example of a fixed cost?

• Wages of hourly employees

• Rent for a store

• Cost of raw materials

• Transportation expenses

Which of the following is an example of a variable cost?

• Salary of a manager

• Rent for a store

• Cost of electricity

• Insurance premiums

Which of the following is true?

• FC = VC + TC

• VC = TC + FC

• TC = FC - VC

• TC= FC+ VC

Which of the following statements is true regarding variable costs?

• They increase as production increases

• They decrease as production increases

• They remain constant regardless of production levels

• They are not relevant in the production process

Calculate VC per unit if TC is $25,000. FC is $5,000 and the number of units produced is 4,000.

• $50.00

• $500.00

• $5.00

• $55.00

Which of the following labels correctly describes the curves in the diagram.

• Red- TC

  Blue - FC

  Green - VC

• Green - FC

  Red- VC

  Blue - TC

• Green - TC

  Blue - FC

  Red - VC

• Red - VC

  Blue - MC

  Green - FC