Business Environment Quiz: Microeconomics - Output and Costs

What is the main objective of a firm in the short run?

• Market share expansion

• Product diversification

• Cost minimization

• Profit maximization

In the short run, which resource is typically fixed?

• Labour

• Raw materials

• Energy

• Capital

What does the Marginal Product (MP) measure?

• Total output produced

• Total cost of production

• Change in total product per unit change in labour

• Average output per unit of labour

What happens to the Average Product (AP) when Marginal Product (MP) is greater than AP?

• AP increases

• AP becomes zero

• AP remains the same

• AP decreases

What is the formula for Total Cost (TC)?

• TC = MC + AFC

• TC = TFC + TVC

• TC = AVC + AFC

• TC = MP + AP

What does the Average Variable Cost (AVC) curve typically look like?

• Straight line

• U-shaped

• Downward sloping

• Horizontal line

What is a characteristic of the Long Run in production?

• All resources are fixed

• Only labour can be varied

• All resources can be varied

• Sunk costs are relevant

What is the Minimum Efficient Scale?

• The smallest quantity of output at which long-run average cost is minimized

• The point where marginal cost equals average cost

• The level of output where total cost is highest

• The maximum output level

What does the Long-Run Average Cost (LRAC) curve represent?

• The cost of fixed inputs

• The average variable cost at different outputs

• The relationship between the lowest attainable average cost and output

• The total cost of production

What is the effect of economies of scale?

• Constant average costs regardless of output

• Decreasing average costs as output increases

• Increasing average costs as output increases

• No effect on average costs