
Understanding Production Costs
Authored by Thomas HUO
Social Studies
9th - 12th Grade
Used 2+ times

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20 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are fixed costs?
Fixed costs are expenses that change monthly.
Fixed costs are only applicable to variable expenses.
Fixed costs are expenses that remain constant regardless of production levels.
Fixed costs vary with production levels.
Answer explanation
Fixed costs are expenses that do not change with production levels, such as rent or salaries. This means they remain constant regardless of how much is produced, making the correct choice: 'Fixed costs are expenses that remain constant regardless of production levels.'
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are variable costs?
Costs that are incurred only during the production of goods.
Variable costs are costs that vary with production volume.
Costs that remain constant regardless of production volume.
Expenses that are fixed and do not change with output levels.
Answer explanation
Variable costs change with production volume, meaning as more goods are produced, these costs increase or decrease accordingly. This distinguishes them from fixed costs, which remain constant regardless of output.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Give an example of a fixed cost.
Employee salaries
Rent for office space
Utilities for the office
Office supplies
Answer explanation
Rent for office space is a fixed cost because it remains constant regardless of business activity levels, unlike variable costs such as utilities or office supplies that can fluctuate.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Give an example of a variable cost.
Rent for office space
Cost of raw materials
Salaries of permanent staff
Insurance premiums
Answer explanation
The cost of raw materials varies with production levels, making it a variable cost. In contrast, rent, salaries, and insurance are fixed costs that do not change with production volume.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is cost-benefit analysis?
A strategy for negotiating business contracts.
A method to calculate taxes owed on investments.
A technique for predicting future market trends.
Cost-benefit analysis is a method used to evaluate the financial implications of different choices by comparing their costs and benefits.
Answer explanation
Cost-benefit analysis is a systematic approach to evaluate the financial implications of different choices by comparing their costs and benefits, making it the correct choice among the options.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is cost-benefit analysis important?
It guarantees project success regardless of costs.
It determines the best marketing strategy for a product.
It focuses solely on qualitative factors without numerical analysis.
It helps evaluate the economic feasibility of projects by comparing costs and benefits.
Answer explanation
Cost-benefit analysis is crucial as it evaluates the economic feasibility of projects by comparing costs and benefits, ensuring informed decision-making rather than guaranteeing success or focusing only on qualitative factors.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are economies of scale?
Economies of scale refer to the increase in product quality with higher production.
Economies of scale are the financial losses incurred when production is too high.
Economies of scale describe the environmental impact of large-scale manufacturing.
Economies of scale are the cost advantages that arise when production becomes more efficient as the scale of output increases.
Answer explanation
Economies of scale refer to the cost advantages gained when production becomes more efficient as output increases, allowing businesses to lower costs per unit.
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