Cost Concepts Quiz

Private costs refer to:

• Costs borne by the individual or firm

• Costs borne by society

• Total costs

• Governmental costs

Social costs are:

• Only the private costs

• Private costs plus external costs

• Only external costs

• Only government costs

Economic costs include:

• Depreciation and interest

• Implicit costs

• Opportunity costs

• Explicit costs like wages and rent

In the short run, the fixed costs are:

• Only explicit costs

• Costs that remain unchanged with changes in output

• Total costs including both explicit and implicit costs

• Government expenditure on public services

Diseconomies of scale occur when:

• All factors are variable

• Average cost per unit increases

• All factors are fixed

• No costs are incurred

The law of diminishing returns applies in the:

• Long run

• Short run

• Both short run and long run

• Neither short run nor long run

The relationship between output and revenue is:

• Variable costs

• Costs that remain unchanged with changes in output

• Total costs

• The cost of raw materials

The efficient scale is known as:

• The efficient scale

• The equilibrium point

• The production frontier

• The margin of productivity

What happens to average cost as output increases during the stage of diminishing returns?

• It increases

• It decreases

• It remains constant

• It fluctuates between high and low values

The primary difference between short-run and long-run costs is:

• The presence of fixed costs in the short run

• The absence of any cost in the long run

• Variable costs in the long run

• Opportunity costs only