Costs

1. Identify the two cost curves that start from the same point on the Y-axis:

• TVC and TFC

  
  

• TFC and AVC

• TFC and TC

• TFC and AFC

1.  Which cost increases continuously with an increase in production?

• Average cost

• Marginal cost

• Variable cost

• Fixed cost

1. In economics, the learning curve shows the relationship between:

• Price and demand

  
  

• Time and interest rates

• Cumulative output and cost per unit

• Capital and labor

1. Economies of scope occur when:

• Producing more of a single good reduces average cost

  
  

• Producing multiple goods together reduces total cost

• A firm achieves constant returns to scale

• The price of inputs falls

1. Which of the following is an example of “Implicit cost”?

• Interest that could have been earned on retained earnings used by the firm to

  finance expansion

• Payment of Rent by the Firm

• Interest Payment made by the Firm for funds borrowed from a Bank

• Payment of Wages by the Firm

1. Which curve is not affected by fixed cost?

• MC Curve

  
  

• TC Curve  

• AC Curve

• AFC Curve

1. The envelope curve represents:

• The minimum average cost for each level of output in the long run

• The maximum cost of production

• The intersection of all marginal cost curves

• Diseconomies of scope

1. A firm’s average fixed cost (AFC) is Rs. 20 at six units of output. What will be AFC at four units of output? 

• Rs. 20 

  
  

• Rs. 30 

• Rs. 40 

• Rs. 50

1.  With which of the following, the concept of marginal cost is closely related? 

• Variable Cost

  
  

•  Fixed Cost 

• Opportunity Cost 

• Implicit cost

1. Which of the following is a variable cost for a firm? 

• Interest on loan 

  
  

• Monthly rent 

• Insurance premium 

• Wages to employees