Theory of cost part 2

When AC Curve is at minimum then MC Curve is ______?

• Minimum then AC Curve

• Equals to AC Curve

• Above AC Curve

• Less then AC Curve

Issues requiring decision making in the context of business are:

• How much should be the optimum output at what price should the firm sell?

• How will the product be placed in the market?

• How to combat the risks and uncertainties involved?

• All of the above.

A firm producing 15 units of output has average cost of ₹250 and 125 as per unit cost for fixed factors of production. Then average variable cost will be:

• ₹180

• ₹150

• ₹125

• None of the above

Which of the following statement is incorrect?

• AC is sloping downwards, MC is below AC

• AC is sloping downwards, MC must fall

• AC is sloping upwards, MC is above AC

• MC cuts AC at its lowest point

Diminishing marginal returns implies.

• Decreasing average fixed cost

• Decreasing average variable cost

• Decreasing marginal cost

• Increasing marginal cost

Opportunity Cost is _______.

• Recorded in the book of accounts

• Sacrificed alternative

• Both (a) and (b)

• None of the above

________ refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity, such that if they are removed the total level of output remains unchanged.

• Voluntary

• Disguised

• Structural

• Technological

Which of the following is true?

• TC = TFC + TVC

• TC + TVC + TFC

• 2TC - TVC = TFC

• none

Total Economic Cost = Explicit Cost + Implicit Cost + _______.

• Normal Profit

• Super Normal Profit

• Loss

• None

Economic cost of production differs from accounting cost of production:

• Partially True

• True

• False

• None