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WorksheetsCONCEPTS OF COST
Total questions: 40
Worksheet time: 40mins
WHICH OF THE FOLLOWING IS CORRECT
TC = TVC - TFC
TC = TVC X TFC
TVC = TC - TFC
TFC = TVC + TC
IF A FIRM PRODUCES ZERO OUTPUT IN THE SHORT PERIOD, THEN
TOTAL COST WILL BE ZERO
VARIABLE COST WILL BE ZERO
FIXED COST WILL BE ZERO
NONE
SALARY OF PERMANENT STAFF IS
VARIABLE AND IMPLICIT COST
FIXED AND IMPLICIT COST
FIXED AND EXPLICIT COST
VARIABLE AND EXPLICIT COST
WHICH OF THE FOLLOWING IS AN EXPLICIT COST ITEM?
INVESTMENT OF PERSONAL SAVINGS BY A PRODUCER
HIRED LABOUR
MANAGEMENT OF BUSINESS BY ITS OWNER
RENT OF OWN LAND
WHICH OF THE FOLLOWING IS AN IMPLICIT COST ITEM?
NORMAL PROFIT
WAGES PAID TO EMPPLOYEES
PAYMENT OF INSURANCE PREMIUM
PAYMENT FOR TRANSPORTATION OF GOODS
NORMAL PROFITS EARNED BY A FIRM ARE INCLUDED IN
VARIABLE COST
EXPLICIT COST
FIXED COST
IMPLICIT COST
WHICH OF THE FOLLOWING IS CORRECT
AC = TFC -TVC
AC = AFC + TVC
AC = TFC + AVC
AC = AFC + AVC
FILL IN THE BLANKS
_______/ Q - AVC = AFC
TC
ATC
TVC
TFC
FILL IN THE BLANK
TC / Q - TFC / Q =
ATC
AFC
TVC
AVC
THE TOTAL COST OF PRODUCING 20 UNITS OF OUTPUT IS 260. IF AVERAGE FIXED COST AT THIS LEVEL OF OUTPUT IS 7, THEN WHAT WILL BE THE TOTAL VARIABLE COST?
160
140
20
120
WHICH OF THE COST CURVE IS A RECTANGULAR HYPERBOLA IN NATURE
TVC CURVE
AVC CURVE
TFC CURVE
AFC CURVE
AVERAGE FIXED COST
REMAINS SAME AT ALL LEVELS OF OUTPUT
INCREASE AS OUTPUT INCREASES
DECREASES AS OUTPUT INCREASES
INITIALLY INCREASES AND THEN DECREASES
AC CAN FALL EVEN WHEN MC IS RISING, PROVIDED
MC < AC
MC > AC
MC = AC
NONE
WHEN AC IS RISING, MC IS
EQUAL TO AC
CONSTANT
LESS THAN AC
MORE THAN AC
WHICH OF THE FOLLOWING IS NOT A FIXED COST
INSURANCE PREMIUM
INTEREST
COST OF RAW MATERIAL
RENT OF FACTORY BUILDING
WHEN AVERAGE COST FALLS WITH AN INCREASE IN OUTPUT, MARGINAL COST ALWAYS REMAINS____ THAN AVERAGE COST
LOWER
GREATER
EQUAL
NONE
TOTAL FIXED COST
DEPENDS ON THE VOLUME OF PRODUCTION
IS INDEPENDENT OF VOLUME OF PRODUCTION
IS ZERO AT ZERO OUTPUT LEVEL
DECREASES AS OUTPUT INCREASES
AREA UNDER MC CURVE IS EQUAL TO
TVC
AVC
TFC
AC
WHICH OF THE FOLLOWING IS A VARIABLE COST ITEM FOR A FIRM
INTEREST ON LOAN
RENT OF FACTORY BUILDING
INSURANCE PREMIUM
PAYMENT OF ELECTRICITY BILL
AS OUTPUT INCREASES
AVC CURVE AND AC CURVE MOVE AWAY FROM EACH OTHER
AVC CURVE COMES CLOSER AND CLOSER TO AC CURVE BUT DO NOT TOUCH EACH OTHER
AVC CURVE AND AC CURVE COME CLOSER TO EACH OTHER AND MEET AFTER SOMETIME
NONE OF THESE
TOTAL FIXED COST CURVE IS
U - SHAPED
VERTICAL STRAIGHT LINE
S - SHAPED
HORIZONTAL STRAIGHT LINE PARALLEL TO X- AXIS
THE TOTAL COST AT 4 UNITS OF OUTPUT IS 80. THE FIXED COST IS 12. THE AVERAGE VARIABLE COST WILL BE
17
20
12
16
AVC CAN FALL EVEN WHEN MC IS RISING PROVIDED
MC < AVC
MC = AVC
MC > AVC
NONE
WHEN CHANGE IN TOTAL COST IS DIVIDED BY CHANGE IN OUTPUT, WE OBTAIN
AVERAGE TOTAL COST
AVERAGE VARIABLE COST
MARGINAL COST
TOTAL VARIABLE COST
WHAT HAPPENS TO ATC, WHEN MC > ATC
ATC WILL FALL
ATC WILL RISE
ATC WILL REMAIN CONSTANT
NONE OF THESE
WHICH OF THE FOLLOWING STATEMENTS IS CORRECT
TC AND TVC CURVES ARE PARALLEL TO EACH OTHER
TC CURVE IS U- SHAPED
THE DIFFERENCE BETWEEN TC AND TVC DECREASES AS OUTPUT INCREASES
TC AND TVC CURVES START FROM THE POINT OF ORIGIN
WHICH OF THE FOLLOWING STATEMENTS IS INCORRECT
TC AND TVC CURVES ARE INVERSELY S - SHAPED
AT ZERO OUTPUT TC IS EQUAL TO TFC
THE CHANGE IN TC IS ENTIRELY DUE TO CHANGE IN TVC
AS OUTPUT INCREASES, TC INCREASES BY HE EXTENT OF TFC
THE TOTAL COST AT 5 UNITS OF OUTPUT IS 30. FIXED COST IS 5. THE AVERAGE VARIABLE COST ST 5 UNITS OF OUTPUT IS
15
20
25
5
THE AVERAGE FIXED COST OF 4 UNITS OF OUTPUT IS 20. AVERAGE VARIABLE COST AT 5 UNITS OF OUTPUT IS 40. AVERAGE COST OF PRODUCING 5 UNITS IS
20
40
56
60
IF A FIRM'S PRODUCTION DEPARTMENT DATA SAY THAT THE TOTAL VARIABLE COST FOR PRODUCING 8 UNITS AND 10 UNITS OF OUTPUT IS 2500 AND 3000 RESPECTIVELY MARGINAL COST OF 10TH UNIT WILL BE
100
150
500
250
AVERAGE FIXED COST CURVE
DOES NOT TOUCH X -AXIS
DOES NOT TOUCH Y -AXIS
DOES NOT HAVE ZERO SLOPE
ALL OF THESE
A FIRM IS OPERATING WITH A TOTAL VARIABLE COST OF 500 WHEN 5 UNITS OF THE GIVEN OUTPUT ARE PRODUCED AND THE TOTAL FIXED COSTS ARE 200, WHAT WILL BE THE AVERAGE TOTAL COST F PRODUCING 5 UNITS OF OUTPUT
140
100
120
300
WHEN AVERAGE COST FALLS, MARGINAL COST
FALLS
RISES
MAY FALL OR MAY RISE
NEITHER FALLS NOR RISES
WHEN THE TOTAL FIXED COST OF PRODUCING 100 UNITS IS 30 AND THE AVERAGE VARIABLE COST 3, TOTAL COST IS
3
30
270
330
WHICH OF THE FOLLOWING COST DECREASES CONTINUOUSLY WITH INCREASE IN PRODUCTION?
TOTAL VARIABLE COST
MARGINAL COST
AVERAGE TOTAL COST
AVERAGE FIXED COST
WHICH OF THE FOLLOWING IS A VARIABLE COST
SALARY OF A PERMANENT STAFF
RENT OF PREMISES
LICENCE FEE
WAGES
IF TOTAL VARIABLE COST AND TOTAL FIXED COST OF PRODUCING 10 UNITS ARE 500 AND 200, THE VALUE OF AVERAGE COST WOULD BE
50
70
20
80
MARGINAL COST OF A GOOD INCLUDES
ONLY VARIABLE COST
ONLY FIXED COST
BOTH (A) AND (B)
NONE
THE AVERAGE COST IS 20 AND IT IS MINIMUM WHEN 4 UNITS ARE PRODUCED. THE MARGINAL COST OF PRODUCING 4 UNITS IS
20
80
24
5
IF THE TOTAL COST OF PRODUCING 5 UNITS OF A COMMODITY IS 20 AND THAT OF PRODUCING 4 UNITS IS 15, WHAT WILL BE THE MARGINAL COST?
25
10
5
15
