Economics Quiz Questions – Chapter 3 – Theory of Cost

Economics Quiz Questions, which are covered in this chapter, relate to the topic, Theory of Cost. Economics Quiz Questions Test contains 10 questions. Answers to Economics Quiz Questions are available at the end of the last question.




1. Opportunity cost is:

(a)    Direct cost

(b)    Total cost

(c)     Accounting cost

(d)    Cost of foregone opportunity

2. As output increases, average fixed cost:

(a)    Remains constant

(b)    Starts falling

(c)     Start rising

(d)    None

3. Average fixed cost can be obtained through:

(a) AFC=TFC/TS

(b)AFC=EC/TU

(c)AFC=TC/PC

(d) AFC=TFC/TU

4. AFC curve is:

(a)    Convex & downward sloping

(b)    Concave & downward sloping

(c)     Convex & upward sloping

(d)    Concave & upward rising

5. A firm’s average fixed cost is Rs 20 at 6 units of output what will it be at 4 units of output?

(a)    Rs 60

(b)    Rs 30

(c)    Rs 40

(d)    Rs 20

6. U-shaped average cost curve is based on:

(a)    Law of increasing cost

(b)    Law of decreasing cost

(c)     Law of constant returns to scale

(d)    Law of variable proportions




7. When shape of average cost curve is upwards, marginal cost:

(a)    Must be decreasing

(b)    Must be constant

(c)     Must be rising

(d)    Any of these

8. If total cost at 10 units is Rs 600 and Rs 640 for 11th unit. The marginal cost of 11th unit is:

(a)    Rs 20

(b)    Rs 30

(c)    Rs 40

(d)    Rs 50

9. Economic cost excludes:

(a)    Accounting cost + explicit cost

(b)    Accounting cost + implicit cost

(c)     Explicit cost + Implicit cost

(d)    Accounting cost + opportunity cost

10. Which of the following cost curves is never ‘U’ shaped?

(a)    Average cost curve

(b)    Marginal cost curve

(c)     Total cost curve

(d)    Fixed cost curve

 

ANSWERS

1.  (d) Cost of foregone opportunity

2. (b) Starts falling

3. (d) AFC=TFC/TU

4. (a) Convex & downward sloping

5. (b) Rs 30

6. (d) Law of variable proportions

7. (c) Must be rising

8. (c) Rs 40

9. (a) Accounting cost + explicit cost

10 (d) Fixed cost curve

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