What type of cost does not change with the level of production?
A) Fixed cost
B) Variable cost
C) Marginal cost
D) Total cost
Which of the following is an example of a variable cost?
A) Rent
B) Salaries of permanent workers
C) Raw materials
D) Depreciation
What is the cost of producing one additional unit of output called?
A) Fixed cost
B) Variable cost
C) Average cost
D) Marginal cost
Which of the following costs is incurred regardless of the level of output?
A) Total cost
B) Variable cost
C) Fixed cost
D) Marginal cost
The sum of fixed costs and variable costs gives:
A) Average cost
B) Marginal cost
C) Total cost
D) Variable cost per unit
What happens to marginal cost as production increases?
A) It remains constant
B) It increases
C) It decreases
D) It fluctuates unpredictably
The total fixed cost of production is:
A) The sum of marginal costs
B) The cost of variable factors of production
C) Independent of the level of output
D) The cost of raw materials
Which of the following is a characteristic of variable costs?
A) They do not change with production levels
B) They are incurred even when no output is produced
C) They vary directly with output levels
D) They are constant in the short run
In the short run, marginal cost initially decreases and then increases due to:
A) Economies of scale
B) Diminishing returns
C) The law of supply
D) Fixed costs
What happens to the average fixed cost as output increases?
A) It increases
B) It decreases
C) It remains constant
D) It fluctuates
What is the formula for calculating total cost?
A) Fixed cost + Marginal cost
B) Variable cost + Marginal cost
C) Fixed cost + Variable cost
D) Average cost × Quantity
Which of the following is true about marginal cost in the short run?
A) It is constant regardless of output
B) It can increase as output increases
C) It does not change with output changes
D) It decreases with an increase in output
Average total cost is the sum of which two types of costs?
A) Fixed cost and marginal cost
B) Average fixed cost and average variable cost
C) Variable cost and marginal cost
D) Total fixed cost and total variable cost
Which of the following is a fixed cost for a factory?
A) Raw materials
B) Wages of workers
C) Factory rent
D) Electricity bills
The cost of producing one more unit of output is:
A) Fixed cost
B) Total cost
C) Marginal cost
D) Average variable cost
In the long run, all costs become:
A) Fixed costs
B) Variable costs
C) Sunk costs
D) Non-relevant costs
When the marginal cost is greater than the average total cost, the average total cost:
A) Increases
B) Decreases
C) Remains constant
D) Becomes zero
Which of the following statements is true for fixed costs?
A) They increase with output
B) They remain the same regardless of output
C) They are zero at all levels of production
D) They only exist in the short run
The relationship between total cost and marginal cost is:
A) Total cost = Marginal cost
B) Total cost increases at a constant rate as marginal cost rises
C) Marginal cost is the difference between total cost at two levels of output
D) Total cost and marginal cost are unrelated
When marginal cost is less than average total cost, average total cost:
A) Increases
B) Decreases
C) Remains constant
D) Becomes zero
Fixed costs include:
A) Rent for equipment
B) Cost of raw materials
C) Wages paid to hourly workers
D) Utility bills
A firm’s variable cost changes when:
A) The output level changes
B) The firm invests in machinery
C) The firm’s location changes
D) The firm pays fixed wages
Which of the following costs is incurred in the production of the first unit of output but not in subsequent units?
A) Marginal cost
B) Average cost
C) Fixed cost
D) Start-up cost
The total cost curve is usually:
A) Horizontal
B) Vertical
C) U-shaped
D) Increasing steadily
The marginal cost curve intersects the average total cost curve at:
A) The minimum point of the marginal cost curve
B) The maximum point of the total cost curve
C) The minimum point of the average total cost curve
D) The equilibrium point
What happens to average variable cost when marginal cost is above it?
A) Average variable cost increases
B) Average variable cost decreases
C) Average variable cost remains the same
D) Average variable cost reaches its maximum point
Which of the following is a variable cost for a car manufacturer?
A) Factory rent
B) Salaries of permanent staff
C) Raw materials used in production
D) Insurance premiums
Fixed costs are important in the short run because:
A) They vary with the level of output
B) They remain constant despite changes in output
C) They decrease with the increase in output
D) They cannot be avoided
The marginal cost curve is typically:
A) U-shaped
B) Linear
C) Horizontal
D) Vertical
