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B Com Exam  >  B Com Tests  >  Business Economics & Finance  >  Test: Cost Function Analysis - 2 - B Com MCQ

Test: Cost Function Analysis - 2 - B Com MCQ


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10 Questions MCQ Test Business Economics & Finance - Test: Cost Function Analysis - 2

Test: Cost Function Analysis - 2 for B Com 2024 is part of Business Economics & Finance preparation. The Test: Cost Function Analysis - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Cost Function Analysis - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Cost Function Analysis - 2 below.
Solutions of Test: Cost Function Analysis - 2 questions in English are available as part of our Business Economics & Finance for B Com & Test: Cost Function Analysis - 2 solutions in Hindi for Business Economics & Finance course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Cost Function Analysis - 2 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Business Economics & Finance for B Com Exam | Download free PDF with solutions
Test: Cost Function Analysis - 2 - Question 1
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What are urgent costs in a firm?

Detailed Solution for Test: Cost Function Analysis - 2 - Question 1
Urgent costs in a firm are the costs that must be incurred to ensure the continuous operation of the firm. These costs include expenses related to materials and labor required for production, as they are essential for the firm's day-to-day activities.
Test: Cost Function Analysis - 2 - Question 2
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What are escapable costs?

Detailed Solution for Test: Cost Function Analysis - 2 - Question 2
Escapable costs are costs that can be reduced or escaped due to a contraction in the activities of a business enterprise. These costs are related to the net effect on costs when business activities are reduced and can include various factors like closing unprofitable branches or reducing credit sales.
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Test: Cost Function Analysis - 2 - Question 3
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When does a firm typically incur postponable costs?

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Postponable costs are costs that can be delayed or postponed, typically during periods of slack activity when production is relatively idle. This postponement of costs can help create employment during economic downturns, making it an anti-cyclical measure.
Test: Cost Function Analysis - 2 - Question 4
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Which of the following is an example of a direct cost?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 4
Raw materials used in production are typically considered direct costs because they can be easily and directly traced to a specific unit of operation or cost center, such as a production department.
Test: Cost Function Analysis - 2 - Question 5
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In the short run, how does average fixed cost behave as output increases?
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In the short run, average fixed cost (AFC) decreases as output increases. This is because fixed costs are spread over a larger number of units as production increases, resulting in a lower per-unit cost.
Test: Cost Function Analysis - 2 - Question 6
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What does the long-run average cost curve represent in terms of plant size?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 6
The long-run average cost (LAC) curve represents the optimal plant size for each level of output. It shows the cost-minimizing choices a firm can make regarding plant size in the long run.
Test: Cost Function Analysis - 2 - Question 7
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When does diseconomies of scale start affecting a firm's cost curve?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 7
Diseconomies of scale start affecting a firm's cost curve at a very large volume of output. As the firm continues to expand beyond a certain point, factors like management inefficiencies and resource competition may outweigh the economies of scale, causing costs to rise.
Test: Cost Function Analysis - 2 - Question 8
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What does the long-run marginal cost (LMC) curve represent?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 8
The long-run marginal cost (LMC) curve represents the change in total cost per unit of output as the firm adjusts its plant size in the long run. It shows how costs change as the firm optimizes its production process.
Test: Cost Function Analysis - 2 - Question 9
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How is controllable cost defined in responsibility accounting?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 9
In responsibility accounting, a controllable cost is defined as a cost that is subject to regulation by the executive with responsibility for that cost. It means that the executive has the authority and ability to influence or control the cost within their area of responsibility.
Test: Cost Function Analysis - 2 - Question 10
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How is the long-run average cost (LAC) curve related to the short-run average cost (SAC) curves?
Detailed Solution for Test: Cost Function Analysis - 2 - Question 10
The long-run average cost (LAC) curve is composed of the segments of the lowest short-run average cost (SAC) curves for various plant sizes. It represents the cost-minimizing choices for each level of output in the long run by selecting the most efficient plant size.
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