Test: Theory Of Cost- 2


30 Questions MCQ Test Crash Course of Micro Economics -Class 12 | Test: Theory Of Cost- 2


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Attempt Test: Theory Of Cost- 2 | 30 questions in 30 minutes | Mock test for CA Foundation preparation | Free important questions MCQ to study Crash Course of Micro Economics -Class 12 for CA Foundation Exam | Download free PDF with solutions
QUESTION: 1

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

Solution:
QUESTION: 2

As output increases, average fixed cost: 

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QUESTION: 3

At which point does the marginal cost curve intersect the average variable cost curve and short run average total cost curve?

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QUESTION: 4

What is the total cost of production of 20 units, if fixed cost is Rs. 5,000 and variable cost is Rs. 2/-?

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QUESTION: 5

A firm’s average fixed cost is Rs. 40 at 12 units. What will be the average fixed cost at 8 units:

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QUESTION: 6

AFC curve is: 

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QUESTION: 7

A firm producing 7 units of output has an average total cost of Rs. 150 and has to pay Rs. 350 to its fixed factors of production. How much of the average total cost is made up of variable cost ?

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QUESTION: 8

The Average fixed cost for producing on output of 6 units of a product by a firm is Rs. 30. The same cost for producing an output of 4 units will be Rs. ______.

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QUESTION: 9

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

Solution:

The total fixed curve is plotted as straight line parallel to the x axis as fixed costs do not change with the level of output produced in the short run.

QUESTION: 10

Marginal cost changes due to change in ________ cost.

Solution:
QUESTION: 11

Average total cost to a firm is Rs. 600 when it produces 10 units of output and Rs 640 when the output is 11 units. The MC of the 11th unit is:

Solution:

At level 10  
TC=AC x Q
      =600x 10
       = 6000
At level 11
  TC= 640 x 11
      =7040
Now MC = 7040 - 6000
               = 1040

QUESTION: 12

Which of the following curves never touch any axis but is downward?

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QUESTION: 13

 U-shaped average cost curve is based on: 

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QUESTION: 14

Direct costs are also known as _______.

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QUESTION: 15

Suppose the total cost production of a commodity ‘x’ is Rs. 1, 25,000 out of which Implicit cost is Rs. 35,000 and normal profit is Rs. 25,000. What would be the explicit cost of commodity x?

Solution:

125000-25000-35000 = 65000 = explicit cost.
Total cost = implicit cost + explicit cost.

QUESTION: 16

 What will be the AFC of 3 units of Output as per table given below?

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QUESTION: 17

 Find AFC of 3 units:
Unit            0   1    2   3
Total cost 15  25  35  45
 

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QUESTION: 18

Calculate total cost of 4 units:

   

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QUESTION: 19

 The total cost of production of 10 units is Rs. 200. When production is increased to 20 units its total cost becomes Rs. 600. What will be its marginal cost.

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QUESTION: 20

From the following details, firm out the average variable cost of 10 units:
OUTPUT :    0                 10        20
Total cost : Rs. 200 Rs. 400 Rs. 800

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QUESTION: 21

Long run does not have:

Solution:

There are no fixed costs in the long run as all the factors become variable. Fixed cost exists only in short run.

QUESTION: 22

Which one of the following is correct?

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QUESTION: 23

Find out AFC of 3 unit: 

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QUESTION: 24

 In the long run all factors are-----

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QUESTION: 25

Average Revenue Curve is also known as _________.

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QUESTION: 26

A forms AFC is Rs. 200 at 10 units of output what will be it at 20 units of output?

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QUESTION: 27

Which of the following is known as Envelop Curve?

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QUESTION: 28

If the LAC curve falls as output expands, this is due to ______________________.

Solution:

 Long-run average cost is the cost per unit of output reasonable when all factors of production are variable. Long-Run Average cost is of 'U' shaped because of returns to scale. In the establishment, firms enjoy lots of economies to scale so its cost curve is downward sloping. Increasing income to scale applies when firms enjoy economies to scale. In the beginning, the factors of production are not exhausted.

QUESTION: 29

 Payment made to outsiders for their goods and services are called :

Solution:
QUESTION: 30

Labour is hirable but you cannot hire:

Solution:
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