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Test: Production And Costs - 2


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20 Questions MCQ Test Indian Economy for UPSC CSE | Test: Production And Costs - 2

Test: Production And Costs - 2 for Commerce 2022 is part of Indian Economy for UPSC CSE preparation. The Test: Production And Costs - 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Production And Costs - 2 MCQs are made for Commerce 2022 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Production And Costs - 2 below.
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Test: Production And Costs - 2 - Question 1

Cost of production is

Detailed Solution for Test: Production And Costs - 2 - Question 1

Cost of production is the total price paid for resources used to manufacture a product or create a service to sell to consumers including raw materials, labor, and overhead.

Test: Production And Costs - 2 - Question 2

Cost function shows

Detailed Solution for Test: Production And Costs - 2 - Question 2

A firm has to pay for the inputs it needs. Therefore, inputs, on the one hand, generate costs and, on the other hand, generate output. We first study the relationship between inputs and the output; that is "production function". Then we look at the relationship between the output and costs; that is cost function.

Test: Production And Costs - 2 - Question 3

Money costs mean

Test: Production And Costs - 2 - Question 4

Explicit costs are paid to

Detailed Solution for Test: Production And Costs - 2 - Question 4

Total cost is what the firm pays for producing and selling its products. Explicit costs are normal business expenses that are easy to track and appear in the general ledger. Explicit costs are the only costs necessary to calculate a profit, as they clearly affect a company's profits. Wages that a firm pays its employees or rent that a firm pays for its office are explicit costs. 

Test: Production And Costs - 2 - Question 5

Implicit costs are

Detailed Solution for Test: Production And Costs - 2 - Question 5

Implicit cost is actually the cost that is the consequence of using the assets, instead of lending, selling or renting them. It also means the income that is forgone from making a choice of not to work. Implicit cost is also known as implied cost, notional cost or imputed cost.

Test: Production And Costs - 2 - Question 6

Opportunity cost is the

Detailed Solution for Test: Production And Costs - 2 - Question 6

“Opportunity cost” of a resource, means the value of the next-highest-valued alternative use of that resource.
E.g. you spend time and money going to a movie, you cannot spend that time at home playing video games, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is playing video games at home, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not playing videos game at home.

Test: Production And Costs - 2 - Question 7

The difference you find between fixed and variable costs

Detailed Solution for Test: Production And Costs - 2 - Question 7

Fixed costs are expenses that remain constant for a period of time irrespective of the level of outputs. Variable costs are expenses that change directly and proportionally to the changes in business activity level or volume. Even if the output is nil, fixed costs are incurred.

Test: Production And Costs - 2 - Question 8

Revenue for a firm is

Test: Production And Costs - 2 - Question 9

Average Revenue(AR) is

Test: Production And Costs - 2 - Question 10

The law of supply explains a

Detailed Solution for Test: Production And Costs - 2 - Question 10

The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.

Test: Production And Costs - 2 - Question 11

Market supply is best defined as

Detailed Solution for Test: Production And Costs - 2 - Question 11

Market Supply : The horizontal summation of all the individual firm supply curves. A market supply curve shows what quantity will be supplied by all firms at various prices. or service. The impact of a surplus in a market is to drive prices down and to increase the quantity traded.

Test: Production And Costs - 2 - Question 12

The supply curve of a firm shows

Test: Production And Costs - 2 - Question 13

The elasticity of supply measures

Test: Production And Costs - 2 - Question 14

A supply schedule is best defined as

Test: Production And Costs - 2 - Question 15

Marginal Revenue is

Detailed Solution for Test: Production And Costs - 2 - Question 15

Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. Marginal revenue helps a company identify the revenue generated from one additional unit of production. A company that is looking to maximize its profits will produce up to the point where marginal cost equals marginal revenue.

Test: Production And Costs - 2 - Question 16

The fixed cost curve is a horizontal straight line to the X axis because

Detailed Solution for Test: Production And Costs - 2 - Question 16

TFC curve is a horizontal straight line parallel to X-axis showing that total fixed costs remain same at all levels of output. 

Test: Production And Costs - 2 - Question 17

Variable costs vary with output because

Test: Production And Costs - 2 - Question 18

Average cost is derived by

Detailed Solution for Test: Production And Costs - 2 - Question 18

The opportunity cost incurred per unit of good produced. This is calculated by dividing the cost of production by the quantity of output produced.
Average cost is a general notion of the per unit cost incurred in the production of a good or service. It is specified as the total cost divided by the quantity of output.

Test: Production And Costs - 2 - Question 19

AVC, AFC & ATC are related in a way that

Test: Production And Costs - 2 - Question 20

Explain the relationship TC, TFC & TVC.

Detailed Solution for Test: Production And Costs - 2 - Question 20

Relationship between TFC, TVC, and TC. Total fixed cost (TFC) is represented by a straight line parallel to X-axis and it remains unchanged for all output levels in a time period. ... TC is the sum of TFC and TVC. When no variable output is added, TC is equal to TFC.

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