MCQ - Theory of Cost Notes | Study Business Economics for CA Foundation - CA Foundation

 Page 1


1. Which Cost Increases Continuously 
With the Increase in Production?
a) Average cost 
b) Marginal cost 
c) Fixed cost 
d) Variable cost 
Answer. (d) 
Page 2


1. Which Cost Increases Continuously 
With the Increase in Production?
a) Average cost 
b) Marginal cost 
c) Fixed cost 
d) Variable cost 
Answer. (d) 
2. Which of the Following Cost Curves is 
Never U-shaped? 
a)Average cost curve 
b) Marginal cost curve 
c) Average variable cost curve 
d) Average fixed cost curve 
Ans. (d) 
Page 3


1. Which Cost Increases Continuously 
With the Increase in Production?
a) Average cost 
b) Marginal cost 
c) Fixed cost 
d) Variable cost 
Answer. (d) 
2. Which of the Following Cost Curves is 
Never U-shaped? 
a)Average cost curve 
b) Marginal cost curve 
c) Average variable cost curve 
d) Average fixed cost curve 
Ans. (d) 
a) Cost of raw material 
b) Cost of equipment 
c)Interest payment on past borrowings 
d)Payment of rent on building 
Ans. (a) 
 
 
 
 
 
 
 
3. Total cost in the short run is classified into fixed costs 
and variable costs. Which one of the following is a 
variable cost? 
Page 4


1. Which Cost Increases Continuously 
With the Increase in Production?
a) Average cost 
b) Marginal cost 
c) Fixed cost 
d) Variable cost 
Answer. (d) 
2. Which of the Following Cost Curves is 
Never U-shaped? 
a)Average cost curve 
b) Marginal cost curve 
c) Average variable cost curve 
d) Average fixed cost curve 
Ans. (d) 
a) Cost of raw material 
b) Cost of equipment 
c)Interest payment on past borrowings 
d)Payment of rent on building 
Ans. (a) 
 
 
 
 
 
 
 
3. Total cost in the short run is classified into fixed costs 
and variable costs. Which one of the following is a 
variable cost? 
 
 
4. In the Short Run, When the Output of a 
Firm Increases, Its Average Fixed Cost: 
 
a) Increases 
b) Decreases 
c) Remains constant 
d) First declines and then rises 
Ans. (b) 
Page 5


1. Which Cost Increases Continuously 
With the Increase in Production?
a) Average cost 
b) Marginal cost 
c) Fixed cost 
d) Variable cost 
Answer. (d) 
2. Which of the Following Cost Curves is 
Never U-shaped? 
a)Average cost curve 
b) Marginal cost curve 
c) Average variable cost curve 
d) Average fixed cost curve 
Ans. (d) 
a) Cost of raw material 
b) Cost of equipment 
c)Interest payment on past borrowings 
d)Payment of rent on building 
Ans. (a) 
 
 
 
 
 
 
 
3. Total cost in the short run is classified into fixed costs 
and variable costs. Which one of the following is a 
variable cost? 
 
 
4. In the Short Run, When the Output of a 
Firm Increases, Its Average Fixed Cost: 
 
a) Increases 
b) Decreases 
c) Remains constant 
d) First declines and then rises 
Ans. (b) 
 
5. Which One of the Following is Also 
Known as Planning Curve? 
a) Long run average cost curve 
b) short run average cost curve 
c) Average variable cost curve 
d) Average total cost curve 
Ans. (a)