Test: Cost and Revenue Concepts - 1 - JAMB MCQ

Fixed cost remains constant regardless of changes in the level of production. It represents costs that do not vary with the quantity of output produced. Examples of fixed costs include rent, salaries, and insurance premiums. These costs must be paid even if the company does not produce anything.

Total cost is the sum of fixed cost and variable cost. Fixed costs remain constant regardless of the level of production, while variable costs change with the quantity of output produced. Total cost gives the overall cost incurred by the company to produce a given quantity of output.

Average cost is calculated by dividing the total cost by the quantity of output. It represents the cost per unit of output and helps in assessing the efficiency of production. Average cost provides insights into how efficiently resources are being utilized in the production process.

Marginal cost is the additional cost incurred from producing one additional unit of output. It is calculated by dividing the change in total cost by the change in quantity of output. Marginal cost helps in analyzing the impact of producing additional units on the overall cost structure.

The average cost per unit is calculated by dividing the total cost by the quantity of output. In this case, $1,000 divided by 100 units gives an average cost per unit of $10.

Total revenue is calculated by multiplying the average revenue by the quantity of output sold. Average revenue is obtained by dividing the total revenue by the quantity of output sold. It represents the revenue per unit of output.

Average revenue is calculated by dividing the total revenue by the quantity of output sold. It provides the average revenue per unit of output and helps in understanding the pricing and revenue generation of the firm.

Marginal revenue is the additional revenue earned from selling one additional unit of output. It is calculated by dividing the change in total revenue by the change in quantity of output. Marginal revenue helps in analyzing the impact of producing and selling additional units on the overall revenue.

The average revenue per unit is calculated by dividing the total revenue by the quantity of output. In this case, $5,000 divided by 100 units gives an average revenue per unit of $50.

If a company's marginal revenue is positive, it means that the total revenue is increasing at an increasing rate. This indicates that selling one additional unit of output is generating more revenue than the previous unit sold. Positive marginal revenue is a favorable situation for the firm.