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Test: Theory Of Cost- 3 - CA Foundation MCQ

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30 Questions MCQ Test - Test: Theory Of Cost- 3

Test: Theory Of Cost- 3 for CA Foundation 2024 is part of CA Foundation preparation. The Test: Theory Of Cost- 3 questions and answers have been prepared according to the CA Foundation exam syllabus.The Test: Theory Of Cost- 3 MCQs are made for CA Foundation 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Theory Of Cost- 3 below.

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Test: Theory Of Cost- 3 - Question 1

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Which of the following is known as the Envelope Curve?

A.
Average variable cost curve
B.
Average total cost curve
C.
Long run average cost curve
D.
Short run average cost curve

Test: Theory Of Cost- 3 - Question 2

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A firm producers 10 units of a commodity at an average total cost of Rs. 200 and with a fixed cost of Rs. 500. Find out the component of average variable cost in the total cost:

A.
Rs. 300
B.
Rs. 200
C.
Rs. 150
D.
Rs. 100

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Test: Theory Of Cost- 3 - Question 3

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A firm will close down in the short period if its average revenue is less than its:

A.
Average cost
B.
Average variable cost
C.
Marginal cost
D.
Average fixed cost

Test: Theory Of Cost- 3 - Question 4

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The average fixed cost for producing an 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. _________.

A.
50
B.
45
C.
25
D.
20

Test: Theory Of Cost- 3 - Question 5

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Long run price is also called by the name of ________.

A.
Market price
B.
Normal price
C.
Administered price
D.
Wholesale price

Test: Theory Of Cost- 3 - Question 6

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Which of the following cost curve will slope downward and does not touch the x-axis?

A.
Average cost curve
B.
Marginal cost curve
C.
Average variable cost curve
D.
Average fixed cost curve.

Test: Theory Of Cost- 3 - Question 7

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Consider the following data

The Average Variable Cost (AVC) for an output of 4 units will be:-

A.
Rs. 20
B.
Rs. 30
C.
Rs. 25
D.
Rs. 26

Test: Theory Of Cost- 3 - Question 8

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Average Revenue Curve is also known as _________.

A.
Profit Curve
B.
Demand Curve.
C.
Supply Curve
D.
Average Cost Curve

Test: Theory Of Cost- 3 - Question 9

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

A.
Opportunity cost
B.
Real cost
C.
Explicit cost
D.
Implicit cost

Test: Theory Of Cost- 3 - Question 10

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When AC curve is rising, the MC curve must be ________ to it

A.
Equal
B.
Above
C.
Below
D.
Parallel

Test: Theory Of Cost- 3 - Question 11

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What will be the total fixed cost for the production of three units as per the details given below?

A.
620
B.
640
C.
1115
D.
2650

Test: Theory Of Cost- 3 - Question 12

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A firm encountering economies of scale over some range of output will have a:

A.
rising long-run average cost curve.
B.
falling long-run average cost curve.
C.
constant long-run average cost curve.
D.
rising, then falling, then rising long-run average cost curve.

Test: Theory Of Cost- 3 - Question 13

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In which of the following cases opportunity cost concept applies?

A.
Resources have alternative uses
B.
Resources have limited uses
C.
Resources have no use
D.
None of the above

Test: Theory Of Cost- 3 - Question 14

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Calculate AFC at 2^nd unit of output

A.
235
B.
290
C.
310
D.
920

Test: Theory Of Cost- 3 - Question 15

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Which statement among below is correct in reference in Average Fixed Cost

A.
Never becomes zero
B.
Curve never touches x-axis
C.
Curve never touches y-axis
D.
All of the above.

Test: Theory Of Cost- 3 - Question 16

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Opportunity cost is :

A.
Direct cost
B.
Total cost
C.
Accounting cost
D.
Cost of foregone opportunity

Test: Theory Of Cost- 3 - Question 17

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What will be the TVC if we produce 2 units?
Units 0 1 2
TC 20 37 50

A.
15
B.
05
C.
17
D.
30

Test: Theory Of Cost- 3 - Question 18

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Which curve is never U-shaped?

A.
ATC curve
B.
AVC curve
C.
AFC curve
D.
MC curve

Test: Theory Of Cost- 3 - Question 19

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External economies accrue due to ________:

A.
Increasing returns to scale
B.
Increasing returns to factor
C.
Law of variable proportion
D.
Low cost

Test: Theory Of Cost- 3 - Question 20

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Average Revenue Curve is also known as _________.

A.
Profit Curve
B.
Demand Curve.
C.
Supply Curve
D.
Average Cost Curve

Test: Theory Of Cost- 3 - Question 21

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Which one of the following is correct?

A.
AFC=AVC+ATC
B.
ATC=AFC-AVC
C.
AVC=AFC+ATC
D.
AFC=ATC-AVC

Test: Theory Of Cost- 3 - Question 22

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When shape of average cost curve is upward, marginal cost :

A.
Must be decreasing
B.
Must be constant
C.
Must be rising
D.
Any of these

Test: Theory Of Cost- 3 - Question 23

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Which of the following is known as Envelope curve?

A.
MC curve
B.
AFC curve
C.
LAC curve
D.
TFC curve

Test: Theory Of Cost- 3 - Question 24

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

A.
Opportunity cost
B.
Real cost
C.
Explicit cost
D.
Implicit cost

Test: Theory Of Cost- 3 - Question 25

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Long run price is also called by the name of ________.

A.
Market price
B.
Normal price
C.
Administered price
D.
Wholesale price

Test: Theory Of Cost- 3 - Question 26

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AFC curve is:

A.
Convex & downward sloping
B.
Concave & downward sloping
C.
Convex & upward sloping
D.
Concave & upward rising

Detailed Solution for Test: Theory Of Cost- 3 - Question 26

The average fixed costs AFC curve is downward sloping because fixed costs are distributed over a larger volume when the quantity produced increases. AFC is equal to the vertical difference between ATC and AVC. Variable returns to scale explains why the other cost curves are U-shaped.

Test: Theory Of Cost- 3 - Question 27

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

A.
Rs. 60
B.
Rs. 70
C.
Rs. 90
D.
Rs. 80

Test: Theory Of Cost- 3 - Question 28

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

A.
Average cost curve
B.
Marginal cost curve
C.
Total cost curve
D.
Fixed cost curve

Test: Theory Of Cost- 3 - Question 29

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Calculate total cost of 4 units:

A.
140
B.
120
C.
50
D.
40

Test: Theory Of Cost- 3 - Question 30

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

A.
Average cost curve
B.
Fixed cost curve
C.
Total cost curve
D.
Marginal cost curve

Detailed Solution for Test: Theory Of Cost- 3 - Question 30

Average fixed cost curve is never U-shaped. The average fixed costs AFC curve is downward sloping because fixed costs are distributed over a larger volume when the quantity produced increases.

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