A level Theory of Cost Quiz 1

15 Questions

Quiz Description

Here in this A level quiz, we will be looking at the theory of cost. The theory of cost has to deal with some exciting theories such as opportunity cost, average cost, marginal physical product, real cost, etc. All of these will be appreciably covered in this quiz.

Cost could be defined as the monetary value of goods and services normally purchased by consumers and producers. In an economic sense, cost is a measure of the alternative opportunities forgone in the choice of a good or service. This cost is referred to as opportunity cost. Total cost has to do with the total expense incurred in reaching a certain output level, and a portion of this total cost is known as fixed cost. An example of a fixed cost could be the cost of purchasing heavy machinery or building. Another type of cost is variable cost, which includes costs of labour, raw materials and so on.

Are you very good at economics? Try this quiz and see your level of understanding of this topic in economics. Good luck as you practice. 

1:

 Opportunity cost is: 


Correct
  • 1:
    Direct cost
  • 2:
    Total cost
  • 3:
    Accounting cost
  • 4:
    Cost of foregone opportunity
2:

 As output increases, average fixed cost: 


Correct
  • 1:
    Remains constant
  • 2:
    Starts falling
  • 3:
    Start rising
  • 4:
    None
3:

 Does Total Physical Product increase only when Marginal Physical Product increases? 


Correct
  • 1:
    True
  • 2:
    False
  • 3:
    True and False
  • 4:
    None
4:

 How is Total Physical Product derived from Marginal Physical Product? 


Correct
  • 1:
    Cumulative addition
  • 2:
    Cumulative subtraction
  • 3:
    Cumulative product
  • 4:
    Cumulative Division
5:

 Average fixed cost can be obtained through: 


Correct
  • 1:
    AFC=TFC/TS
  • 2:
    AFC=EC/TU
  • 3:
    AFC=TC/PC
  • 4:
    AFC=TFC/TU
6:

 AFC curve is: 


Correct
  • 1:
    Convex & downward sloping
  • 2:
    Concave & downward sloping
  • 3:
    Convex & upward sloping
  • 4:
    Concave & upward rising
7:

 The shape of the Total Physical Product short run is 


Correct
  • 1:
    Inverse U-Shaped
  • 2:
    U-Shaped
  • 3:
    Hyperbola
  • 4:
    V-Shaped
8:

 In the short run Total Product Price changes with the change in which of the following factors. 


Correct
  • 1:
    Economic Cost
  • 2:
    Fixed Cost
  • 3:
    All the factors
  • 4:
    Variable Cost
9:

What is real cost?


Correct
  • 1:
    All hard work, discomforts, sacrifices involved in manufacturing a product
  • 2:
    Total money spent by a company for manufacturing goods
  • 3:
    This the cost for the next best alternative foregone
  • 4:
    Payment made to an outsider
10:

 A firm’s average fixed cost is Rs 20 at 6 units of output what will it be at 4 units of output? 


Correct
  • 1:
    Rs 60
  • 2:
    Rs 30
  • 3:
    Rs 40
  • 4:
    Rs 20
11:

 U-shaped average cost curve is based on: 


Correct
  • 1:
    Law of increasing cost
  • 2:
    Law of decreasing cost
  • 3:
    Law of constant returns to scale
  • 4:
    Law of variable proportions
12:

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


Correct
  • 1:
    Must be decreasing
  • 2:
    Must be constant
  • 3:
    Must be rising
  • 4:
    Any of these
13:

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


Correct
  • 1:
    Rs 20
  • 2:
    Rs 30
  • 3:
    Rs 40
  • 4:
    Rs 50
14:

 Economic cost excludes: 


Correct
  • 1:
    Accounting cost + explicit cost
  • 2:
    Accounting cost + implicit cost
  • 3:
    Explicit cost + Implicit cost
  • 4:
    Accounting cost + opportunity cost
15:

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


Correct
  • 1:
    Average cost curve
  • 2:
    Marginal cost curve
  • 3:
    Total cost curve
  • 4:
    Fixed cost curve

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A level Theory of Cost Quiz 1
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