Multiple Choice Question & Answer

YB WEB DESK. Dated: 4/22/2021 11:30:41 AM

Multiple Choice Questions on Cost Analysis
1-In order to maximise profits a firm endeavours to
(A) increase its revenue
(B) lower its cost
(C) both (A) and (B)
(D) increase its capital
2-___ are defined as the change in overall costs that result from particular decisions
being made.
(A) Incremental costs
(B) Book costs
(C) Sunk costs
(D) None of the above
3-Incremental costs are also known as
(A) avoidable costs
(B) escapable costs
(C) differential costs
(D) all of the above
4-The following cost will remain same whatever the level of activity.
(A) Incremental cost
(B) Sunk cost
(C) Both (A) and (B)
(D) None of the above
5-Wages and salaries paid to the employees are
(A) out of pocket costs
(B) book costs
(C) incremental cost
(D) none of the above
6-The cost of plant, equipment and materials at the price paid originally for them.
(A) Replacement Cost
(B) Historical cost
(C) Implicit cost
(D) None of the above
7-The following costs relate to functioning of a firm as a production unit.
(A) micro-level economic cost
(B) macro-level economic cost
(C) both (A) and (B)
(D) none of the above
8-Which of the following is (are) fixed cost(s)?
(A) contractual rent
(B) insurance fee
(C) interest on capital investment
(D) all of the above
9-Which of the following is (are) variable cost(s)?
(A) wages of labor
(B) price of raw material
(C) cost on fuel and power used
(D) all of the above
10-The output can be increased in short run by increasing
(A) fixed cost
(B) variable cost
(C) both (A) and (B)
(D) none of the above
11-Average Fixed Cost (AFC) =
(A) Total Fixed Cost (TFC) / Number of output produced (Q)
(B) Total Variable Cost (TVC) / Number of output produced (Q)
(C) Total Fixed Cost (TFC) X Number of output produced (Q)
(D) Total Variable Cost (TVC) X Number of output produced (Q)
12- Average Variable Cost (AVC) =
(A) Total Fixed Cost (TFC) / Number of output produced (Q)
(B) Total Variable Cost (TVC) / Number of output produced (Q)
(C) Total Fixed Cost (TFC) X Number of output produced (Q)
(D) Total Variable Cost (TVC) X Number of output produced (Q)
13-The average total cost (ATC) =
(A) Total Fixed Cost (TFC) / Number of output produced (Q)
(B) Total Variable Cost (TVC) / Number of output produced (Q)
(C) Total Cost (TC) / Number of output produced (Q)
(D) Total Cost (TC) X Number of output produced (Q)
14-Marginal cost is independent of the ___ .
(A) Fixed cost
(B) Variable cost
(C) Both (A) and (B)
(D) None of the above
15-Following is (are) advantage(s) of Marginal Cost
(A) break-even analysis profit of firm
(B) calculating per unit profit of a firm
(C) to decide whether a firm needs to expand or not
(D) all of the above
16-The laws governing costs are the same as the laws governing ___ .
(A) production
(B) productivity
(C) quality
(D) all of the above
17-Long run average cost (LAC) is the least when
(where LMC = Long run marginal cost)
(A) LMC ˃ LAC
(B) LMC ˂ LAC
(C) LMC = LAC
(D) None of the above
18-A larger plant will lead to lower per unit cost in the long run, is the concept of
(A) Economies of Scale
(B) Economies of Scope
(C) both (A) and (B)
(D) None of the above
19-Cost advantages may follow from variety of output–product diversification within the
given scale of plant, is the concept of
(A) Economies of Scale
(B) Economies of Scope
(C) both (A) and (B)
(D) None of the above
20-The difference between total revenue and total cost at any level of output represents
the total __ that will be realised.
(A) profit
(B) loss
(C) profit or loss
(D) None of the above
AnswErs:
1-(c), 2-(A), 3-(d), 4-(B), 5-(A), 6-(B), 7-(A), 8-(d), 9-(d), 10-(B), 11-(A), 12-(B), 13-(c),
14-(A), 15-(c), 16-(B), 17-(c), 18-(A), 19-(B), 20-(c)

 

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