Online Test — Cost
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
The value of the next-best alternative foregone is the ____ cost.
Money
Opportunity
Fixed
Marginal
Explanation: Opportunity cost is the next-best alternative given up.
Question 2 of 15
Costs that do not change with output are:
Variable costs
Fixed costs
Marginal costs
Average costs
Explanation: Fixed costs (TFC) do not change with output.
Question 3 of 15
Costs that change with the level of output are:
Fixed costs
Variable costs
Sunk costs
Opportunity costs
Explanation: Variable costs (TVC) change with output.
Question 4 of 15
Total cost equals:
TFC − TVC
TFC + TVC
TFC × TVC
TVC ÷ TFC
Explanation: TC = TFC + TVC.
Question 5 of 15
At zero output, total cost equals:
Zero
TFC
TVC
MC
Explanation: TC = TFC at zero output (TVC is zero).
Question 6 of 15
Average fixed cost is:
TFC ÷ Q
TVC ÷ Q
TC ÷ Q
Change in TC
Explanation: AFC = TFC ÷ Q.
Question 7 of 15
As output rises, AFC:
Rises
Falls continuously
Is constant
Is U-shaped
Explanation: AFC falls continuously as fixed cost is spread thinner.
Question 8 of 15
Average total cost equals:
AFC + AVC
AFC − AVC
TFC + TVC
MC × Q
Explanation: AC = AFC + AVC (= TC ÷ Q).
Question 9 of 15
Marginal cost is the:
Change in total cost from one more unit
TFC ÷ Q
TC ÷ Q
Total fixed cost
Explanation: MC = change in total cost when one more unit is produced.
Question 10 of 15
If TC rises from 27 to 36 when output rises from 3 to 4, MC is:
9
27
36
3
Explanation: MC = 36 − 27 = 9.
Question 11 of 15
The AVC curve is:
Always falling
U-shaped
Horizontal
Vertical
Explanation: AVC is U-shaped (falls then rises).
Question 12 of 15
The AFC curve is a:
Rectangular hyperbola (falling)
U-shape
Straight upward line
Vertical line
Explanation: AFC continuously falls as a rectangular hyperbola.
Question 13 of 15
The MC curve cuts the AVC and AC curves at their:
Maximum points
Minimum points
Starting points
End points
Explanation: MC cuts AVC and AC at their minimum points.
Question 14 of 15
The vertical gap between the AC and AVC curves equals the:
MC
AFC
TVC
TC
Explanation: AC − AVC = AFC, which is the gap between the curves.
Question 15 of 15
Rent of a factory building is an example of a ____ cost.
Variable
Fixed
Marginal
Opportunity
Explanation: Factory rent does not vary with output — a fixed cost.