Business Quiz: Production And Costs
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In any business, production and cost are two pivotal processes regarding a business's success and profit. You need to be making sure that the cost of your production does not outweigh the money being brought in. So, let's see how much knowledge do you have about the topic.
- 1.Total revenue equals the quantity of output the firm produces times the price at which it sells its output.
- A.
True
- B.
False
- 2.Wages and salaries paid to workers are an example of implicit costs of production.
- A.
True
- B.
False
- 3.If total revenue is $100, explicit costs are $50, and implicit costs are $30, then accounting profit equals $50.
- A.
True
- B.
False
- 4.If there are implicit costs of production, accounting profits will exceed economic profits.
- A.
True
- B.
False
- 5.When a production function gets flatter, the marginal product is increasing.
- A.
True
- B.
False
- 6.If a firm continues to employ more workers within the same size factory, it will eventually experience diminishing marginal product.
- A.
True
- B.
False
- 7.If the production function for a firm exhibits diminishing marginal product, the corresponding total-cost curve for the firm will become flatter as the quantity of output expands.
- A.
True
- B.
False
- 8.Fixed cost plus variable costs equal total costs.
- A.
True
- B.
False
- 9.Average total costs are total costs divided by marginal costs.
- A.
True
- B.
False
- 10.When marginal costs are below average total costs, average total costs must be falling.
- A.
True
- B.
False
- 11.If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will be U-shaped.
- A.
True
- B.
False
- 12.The average-total-cost curve crosses the marginal-cost curve at the minimum of the marginal-cost curve.
- A.
True
- B.
False
- 13.The average-total-cost curve in the long run is flatter than the average-total-cost curve in the short run.
- A.
True
- B.
False
- 14.The efficient scale for a firm is the quantity of output the minimizes marginal cost.
- A.
True
- B.
False
- 15.In the long run, as a firm expands its production facilities, it generally first experiences diseconomies of scale then constant returns to scale, and finally economies of scale.
- A.
True
- B.
False
- 16.Accounting profit is equal to total revenue minus:
- A.
Implicit costs
- B.
Explicit costs
- C.
The sum of implicit and explicit costs
- D.
Marginal costs
- E.
Variable costs
- 17.Economic profit is equal to total revenue minus:
- A.
Implicit costs
- B.
Explicit costs
- C.
The sum of the implicit and explicit costs
- D.
Marginal costs
- E.
Variable costs
- 18.If there are implicit costs of production:
- A.
Economic profit will exceed accounting profit
- B.
Accounting profit will exceed economic profit
- C.
Economic profit and accounting profit will be equal
- D.
Economic profit will always be zero
- E.
Accounting profit will always be zero
- 19.If a production function exhibits diminishing marginal product, its slope:
- A.
Becomes flatter as the quantity of the input increases
- B.
Becomes steeper as the quantity of the input increases
- C.
Is linear (a straight line)
- D.
Could be any of the above
- 20.If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve:
- A.
Becomes flatter as the quantity of output increases
- B.
Become steeper as the quantity of output increases
- C.
Is linear (a straight line)
- D.
Could be any of the above
- 21.Which of the following is a variable cost in the short run?
- A.
Wages paid to factory labor
- B.
Payment on the lease for factory equipment
- C.
Rent on the factory
- D.
Interest payments on borrowed financial capital
- E.
Salaries paid to upper management
- 22.When marginal costs are below average total costs:
- A.
Average fixed costs are rising
- B.
Average total costs are falling
- C.
Average total costs are are rising
- D.
average total costs are minimized
- 23.If, as the quantity produced increases, a production function first exhibits increasing marginal product and later diminishing marginal product, the corresponding marginal-cost curve will:
- A.
Slope upward
- B.
Be U-shaped
- C.
Slope downward
- D.
Be flat (horizontal)
- 24.In the long run, if a very small factory were to expand its scale of operations, it is likely that it would initially experience:
- A.
Economies of scale
- B.
Constant returns to scale
- C.
Diseconomies of scale
- D.
An increase in average total costs
- 25.The efficient scale of production is the quantity of output that minimizes:
- A.
Average total cost
- B.
Marginal cost
- C.
Average fixed cost
- D.
Average variable cost
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