17th Nov Theory of Cost Quiz 1 – Punjab Meritorious School Preparation Portal

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With which of the following is the concept of marginal cost closely related?

Variable cost.

Fixed cost.

Opportunity cost.

Economic cost.

Total cost in the short run is classified into fixed costs and variable costs. Which one of the following is a variable cost?

Cost of raw materials

Cost of equipment

Interest payment on past borrowings.

Payment of rent on building

In the short run, when the output of a firm increases, its average fixed cost:

increases

decreases.

remains constant.

first declines and then rises.

Which of the following is an example of "explicit cost"?

The wages a proprietor could have made by working as an employee of a large firm.

The income that could have been earned in alternative uses by the resources owned by the firm.

The payment of wages by the firm.

The normal profit earned by a firm.

Which of the following statements is correct?

When the average cost is rising, the marginal cost must also be rising.

When the average cost is rising, the marginal cost must be falling.

When the average cost is rising, the marginal cost is above the average cost.

When the average cost is falling, the marginal cost must be rising.

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