Managerial Economics Quiz Tick the correct answer: 1.

. If average total cost is falling it means that a) average variable costs is also falling b) average fixed costs is also falling c) marginal costs is falling d) all of the above e) none of the above 2. A firm produces 200 units. The firms fixed costs is 10,000 while variable cost per unit is 1000. The firms total cost is a) 11,000 b) 12,000 c) 2,100,000 d) 2,200,000 e) 2,300,000 3. The short run marginal cost equals the short run average costs at a) minimum of the former b) minimum of the latter c) minimum of average variable costs d) minimum of average fixed costs e) none of the above 4. Complete the foll. Schedule : ( 2 MARKS) output Total cost TVC TFC 0 100 1 115 2 121 3 130 4 145 AVC AFC MC

5. Other things being equal if the fixed costs of the firm were to increase by 10,000 per year which of the foll. would happen? a) marginal costs and average variable costs would both rise b) average fixed costs and average variable costs would rise c) average fixed costs would rise but marginal costs would fall d) average fixed costs would remain unchanged but MC would fall e) AFC and ATC would both rise 6) . If the market price faced under perfect competition is Rs 50 and the marginal cost is = 10+2q, the profit maximizing output is a) 10 b) 20 c) 50 d) 100 e) 5

7. Which of the foll. Is true : a) When AC falls with increase in output , MC is lower than AC b) When AC rises with increase in output , MC is lower than AC c) At the level of optimum output, average cost is maximum and constant d) At zero level of output , AC and MC is zero e) marginal cost varies inversely with the average product of the variable input.

8. Economic profit is :

a) Accounting profit plus implicit cost b) accounting profit plus implicit plus explicit cost c) accounting profit implicit cost d) accounting profit minus implicit less explicit cost e) same as normal profit 9. The minimum efficient scale refers to that output at which a firm can minimize a) LAC b) LMC c) short run average cost d) short run marginal cost e) both explicit and implicit costs 10. Consider the foll. Total cost function : TC = 1000 + 200Q 9Q2 + 0.25 Q3 Which of the foll. Is true a) MC = 200 -9Q + .25Q2 b) TVC = 200Q -9Q2 + .25 Q3 c) TFC = 1000 d) both b) and c) e) avc = 1000/q 11.. Which of the foll. Is not true ? a) When MP is highest, MC is lowest b) when AP is highest, AC is lowest c) When MP is greater than AP , AC is falling d) when MC is less than AC AP is increasing e) MP and AC are inversely related . 12. Which of the foll. Are not U shaped : a) fixed costs b) AVC c) ATC d) MC e) LAC 13. Cost function of a firm is 1000 + 2q If the price is Rs 2.50 a unit find the break even output : a) 5 b) 1000 c) 2000 d) 2500 e) 5000 14. If the LAC = 500 15Q + 2Q2 , then the MES is given by Q equals a) 7.5 b) 10 c) 25 d) 25 e) 15 ( 2 marks) 15. If TC = 5000 + 150Q -20Q2 +Q3 the shut down price is a) 50 b) 100 c) 75 d) 20 e) none of the above ( 2 marks)

16. Which is not a fixed cost a) administrative expenses b) purchase of raw materials c) depreciation of machinery d) expenses on rent e) interest on loans . 17. Which of the foll. Is not true a) wages , fuel and raw materials are variable costs b) labour provided by the owner of a store is an implicit cost c) whenever MC is rising, average cost is also rising d) mc declines at first due to increasing returns on production e) depreciation is a fixed cost