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31. A ceramic pottery unit hires 8 craftsmen by paying each of them Rs 900 per day. The 9th craftsman demands Rs 950 per day. If this craftsman is hired then all other craftsmen must be paid Rs 950. The marginal resource (labour) cost of the 9th craftsman is _________.
(A) Rs 1530
(B) Rs 1050
(C) Rs 50
(D) Rs 1350
Ans. (D)

32. If for a perfectly competitive firm, price is Rs. 60, output is 300 units, average variable costs are Rs. 18, and average total costs are Rs. 36. The firm’s profits are equal to-
(A) Rs. 5400
(B) Rs. 3600
(C) Rs. 7200
(D) Rs. 1800
Ans. (D)

33. The cost of one thing in terms of the alternative given up is called-
(A) Real cost
(B) Production cost
(C) Physical cost
(D) Opportunity cost
Ans. (D)

34. In the short run, when the output of a firm increases, its average fixed cost-
(A) Remains constant
(B) Decreases
(C) Increases
(D) First decreases and then rises
Ans. (B)

35. Payment given to others by firms for using their goods and services are called-
(A) Actual cost
(B) Economic cost
(C) Explicit
(D) Implicit cost
Ans. (C)

36. The additional cost to total cost by producing an additional unit of output by a firm is called-
(A) Average cost
(B) Marginal Cost
(C) Total Cost
(D) Variable Cost
Ans. (B)

37. The non-expenditure costs which arise when producing firm itself and supplies contain factors of production are-
(A) Expicit Cost
(B) Original Cost
(C) Implicit Cost
(D) Replacement Cost

38. Expicit + Implicit cost =
(A) Economic cost (B) Social cost
(C) Personal cost (D) Accounting cost
Ans. (A)

39. In the long-run the fixed costs become-
(A) Money costs
(B) Real costs
(C) Opportunity costs
(D) Variable costs
Ans. (D)

40. Marginal Cost equals-
(A) Total cost divided by quantity
(B) The change in total cost divided by the change in quantity
(C) Total cost minus total benefit for the last unit Produced
(D) Total cost divided by total benefit for the last unit produced
Ans. (B)

41. The expenses on advertising is called–
(A) Implicit cost
(B) Surplus cost
(C) Fixed cost
(D) Selling cost
Ans. (D)

42. Which of the following cost curve is never ‘U’ shaped?
(A) Marginal cost curve
(B) Average variable cost curve
(C) Average fixed cost curve
(D) Average cost curve
Ans. (C)

43. Those payments which the firms make to outsiders for their goods and services are called-
(A) Real costs
(B) Economic costs
(C) Explicit costs
(D) Implicit costs
Ans. (C)

44. Cost of production of the producer is given by-
(A) Sum of wages paid to labourers
(B) Sum of wages and interest paid on capital
(C) Sum of wages, interest, rent and supernormal profit
(D) Sum of wages, interest, rent and normal profit
Ans. (D)

45. Opportunity cost of production of a commodity is-
(A) The cost that the firm could have incurred when a different technique was adopted
(B) The cost that the firm could have incurred under a different method of production
(C) The actual cost incurred
(D) The next best alternative output
Ans. (A)

46. When Average Cost Production (ACP) falls, marginal cost of production must be-
(A) Rising
(B) Falling
(C) Greater than the average cost
(D) Less than the average cost
Ans. (D)

47. Prime cost is equal to-
(A) Variable cost plus administrative cost
(B) Variable cost plus fixed costs
(C) Variable cost only
(D) Fixed cost only
Ans. (C)

48. An expenditure that has been made and cannot be recovered is called-
(A) Variable cost
(B) Opportunity cost
(C) Sunk cost
(D) Operational cost
Ans. (C)

49. What is selling cost?
(A) Cost incurred on transportation of commodities to market
(B) Cost incurred on promoting the sale of the product
(C) Cost incurred on commission and salaries personnel
(D) Cost incurred on advertisement
Ans. (B)

50. Marginal cost is the-
(A) Cost of producing a unit of output
(B) Cost of producing an extra unit of output
(C) Cost of producing the total output
(D) Cost of producing a given level of output
Ans. (B)

51. The fixed cost on such factors of production which are neither hired nor brought by the firm is called-
(A) Social cost
(B) Opportunity cost
(C) Economic cost
(D) Surcharged cost

52. Transfer earning or alternative cost is otherwise known as-
(A) Variable cost
(B) Implicit cost
(C) Expicit cost
(D) Opportunity cost (Economic cost)
Ans. (D)

53. Economic rent refers to-
(A) Payment made for the use of labour
(B) Payment made for the use of capital
(C) Payment made for the use of organisation
(D) Payment made for the use of land
Ans. (D)

54. Total fixed cost curve is-
(A) Vertical
(B) Horizontal
(C) Positively sloping
(D) Negatively sloping
Ans. (B)

55. Which of the following are not fixed costs?
(A) Rent on land
(B) Municipal taxes
(C) Wages paid to workers
(D) Insurance charges
Ans. (C)

56. Fixed cost is known as-
(A) Special cost
(B) Direct cost
(C) Prime cost
(D) Overhead cost
Ans. (D)

57. Fixed costs are also known as-
(A) Supplementary Costs
(B) Overhead Costs
(C) Indirect Costs
(D) All of these
Ans: (D)

58. Average fixed cost is indicated by-
(A) A rectangular hyperbola
(B) A straight line parallel to X-axis
(C) A straight line parrallel to Y-axis
(D) A U-shaped curve
Ans: (A)

59. The short run average cost curve is ____ shaped.
(A) U (B) V
(C) X (D) W
Ans. (A)

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