# Costs Revision Test: AP Microeconomics

The Average Cost Curve contains: I Normal Profits II Super-Normal Profits III No Normal Profits
I only
II only
III only
I and II
I and III
An example of Variable Costs is:
Purchase of a heavy machine
Payment of Wages to Labour
Payment of Salary to the factory’s Manager
Hiring the building for the factory
None of these
In the Short Period, with an increase in Production, the Average Fixed Cost:
does not change
increases
decreases
either increases or decreases
None of the above
The factor which decides the difference between the Fixed and Variable Costs is:
whether the Costs are under a legal contract or not
whether the Costs enter the Total Costs or not
whether the Costs vary with the Quantity or Output produced in the Short run
whether the Costs can be changed during the Plant’s life
All of the above
What is the name of the Adjustment when a major increase is made in the capacity of Plant?
With increase in Output, the difference between the Average Total Cost and Average Variable Cost: I increases II decreases III remains the same
I only
II only
III only
I or III
II or III
The Long run Period:
spans more than three years
is the period required for the firm to start earning Profits
is the period sufficient to put in operation a method to produce a given Output at the lowest possible Cost
the existing Plant and Machinery can be fully replaced
All of the above
The Rising portion of the Marginal Cost Curve is a result of:
Increasing Returns to Scale
Increasing Returns to a Variable Factor
Decreasing Returns to Scale
Decreasing Returns to a Variable Factor
Constant Returns to a Variable Factor
The vertical distance between the Total Variable Cost and the Total Cost is:
the Variable Cost
the Average Variable Cost
the Marginal Cost
the Average Cost
Total Fixed Cost
Which of the following factors influence the normal Long-run Average cost Curve? I Law of Diminishing Returns II Principle of Constant Returns to Scale III Economies and Diseconomies of Large Scale Production
I only
II only
III only
I and III
II and III
Description:

Costs, are of various types. Be it Explicit or Implicit Costs, Fixed or Variable; as a student of Microeconomics AP, you must know their meanings and application. Cost Curves and Dimensions of Time play an important role in the study of Microeconomics. Here is a 7-minute short test on the basic Cost Concepts. You’ll find Multiple Choice questions on the basics of the major kinds of Costs and Cost Curves.

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