Economics Practice Test – Theory of Cost and Revenue

The rising portion of the long-run average cost curve of a firm is an indication that it is experiencing ______ (JAMB 2010)

A. increasing efficiency
B. diseconomies of scale
C. economics of scale
D. increasing marginal returns

A firm’s average cost decreases in the long-run because of _____

A. increasing returns to scale
B. diminishing average returns
C. decreasing marginal returns
D. decreasing average fixed cost.

A firm incurs short-run costs when _____ (JAMB 2007)

A. operation is at its later stages
B. some inputs cannot be varied
C. percentage change in inputs exceeds output
D. output and all inputs change by the same percentage

If the total fixed cost is the same regardless of output, the average fixed cost will be ______ (JAMB 2007)

A. maximum     B. minimum     C. Decreasing     D. increasing

In a textile factory, the cost of cotton used is a typical example of _____ (JAMB 2004)

A. an average cost
B. a fixed cost
C. a total cost
D. a variable cost.