Economics Practice Test – Theory of Cost and Revenue

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.

The short-run average variable cost of a firm will rise owing to ______ (JAMB 2014)

A. the building of new warehouses
B. an increase in the cost of labour
C. an increase in the salaries of directors
D. the expansion of factory space

The shape of the long-run average cost curve is best explained by the ____ (JAMB 2009)

A. law of diminishing returns
B. law of returns to scale
C. cost of fixed inputs
D. cost of variable inputs.

The ATC at 30 units of outputs _______ (JAMB 2003)

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