Total revenue minus which costs gives accounting profit?
Correct answer B. Explicit costs
Topic / 14 questions
Average And Total Cost MCQs
Average And Total Cost MCQs cover how a firm's costs behave as output changes, including fixed, variable, total, average and marginal cost. They help economics students and civil service candidates master cost curves, and each question shows its correct answer the moment you choose an option.
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Naila makes 1,000 pieces of pottery a year and sells them for Rs100 each. Raw materials cost Rs20,000. She has invested Rs100,000 in her factory and equipment: Rs50,000 of her own savings and Rs50,000 borrowed at 10 percent (she could also have lent her own money at 10 percent). She could earn Rs40,000 a year at a rival pottery factory. What is the accounting profit of her factory?
Correct answer C. Rs75,000
What follows if a firm has implicit costs of production?
Correct answer D. Accounting profit will exceed economic profit
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If a production function shows diminishing marginal product, how does the slope of the related total-cost curve behave?
Correct answer B. Becomes steeper as the quantity of output increases
Which of these is a variable cost in the short run?
Correct answer B. Wages paid to factory labour
What is true when marginal cost equals average total cost?
Correct answer D. Average total cost is minimised
In the long run, what is a very small factory likely to experience at first if it expands its scale of operations?
Correct answer D. Economies of scale
The efficient scale of production is the output level that minimises which cost?
Correct answer B. Average total cost
Total revenue minus which costs gives economic profit?
Correct answer B. Implicit costs
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Naila makes 1,000 pieces of pottery a year and sells them for Rs100 each. Raw materials cost Rs20,000. She has invested Rs100,000 in her factory and equipment: Rs50,000 of her own savings and Rs50,000 borrowed at 10 percent (she could also have lent her own money at 10 percent). She could earn Rs40,000 a year at a rival pottery factory. What is the economic profit of her factory?
Correct answer B. Rs30,000
How does the slope of a production function behave if it shows diminishing marginal product?
Correct answer B. Becomes flatter as the quantity of the input increases
Which of the following statements about costs is true?
Correct answer B. All costs are variable in the long run
What happens to average total cost when marginal cost is below it?
Correct answer A. Average total cost is falling
If a production function first shows increasing and then diminishing marginal product as output rises, what shape will the marginal-cost curve have?
Correct answer D. Be U-shaped
About Average And Total Cost MCQs
This topic explains the cost side of the theory of the firm. Questions ask which costs are variable in the short run, such as raw materials and hourly wages, and why fixed costs do not change with output. You will see that marginal cost cuts average total cost at its lowest point, so when MC equals ATC, average cost is at a minimum. Other items cover economic profit as total revenue minus both explicit and implicit costs, economies of scale when a small factory expands, and short scenarios about a pottery business. These ideas are common in microeconomics papers.
Exams that include Average And Total Cost MCQs
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Frequently asked questions
What happens when marginal cost equals average total cost?
When marginal cost equals average total cost, average total cost is at its minimum. If marginal cost is below average cost, it pulls the average down; if it is above, it pulls the average up. So the marginal cost curve always cuts the average total cost curve at its lowest point.
What is the difference between economic profit and accounting profit?
Accounting profit is total revenue minus explicit costs, the actual payments a firm makes. Economic profit is total revenue minus both explicit and implicit costs, including the opportunity cost of the owner's time and capital. Economic profit is therefore usually smaller than accounting profit.
How many Average And Total Cost MCQs are on MCQs360?
There are 14 Average And Total Cost MCQs in the Economics section of MCQs360. They are free to practise with no sign-up, and every question gives its answer instantly, so you can check cost curve rules quickly.
Last reviewed October 2026