Page 2 - HA-COST

7 The cost,which is never zero even when the production is 1
stopped is known as____________.
a) Prime cost
b) Supplementary cost
c) Implicit cost
d) Explicit cost

8 Give reason for TC and TVC curve parallel to each other. 1

9. Give the meaning of implicit cost. Give one example. 1

10. TC = TFC at the ________ level of output. 1

11 Area under MC curve is equal to ------------------.(TVC/TC) 1
12. When AC falls MC cost:
a) Falls
b) Rises
c) May fall or may rise
d) Constant
13 Give the meaning of marginal cost. 1
14. State whether True or False
“Total cost of production is the sum total of variable cost and marginal
cost.”
15. MC curve intersects AC curve at its -------------- point.(
Maximum/Minimum) Choose the correct answer.
(Short answer type questions-3/4 marks)
16. Differentiate between explicit and implicit cost. 3

17. Explain the relationship between MC and AC. 3

18. Define AFC.Discuss the shape of AFC curve with the help of 4
a diagram.

19 State whether the following statements are true or false. Give 4
reasons.

a) The minimum point of AC curve lies to the right of
AVC curve.

b) AVC can fall even when MC is rising
c) The distance between AC and AVC keeps on rising
as output level increases.

d) Total fixed cost is less than Total Variable cost at