Costs of Production Quiz

What are fixed costs in the short term?

• Variable costs that change with the level of sales

• Costs that increase with the level of production

• Expenses that only occur in the long term

• Expenses that do not change regardless of the level of production or sales

Which of the following is an example of a variable cost in the short term? A) Rent B) Employee salaries C) Property taxes D) Insurance

• A) Rent

• C) Property taxes

• D) Insurance

• B

How do you calculate total cost in the short term?

• By subtracting fixed costs from variable costs

• By multiplying fixed costs with variable costs

• By dividing fixed costs by variable costs

• By adding up all the fixed and variable costs incurred during that period.

What are diseconomies of scale in the long term?

• Short-term increase in average cost of production

• Decrease in average cost of production

• No change in average cost of production

• Long-term increase in average cost of production

In the short term, which of the following is considered a fixed cost? A) Raw materials B) Machinery maintenance C) Utilities D) Employee wages

• B) Machinery maintenance

• C) Utilities

• A) Raw materials

• D) Employee wages

Which of the following is a variable cost in the short term? A) Property taxes B) Insurance C) Raw materials D) Rent

• B) Employee salaries

• D) Utilities

• A) Property maintenance

• C) Raw materials

What is the formula to calculate total cost in the short term?

• Total Cost = Fixed Costs - Variable Costs

• Total Cost = Fixed Costs / Variable Costs

• Total Cost = Fixed Costs + Variable Costs

• Total Cost = Fixed Costs x Variable Costs

Explain the concept of economies of scale in the long term.

• Decrease in production efficiency by increasing scale of production in the long term

• No impact on production costs by increasing scale of production in the long term

• Cost disadvantages achieved by increasing scale of production in the long term

• Cost advantages achieved by increasing scale of production in the long term

Describe the concept of diseconomies of scale in the long term.

• Costs per unit increase as the company grows in size

• Diseconomies of scale only occur in the short term

• There are no cost increases as the company expands

• Costs per unit decrease as the company grows in size