Revenue and Cost of Production Quiz

What is the formula for Total Revenue?

• Total Revenue = Price × Quantity

• Total Revenue = Quantity × Price

• Total Revenue = Price + Quantity

What is the difference between Accounting Income and Economic Profit?

• Accounting Income = Total Revenue – Total Cost

• Economic Profit = Total Revenue – [Explicit Cost + Implicit Cost]

• Both are the same

What is Opportunity Cost?

• The cost we forgo to get something else

• The actual cost being paid by the firm

• The cost of production

What is the Rationing function of price?

• Changes in prices attributed to the distribution of resources

• Changes in prices that direct resources away from overcrowded markets

• None of the above

What is the Allocative function of price?

• Changes in prices attributed to the distribution of resources

• Changes in prices that direct resources away from overcrowded markets

• None of the above

What is Marginal Product?

• The change in output from one additional unit of input

• The total output produced

• The cost of production

What does the law of diminishing marginal product state?

• Marginal product decreases as the quantity of the input increases

• Marginal product increases as the quantity of the input increases

• Marginal product remains constant

What are Fixed Costs?

• Costs that do not vary with the quantity produced

• Costs that vary with the quantity produced

• Total costs of production

What are Variable Costs?

• Costs that do not vary with the quantity produced

• Costs that vary with the quantity produced

• Total costs of production

What is the formula for Average Total Cost?

• ATC = AFC + AVC

• ATC = TC / Q

• Both of the above