Department of Technical Education & Board of Technical Examinations 2007 P.U.C Economics Model for MANAGEMENT - exam paper

ques. one (1 point)
The foregone value associated with the current rather than next-best use of a provided asset is called:
1. current cost.
2. replacement cost.
3. historical cost.
4. opportunity cost.
ques. two (1 point)
Sunk costs:
1. typically involve multiple units of output.
2. do not vary across decision options.
3. come into play when judging the costs of adding a new product line, advertising campaign, production shift, or organization structure.
4. play a role in determining the optimal course of action.
ques. three (1 point)
In the short run, the:
1. firm has complete flexibility with respect to input use.
2. availability of all inputs is fixed.
3. operating period is longer than the planning period.
4. availability of at lowest 1 input is fixed.
ques. four (1 point)
The amount that must be paid for an item under prevailing market conditions is:
1. historical cost.
2. replacement cost.
3. incremental cost.
4. current cost.
ques. five (1 point)
The acquisition cost of an asset is:
1. a replacement cost.
2. an implicit cost.
3. an explicit cost.
4. an opportunity cost.
ques. six (1 point)
Incremental cost is the change in:
1. total cost caused by a provided managerial decision.
2. noncash expenses caused by a provided managerial decision.
3. out-of-pocket costs caused by a provided managerial decision.
4. variable cost caused by a provided managerial decision.
ques. seven (1 point)
Noncash expenses are:
1. explicit costs.
2. sunk costs.
3. incremental costs.
4. implicit costs.
ques. eight (1 point)
In the decision process, management should always consider:
1. relevant costs.
2. sunk costs.
3. implicit costs only.
4. historical costs.
ques. nine (1 point)
Marginal cost equals:
1. average variable cost at its maximum point.
2. the change in total fixed cost divided by the change in volume.
3. the change in total variable cost divided by the change in volume.
4. total cost divided by volume.
ques. 10 (1 point)
Incremental cost:
1. always equals marginal cost.
2. never involves multiple outs.
3. is the added cost tied to a provided managerial decision.
4. is typically less than historical cost.
ques. 11 (1 point)
If the productivity of variable factors is decreasing in the short-run:
1. marginal cost must increase as output increases.
2. average cost must reduce as output increases.
3. average cost must increase as output increases.
4. marginal cost must reduce as output increases.
ques. 12 (1 point)
If the slope of a long-run total cost function reduces as output increases, the firm's underlying production function exhibits:
1. constant returns to scale.
2. decreasing returns to scale.
3. decreasing returns to a factor input.
4. increasing returns to scale.
ques. 13 (1 point)
avg. cost declines as output expands in a production process with:
1. constant returns to scale.
2. decreasing returns to scale.
3. decreasing returns to a factor input.
4. increasing returns to scale.
ques. 14 (1 point)
If a total product curve exhibits increasing returns to a variable input, the cost elasticity is:
1. equal to one.
2. greater than one.
3. unknown, without further info.
4. less than one.
ques. 15 (1 point)
every point on a long-run avg. cost curve is the minimum:
1. point on the short-run marginal cost curve.
2. short-run avg. cost of production.
3. long-run avg. cost of production.
4. point on the short-run avg. cost curve.
ques. 16 (1 point)
A firm's capacity is the output:
1. maximum that can be produced in the long-run.
2. level where short-run avg. costs are minimized.
3. level where long-run avg. costs are minimized.
4. maximum that can be produced in the short-run.
ques. 17 (1 point)
The change in cost caused by a provided managerial decision is:
1. implicit cost.
2. incremental cost.
3. explicit cost.
4. opportunity cost.
ques. 18 (1 point)
Costs that do not vary across decision options are:
1. implicit.
2. explicit.
3. sunk.
4. economic.
ques. 19 (1 point)
The output level at which short-run avg. costs are minimized is:
1. minimum efficient scale.
2. where multi-plant economies of scale equal one.
3. where multi-plant economies of scale exceed one.
4. capacity.
ques. 20 (1 point)
Opportunity cost is not:
1. a real economic cost.
2. an implicit cost.
3. a variable cost.
4. none of these.

Earning:   Approval pending.