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Questions and Answers
Which one of the following is a key difference between accounting cost and economic cost?
Which one of the following is a key difference between accounting cost and economic cost?
- Accounting cost includes only implicit costs, while economic cost includes both explicit and implicit costs.
- Accounting cost includes only explicit costs, while economic cost includes both explicit and implicit costs. (correct)
- Accounting cost includes all business expenses, while economic cost includes only explicit costs.
- Accounting cost includes only fixed costs, while economic cost includes both fixed and variable costs.
Which one of the following best describes the concept of opportunity cost?
Which one of the following best describes the concept of opportunity cost?
- The cost of using resources in the production of a particular good or service, measured in terms of the next best alternative foregone. (correct)
- The cost of variable inputs in the production process.
- The cost of producing one additional unit of output.
- The cost of fixed inputs in the production process.
Which one of the following is true about average fixed cost (AFC) and average variable cost (AVC)?
Which one of the following is true about average fixed cost (AFC) and average variable cost (AVC)?
- AFC decreases as output increases, while AVC remains constant.
- AFC increases as output increases, while AVC remains constant.
- AFC remains constant as output increases, while AVC increases.
- AFC remains constant as output increases, while AVC decreases. (correct)
Which one of the following best describes the relationship between marginal cost (MC) and average cost (AC)?
Which one of the following best describes the relationship between marginal cost (MC) and average cost (AC)?
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Which one of the following best describes the concept of marginal revenue (MR)?
Which one of the following best describes the concept of marginal revenue (MR)?
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