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CA Foundation Production And Cost — practice questions

Explore 59 free Production And Cost questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Production And Cost questions and exercises with answers

Showing questions 1–30 of 59.

A cost that does not change with the level of output is called what?Read the answer and worked solution →Fixed costs are also commonly known as which type of cost?Read the answer and worked solution →For a bakery, which item is a fixed cost, not a variable one?Read the answer and worked solution →In the long run, which statement about fixed costs is correct?Read the answer and worked solution →Which cost rises or falls as the quantity produced changes?Read the answer and worked solution →Total cost is made up of which two components?Read the answer and worked solution →Which pair is often called prime cost in costing?Read the answer and worked solution →Direct labor plus overhead together make up which cost?Read the answer and worked solution →Electricity billed as a standing charge plus a usage charge is which type of cost?Read the answer and worked solution →A shirt maker uses cloth, labor, a room and a sewing machine. Which is fixed?Read the answer and worked solution →Over a five-year horizon, what happens to a firm's costs?Read the answer and worked solution →Whether a cost is called fixed or variable depends mainly on what?Read the answer and worked solution →Over a one-day horizon, which is the main variable cost of a factory?Read the answer and worked solution →Variable cost for a given output equals the sum of which cost over all units produced?Read the answer and worked solution →How is average cost (AC) obtained?Read the answer and worked solution →Average cost is another name for which of these?Read the answer and worked solution →What shape does a typical short-run average cost curve have?Read the answer and worked solution →The marginal cost curve cuts the average cost curve at which point?Read the answer and worked solution →When average cost is falling as output rises, marginal cost is what?Read the answer and worked solution →At the lowest point of the average cost curve, marginal cost is what?Read the answer and worked solution →As output increases, what happens to average fixed cost (AFC)?Read the answer and worked solution →Which of AVC and AC reaches its minimum first as output grows?Read the answer and worked solution →Long-run average cost is the unit cost when which condition holds?Read the answer and worked solution →A downward-sloping portion of the long-run average cost curve shows what?Read the answer and worked solution →If long-run average cost keeps falling indefinitely, the industry tends toward what?Read the answer and worked solution →Why is a nuclear plant very inefficient at small output levels?Read the answer and worked solution →Average fixed cost is calculated as which ratio?Read the answer and worked solution →The vertical gap between the AC curve and the AVC curve equals what?Read the answer and worked solution →How does economic cost differ from accounting cost?Read the answer and worked solution →Which factor is conventionally assumed to be the variable input in short-run cost analysis?Read the answer and worked solution →

Worked practice questions

A cost that does not change with the level of output is called what?

  1. Prime cost
  2. Variable cost
  3. Marginal cost
  4. Fixed cost
Show answer and solution

Correct answer: D. Fixed cost

Such expenses stay the same whether the firm makes a little or a lot, which defines a fixed cost.

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Fixed costs are also commonly known as which type of cost?

  1. Direct costs
  2. Sunk revenues
  3. Marginal costs
  4. Overhead costs
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Correct answer: D. Overhead costs

Because they do not move with output, fixed costs are treated as indirect or overhead costs.

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For a bakery, which item is a fixed cost, not a variable one?

  1. Flour used for bread
  2. Wages of extra workers
  3. Monthly shop rent
  4. Packing material used
Show answer and solution

Correct answer: C. Monthly shop rent

Rent is paid whatever the quantity of bread baked, while flour, packing and extra wages rise with output.

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