Question

Marginal cost equals:

Select one:

a. average variable cost at its maximum point.

b. the change in total fixed cost divided by the change in quantity.

c. the change in total variable cost divided by the change in quantity.

d. total cost divided by quantity.

Noncash expenses are:

Select one:

a. explicit costs.

b. sunk costs.

c. incremental costs.

d. implicit costs.

Opportunity cost is not:

Select one:

a. a real economic cost.

b. an implicit cost.

c. a variable cost.

d. none of these.

Sunk costs:

Select one:

a. typically involve multiple units of output.

b. do not vary across decision alternatives.

c. come into play when judging the costs of adding a new product line, advertising campaign, production shift, or organization structure.

d. play a role in determining the optimal course of action.

The acquisition cost of an asset is:

Select one:

a. a replacement cost.

b. an implicit cost.

c. an explicit cost.

d. an opportunity cost.

Answer 1

1) Marginal cost equals

Solution: the change in total variable cost divided by the change in quantity.

Explanation: Marginal cost is computed as: (change in quantity of output)/(change in total cost)

2) Noncash expenses are:

Solution: Implicit cost

Explanation: Implicit costs are non-cash costs or alternative costs.

3) Opportunity cost is not:

Solution: none of these

Explanation: Opportunity cost is real economic cost, implicit cost and variable cost.

4) Sunk costs

Solution: do not vary across decision alternatives

Explanation: sunk cost refers to a cost that has already been incurred and cannot be recovered