Short-run and long-run costs - Jamb Economics Past Questions and Answers

Question 11:

• JAMB 1992

The U-shape of the long run average cost curve can be explained by the?

A. Law of increasing returns
B. Law of constant returns
C. Law of diminishing returns
D. Concepts of economies and diseconomies of scale

Question 12:

• JAMB 1992

\(\begin{array}{c|c}
\text{Quantity of singlets} & \text{Short run total costs(N)} \\
0 & 1,000 \\
10 & 1,200 \\
20 & 1,400 \\
30 & 1,600 \\
40 & 1,800 \\
\end{array}\)
The short run total costs for different levels of output for a firm producing singlets are shown above. Calculate the variable cost per unit at an output of 20.

A. N1000
B. N400
C. N70
D. N20

Question 13:

• JAMB 1994

The basic relationship between the cost of production, and the market price of any commodity in the short run is that the market price?

A. Always reflects the cost of labour
B. Reflects the variable, but not the fixed cost of production
C. Does not rise above variable costs
D. Is determined by the cost of production and the current rate of inflation

Question 14:

• JAMB 1995

Both in the short run and in the long run, a firm maximizes its profits when?

A. MC = MR
B. AC = MC
C. AVC = AC
D. MC = AVC

Question 15:

• JAMB 1997

The type of cost which has to be covered for a firm to continue production in the short-run is the?

A. Overhead cost
B. Fixed cost
C. Marginal cost
D. Average variable cost