JAMB Economics questions: Theory of costs and revenue

17 questions with answers and explanations. Tap an option to check yourself.

1. Question 1· Theory of costs and revenue· JAMB

   A firm earns normal profit when

   • Atotal revenue equals total cost including opportunity cost
   • Bprice is above average cost
   • Cmarginal revenue is zero
   • Dit makes a loss

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2. Question 2· Theory of costs and revenue· JAMB

   Which of the following is a fixed cost to a factory?

   • Arent on the factory building
   • Braw materials
   • Celectricity used by machines
   • Dwages of casual workers

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3. Question 3· Theory of costs and revenue· JAMB

   Costs that change as output changes are called

   • Avariable costs
   • Bfixed costs
   • Csunk costs
   • Doverhead costs

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4. Question 4· Theory of costs and revenue· JAMB

   Total cost is ₦9,000 when output is 300 and total fixed cost is ₦6,000. Average variable cost is

   • A₦20
   • B₦30
   • C₦10
   • D₦3,000

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5. Question 5· Theory of costs and revenue· JAMB

   A profit-maximising firm produces where

   • Aaverage cost is lowest
   • Bmarginal cost equals marginal revenue
   • Ctotal revenue is highest
   • Dprice is highest

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6. Question 6· Theory of costs and revenue· JAMB

   For a firm in perfect competition, average revenue is equal to

   • Azero
   • Btotal cost
   • Cthe price of the product
   • Dfixed cost

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7. Question 7· Theory of costs and revenue· JAMB

   Average revenue is equal to

   • Aprofit
   • Btotal cost
   • Cmarginal cost
   • Dprice

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8. Question 8· Theory of costs and revenue· JAMB

   Average fixed cost

   • Ais zero
   • Brises with output
   • Cis constant
   • Dfalls continuously as output rises

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9. Question 9· Theory of costs and revenue· JAMB

   The long-run average cost curve is typically

   • Avertical
   • Bstraight horizontal
   • CU-shaped
   • Dupward sloping only

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10. Question 10· Theory of costs and revenue· JAMB

    A firm's total cost of producing 50 units is ₦500. Find the average cost.

    • A₦25,000
    • B₦10
    • C₦50
    • D₦450

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11. Question 11· Theory of costs and revenue· JAMB

    Average fixed cost falls continuously as output rises because

    • Athe same fixed cost is spread over more units
    • Bfixed cost rises
    • Cvariable cost falls
    • Dprice falls

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12. Question 12· Theory of costs and revenue· JAMB

    Total fixed cost is ₦6,000 and output is 300 units. Average fixed cost is

    • A₦200
    • B₦6,000
    • C₦1,800,000
    • D₦20

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13. Question 13· Theory of costs and revenue· JAMB

    A firm sells 40 units at ₦25 each. Find its total revenue.

    • A₦625
    • B₦65
    • C₦1,000
    • D₦1.60

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14. Question 14· Theory of costs and revenue· JAMB

    A firm's fixed costs are ₦50,000, its price ₦500 a unit and its variable cost ₦300 a unit. Its break-even output is

    • A100 units
    • B250 units
    • C167 units
    • D500 units

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15. Question 15· Theory of costs and revenue· JAMB

    Total cost rises from ₦200 to ₦260 when output rises from 10 to 12 units. Find the marginal cost per unit.

    • A₦60
    • B₦30
    • C₦21.67
    • D₦13

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16. Question 16· Theory of costs and revenue· JAMB

    Total cost is ₦30,000 at 100 units and ₦33,000 at 110 units. Marginal cost per unit is

    • A₦300
    • B₦3,000
    • C₦330
    • D₦30

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17. Question 17· Theory of costs and revenue· JAMB

    In the short run, a firm will shut down if the price falls below its

    • Aaverage fixed cost
    • Baverage variable cost
    • Cmarginal revenue
    • Daverage total cost only

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