# COST ANALYSIS AND COST FUNCTION

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COST ANALYSIS AND COST FUNCTION
1. Cost Analysis is the study of behaviour of …………. , in relation to one or more production criteria.
2. (a) Prices and Revenue
(b) Profits
(c) Costs
(d) Output Quantity

(c) Costs

3. Cost Analysis is the study of behaviour of Cost, in relation to —
4. (a) Selling Prices
(b) Profits
(c) Total Revenue
(d) One or more Production Criteria

(d) One or more Production Criteria

5. For Cost Analysis purposes, the Production Criteria may be —
6. (a) Quantity of output
(b) Scale of operations
(c) Prices of factors of production
(d) All of the above

(d) All of the above

7. For Cost Analysis purposes, the Production Criteria may be —
8. (a) Prices of factors of production
(b) Quantity of output
(c) Either (a) or (b)
(d) Neither (a) nor (b)

(c) Either (a) or (b)

9. Cost Analysis is concerned with …………. of production.
10. (a) Financial aspects
(b) Physical aspects
(c) Either (a) or (b)
(d) Both (a) and (b)

(a) Financial aspects

11. Production Analysis is concerned with ……………. of production.
12. (a) Financial aspects
(b) Physical aspects
(c) Either (a) or (b)
(d) Both (a) and (b)

(b) Physical aspects

13. Cost Function refers to the mathematical relationship between cost of a product and the various determinants of Cost. This statement is
14. (a) TRUE
(b) FALSE
(c) Partially True
(d) None of the above

(a) True

15. A Cost Function deals with —
16. (a) Total Cost
(b) Cost per unit
(c) Either (a) or (b)
(d) Neither (a) nor (b)

(c) Either (a) or (b)

17. In a Cost Function, the Total Cost or Cost per unit is a/an
18. (a) Dependent variable
(b) Independent Variable
(c) Either (a) or (b)
(d) Neither(a) nor (b)

(a) Dependent variable

19. In a cost Function,the Output Quantity is a/an-
20. (a) Dependent Variable
(b) Independent Variable
(c) Either (a) or (b)
(d) Neither (a) nor (b)

(b) Independent Variable

21. In a Cost Function, the Scale of Operations is a/an-
22. (a) Dependent Variable
(b) Independent Variable
(c) Either (a) or (b)
(d) Neither (a) nor (b)

(b) Independent Variable

23. In a Cost Function, the Price of Factors of Production is a/an—
24. (a) Dependent Variable
(b) Independent Variable
(c) Either (a) or (b)
(d) Neither (a) nor (b)

(b) Independent Variable

25. Identify the Dependent Variable in a Cost Function from the following.
26. (a) Quantity of Output
(b) Scale of Operations
(c) Total Cost
(d) Price of Factors of Production

(c) Total Cost

27. Identify the Dependent Variable in a Cost Function from the following.
28. (a) Efficiency
(b) Level of Capacity utilisation
(c) Technology
(d) Cost per unit

(d) Cost per unit

29. Identify the Independent Variable in a Cost Function from the following.
30. (a) Time Period under study
(b) Cost per unit
(c) Total Cost
(d) None of the above

(a) Time Period under study

31. Cost Functions are Derived Functions. They are derived from —
32. (a) Demand Function
(b) Supply Function
(c) Isoquant Function
(d) Production Function

(d) Production Function

33. A Cost Function determines the behaviour of Cost With change in —
34. (a) Output
(b) Input
(c) Technology
(d) Wages

(a) Output

35. The Cost Function indicates the functional relationship between Total Cost and —
36. (a) Total Input
(b) Fixed Cost
(c) Total Output
(d) Variable Cost

(c) Total Output

37. Which of the following is not a determinant of the Firm’s Cost Function?
38. (a) Production Function
(b) Price of Labour
(c) Rent paid for use of Building
(d) Price of the Firm’s Output

(d) Price of the Firm’s Output

39. The Functional Relationship between Output and the Long Run Cost of Production is known as —
40. (a) Cost Function
(b) Long Run Cost Function
(c) Short Run Cost Function
(d) Output Function

(b) Long Run Cost Function

41. The Functional Relationship between Output and the Short Run Cost of Production is known as —
42. (a) Cost Function
(b) Long Run Cost Function
(c) Short Run Cost Function
(d) Output Function

(c) Short Run Cost Function

43. Which of the following statements regarding the Long Run Cost Function is not true?
44. (a) The Firm adjusts Factors of Production to meet the market demand
(b) Firms identify a combination that gives maximum output at the lowest CoSt
(c) Inputs are chosen for production desired level of output
(d) AII the inputs in the long-run are fixed

(d) AII the inputs in the long-run are fixed

45. Expansion of Scales of operation forms a part of …………….. Cost Function.
46. (a) Long run
(b) Short run
(c) Fixed
(d) Both (b) and (C)

(a) Long run

47. Which theory proposes that a country coUld be better off by producing the product in which it has relatively towel Labour Cost and relatively higher Labour productivity?
(d) Imitation Theory