Concepts of Cost MCQ — Class 11

Test your understanding of Concepts of Cost with 20 free questions across Easy and Moderate. Hard and Extreme require Premium. Choose a level in the interactive quiz to answer questions and review explanations.

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Key concepts to revise

Total fixed cost

Total fixed cost: cost that remains unchanged with output in the short run

Total variable cost

Total variable cost: cost that changes with the level of output

Total cost

Total cost: the sum of total fixed cost and total variable cost

Average fixed cost

Average fixed cost: total fixed cost divided by output

Average variable cost

Average variable cost: total variable cost divided by output

Average cost

Average cost: total cost divided by output and also equal to AFC plus AVC

Marginal cost

Marginal cost: the change in total cost caused by producing one additional unit

TFC–TC–TVC relation

TFC–TC–TVC relation: the vertical difference between total cost and total variable cost equals total fixed cost

MC–AC relation

MC–AC relation: AC falls when MC is below AC, is minimum when MC equals AC, and rises when MC is above AC

MC–AVC relation

MC–AVC relation: AVC falls when MC is below AVC, is minimum when MC equals AVC, and rises when MC is above AVC

Try these sample MCQs

1. Which concept best matches this situation? Factory rent is ₹50,000 whether output is zero or 1,000 units.

  1. Total variable cost
  2. Total fixed cost
  3. Average fixed cost
  4. Marginal cost
Check answer and explanation

Total fixed cost. Total fixed cost: cost that remains unchanged with output in the short run

2. Which concept best matches this situation? Raw-material cost rises as more units are produced.

  1. Total cost
  2. Average variable cost
  3. Total variable cost
  4. TFC–TC–TVC relation
Check answer and explanation

Total variable cost. Total variable cost: cost that changes with the level of output

3. Which concept best matches this situation? TFC ₹100 plus TVC ₹300 gives TC ₹400.

  1. Average fixed cost
  2. Average cost
  3. MC–AC relation
  4. Total cost
Check answer and explanation

Total cost. Total cost: the sum of total fixed cost and total variable cost

After the quiz

Write down the concepts you missed. Explain each one in your own words, give an example, and attempt the level again without notes. A high score on a short quiz does not replace revision of the whole chapter.

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