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ACTIVITY - 8 I. Write 7for True and Ffor False against each statement: 1. The cost of a commodity is determined by production function and the price of inputs. 2. Cost function shows relationship between total cost and its determinants. 3. The actual expenditure incurred by a firm to purchase or hire the inputs it needs in the production process is called implicit cost. 4. Sunk cost is the expenditure that has been incurred and cannot be recovered. 5. TFC curve is a straight line parallel to x- axis. 6. Total variable cost (TVC) curve is inverse- S shaped starting from the origin. 7. AFC is a rectangular hyperbola showing decreasing fixed cost per unit as output increases. 8. The minimum point of AC occurs to the left of the minimum point of the AVC. 9. MC curve cuts AC curve at its minimum point. 10. LAC and LTC are planning curves. Ques 1 2 3 5 6 7 8 9 10 Ans II. Matching Test: A. The actual expenditure incurred by a 1. Variable cost firm to purchase or hire the inputs: B. The cost of inputs owned by the firm 2. Fixed cost and used by the firm in its own production process: C. The cost that does not change with 3. Implicit cost change in output: D. The costs which vary/change with the 4. Explicit cost quantity of output: I A B C D TI Worksheets of Activities in SSE 208 - Microeconomics for Social Studies Teachers WVSU Janiuay Campus III. Multiple Choice Questions: 1. Cost functions are derived from- a. Production function; b. Demand function; c. Supply function; d. None of these. 2. Total cost (TC) is equal to- a. TFC + TVC b. MC + AC c. TFC + MC d. TFC + AC 3. Which of the following is rectangular hyperbola- a. TFC b. TVC C. AFC d. AVC JC 4. An addition made to the TC or TVC as output is increased by one more units is called: a. AC b. MC C. AVC d. AFC 5. When MC is falling, MC is- a. Below AC b. Above AC c. Equal to AC d. All may be possible. 6. MC curve cuts AC curve at its- O a. minimum point; b. Maximum point. c. Any point; d. Never cuts. 7. Shift in cost curves is/are due to- a. Change in input supply; b. Change in technology; c. a + b d. None of these. Ques 1 2 3 5 6 7 Ans