Fixed costs are costs that: MCQ with Answer and Explanation

Question

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Fixed costs are costs that:

A. are zero in the long run

B. equal variable costs

C. remain constant irrespective of output in the short run

D. vary directly with output

Answer: Option C

Solution (By JKSSB Mock Tests)

Fixed costs do not change with the level of output in the short run.

This question belongs to: Economy GK Economy Set 1

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Question #1

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The 'GST' has helped in creating a unified national market by:

A. increasing check posts

B. increasing entry taxes

C. raising state VAT rates

D. removing cascading taxes and multiple state-level barriers

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Correct Answer: Option D

Explanation:
GST removed cascading taxes and state barriers, creating a unified market.

This question belongs to: Economy GK Economy Set 1

Question #2

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Which of the following is a feature of the 'Modigliani-Miller Theorem'?

A. The value of a firm always rises with higher leverage

B. Dividend policy always affects firm value

C. In perfect capital markets, the value of a firm is independent of its capital structure

D. Capital structure is the only determinant of firm value

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Correct Answer: Option C

Explanation:
The Modigliani-Miller theorem asserts that, under perfect capital markets (no taxes, no bankruptcy costs, no asymmetric information), the total value of a firm is independent of whether it is financed by debt or equity.

This question belongs to: Economy GK Economy Set 1

Question #3

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The 'Goods and Services Tax Compensation Cess' is levied to compensate states for:

A. loss due to natural calamities

B. loss of revenue due to GST implementation for a transition period

C. loss of import revenue

D. loss due to bank failures

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Correct Answer: Option B

Explanation:
GST Compensation Cess compensates states for revenue loss due to GST implementation for five years.

This question belongs to: Economy GK Economy Set 1

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