In the context of cost analysis, fixed costs in the short run: MCQ with Answer and Explanation

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In the context of cost analysis, fixed costs in the short run:

A. Are always greater than variable costs

B. Vary with the level of output

C. Are zero at zero output

D. Remain constant irrespective of the level of output

Answer: Option D

Solution (By JKSSB Mock Tests)

Fixed costs do not change with the level of output in the short run; they must be incurred even if output is zero.

This question belongs to: Economy GK Economy Set 1

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Question #1

Tax buoyancy measures the responsiveness of:

A. tax revenue to changes in GDP without discretionary changes

B. tax revenue to changes in GDP including discretionary changes

C. expenditure to revenue

D. imports to exports

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Correct Answer: Option B

Explanation:
Tax buoyancy includes both automatic and discretionary changes in tax revenue relative to GDP growth.

This question belongs to: Economy GK Economy Set 1

Question #2

The Laffer curve shows the relationship between:

A. inflation and unemployment

B. interest rate and investment

C. income and consumption

D. tax rate and tax revenue

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Correct Answer: Option D

Explanation:
The Laffer curve shows the relationship between tax rates and total tax revenue.

This question belongs to: Economy GK Economy Set 1

Question #3

Economic cost includes:

A. only accounting costs

B. only explicit costs

C. only implicit costs

D. both explicit and implicit costs

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Correct Answer: Option D

Explanation:
Economic cost includes both explicit costs and implicit opportunity costs.

This question belongs to: Economy GK Economy Set 1

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