1. Directions

You will read passages on the topic and then answer questions about them. You may find vocabulary at the end of the test. Read the questions carefully before choosing the correct answers.

2. Questions of the test

Question 1. Which of the following is NOT a type of production cost?
A) Rent
B) Materials
C) Insurance
D) Sales

Question 2. Which of the following is NOT a strategy that businesses can use to reduce their production costs?
A) Negotiating lower prices for materials
B) Investing in more efficient technology
C) Outsourcing tasks to countries with cheaper labor
D) Increasing the level of production

Question 3. Which of the following is NOT a direct cost of production?
A) Materials
B) Labor
C) Marketing
D) Research and development

Question 4. Which of the following statements is NOT true about production costs?
A) Production costs determine the price at which goods or services can be sold.
B) Production costs must be carefully managed to ensure profitability and sustainability.
C) Production costs do not include indirect costs such as marketing and research and development.
D) Production costs are the same for all businesses in a particular industry.

Question 5. Which of the following is NOT a type of fixed cost?
A) Rent
B) Salaries
C) Insurance
D) Materials