question
For most producing firms:
answer
`average total costs decline as output is carried to a certain level, and then begin to rise.
question
Average fixed cost:
answer
declines continually as output increases
question
Which of the following is correct as it relates to cost curves?
answer
Marginal cost intersects average total cost at the latter's minimum point.
question
Marginal cost:
answer
equals both average variable cost and average total cost at their respective minimums.
question
Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. The firm's total fixed costs are:
answer
$5000
question
Other things equal, if the prices of a firm's variable inputs were to fall:
answer
marginal cost, average variable cost, and average total cost would all fall
question
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen?
answer
Average fixed costs and average total costs would rise.
question
If a firm decides to produce no output in the short run, its costs will be:
answer
its fixed costs.
question
output:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The total variable cost of producing 5 units is:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The total variable cost of producing 5 units is:
answer
$37
question
output:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The average total cost of producing 3 units of output is:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The average total cost of producing 3 units of output is:
answer
$16
question
output:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The average fixed cost of producing 3 units of output is:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The average fixed cost of producing 3 units of output is:
answer
$8
question
output:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The marginal cost of producing the sixth unit of output is:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The marginal cost of producing the sixth unit of output is:
answer
$8
question
output:
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The profit-maximizing output for this firm
0
1
2
3
4
5
6
total cost:
$24
33
41
48
54
61
69
Refer to the above data. The profit-maximizing output for this firm
answer
cannot be determined from the information given
question
In comparing the changes in TVC and TC associated with an additional unit of output, we find that:
answer
the changes in TC and TVC are equal
question
In the short run, which of the following statements is correct?
answer
total cost will exceed total variable cost
question
Total fixed cost (TFC):
answer
does not change as total output increases or decreases.
question
Fixed costs are associated with:
answer
the short run only
question
In the above diagram curves 1, 2, and 3 represent:
answer
total fixed cost, total variable cost, and total cost respectively.
question
Which of the following is correct?
answer
When MP is rising MC is falling, and when MP is falling MC is rising.
question
If a firm wanted to know how much it would save by producing one less unit of output, it would look to:
answer
MC
question
Which of the following holds true?
answer
When AP is rising AVC is falling, and when AP is falling AVC is rising.
question
Average fixed costs can be determined graphically by:
answer
the vertical distance between ATC and AVC.
question
The vertical distance between the total cost and the total variable cost curves differs by an amount which:
answer
is constant as output changes.
question
The vertical distance between a firm's ATC and AVC curves represents:
answer
AFC, which decreases as output increases
question
Refer to the above short-run production and cost data. In Figure A curve (1) is:
answer
average product and curve (2) is marginal product
question
Refer to the above short-run production and cost data. In Figure B curve (3) is:
answer
MC and curve (4) is AVC.
question
In the short run:
answer
TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate.
question
As output increases, total variable cost:
answer
increases at a decreasing rate and then at an increasing rate
question
In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:
answer
$1250
question
Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This:
answer
firm's total cost is $270
question
In comparing the changes in TC and TVC associated with an additional unit of output, we find that:
answer
the change in both are equal to MC
question
Other things equal, if the wage rates paid to a firm's labor inputs were to rise, we would expect the:
answer
AVC, ATC, and MC curves all to rise
question
Assume a firm closes down in the short run and produces no output. Under these conditions:
answer
TFC and TC are positive, but TVC is zero
question
If marginal cost:
answer
rising, then average total cost could be either falling or rising
question
Output:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The total cost of producing 3 units of output is:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The total cost of producing 3 units of output is:
answer
$105
question
Output:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The average total cost of 3 units of output is:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The average total cost of 3 units of output is:
answer
$35
question
Output:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The average fixed cost of 3 units of output is:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The average fixed cost of 3 units of output is:
answer
$13.33
question
Output:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The marginal cost of the third unit of output is:
1
2
3
4
5
TVC:
$30
50
65
85
110
Refer to the above information. The marginal cost of the third unit of output is:
answer
$15
question
Economies and diseconomies of scale explain:
answer
why the firm's long-run average total cost curve is U-shaped
question
In the long run:
answer
all costs are variable costs
question
When diseconomies of scale occur:
answer
the long-run average total cost curve rises
question
When a firm does more of something, it gets better at it. This learning-by-doing is:
answer
a source of economies of scale.
question
Economies of scale are indicated by:
answer
the declining segment of the long-run average total cost curve
question
If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that:
answer
economies of scale are being realized
question
The minimum efficient scale of a firm:
answer
is the smallest level of output at which long-run average total cost is minimized
question
If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that:
answer
both relatively small and relatively large firms can be viable in the industry
question
Diseconomies of scale arise primarily because:
answer
of the difficulties involved in managing and coordinating a large business enterprise
question
The long-run average total cost curve:
answer
indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size
question
If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then:
answer
it is encountering economies of scale
question
If a firm increases all of its inputs by 10 percent and its output increases by 10 percent then:
answer
it is encountering constant returns to scale
question
Suppose a firm is in a range of production where it is experiencing economies of scale. Knowing this, we can predict that:
answer
a 10 percent increase in all inputs will increase output by more than 10 percent.
question
Because of higher gasoline prices, firms using gasoline intensively in the production or distribution of their goods have experienced:
answer
an upward shift in their MC, AVC, and ATC curves.
question
Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?
answer
firms like iTunes that distribute their products over the Internet
question
(Consider This) If the law of diminishing returns applies to study time:
answer
the 10th hour of study will likely be less productive than the 3rd.
question
(Consider This) Past costs that are not affected by new decisions are known as:
answer
sunk costs
question
(Consider This) Which of the following is an example of a sunk cost, as it relates to a firm?
answer
an expenditure on a nonrefundable, nontransferable airline ticket.
question
(Consider This) Susie purchased a non-refundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match, and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost?
answer
The $20 ticket to the match
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