Question 1

The formula for average fixed costs is

Accepted Answer

A)  TFC - q. 
B)  TFC/q. 
C)  q/TFC. 
D)  Δq/ΔTFC. 
A)  TFC - q. 
B)  TFC/q. 
C)  q/TFC. 
D)  Δq/ΔTFC.

Question 2

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&& \
1 & 20& & & & \
2 & & 10& & & &30& \
3 & & &  & 110&& \
4 & & &20 & & & \
5 & & & &180 &\
\hline
\end{array}$

-Refer to Table 8.3. If the firm is in a perfectly competitive industry with a market price of $30 per unit, the firm will produce ________ units and earn a profit of ________.

Accepted Answer

A)  three; $20 
B)  four; $20 
C)  four; -$20 
D)  five; $30 
A)  three; $20 
B)  four; $20 
C)  four; -$20 
D)  five; $30

Question 3

If the corn industry is perfectly competitive, ________ for corn is downward sloping and ________ is horizontal.

Accepted Answer

A)  the market demand curve; an individual corn producer's demand curve 
B)  an individual corn producer's demand curve; the marginal revenue curve 
C)  the marginal cost curve; the marginal revenue curve 
D)  marginal revenue curve; average total cost curve 
A)  the market demand curve; an individual corn producer's demand curve 
B)  an individual corn producer's demand curve; the marginal revenue curve 
C)  the marginal cost curve; the marginal revenue curve 
D)  marginal revenue curve; average total cost curve

Question 4

The formula for AVC is

Accepted Answer

A)  q/TVC. 
B)  TVC/q. 
C)  ΔTVC/Δq. 
D)  Δq/ΔTVC. 
A)  q/TVC. 
B)  TVC/q. 
C)  ΔTVC/Δq. 
D)  Δq/ΔTVC.

Question 5

A perfectly competitive firm breaks even at the level of output where

Accepted Answer

A) P > ATC. B) P < ATC. C) P = ATC. D) P = MC. A) P > ATC. B) P < ATC. C) P = ATC. D) P = MC.

Question 6

Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $5 and its total variable cost is $300. What is the total cost of producing 100 widgets?

Accepted Answer

A)  $300 
B)  $305 
C)  $500 
D)  $800 
A)  $300 
B)  $305 
C)  $500 
D)  $800

Question 7

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&100 & \
1 & & 50 & & & \
2 & & & & & &&95 \
3 & & & 46.67 & & \
4 & & & & &300 & \
5 & 270 & & &\
\hline
\end{array}$

-Refer to Table 8.2. Assume that Sherry's Earrings is producing in a perfectly competitive market and the market price for earrings is $60. To maximize profits Sherry should produce ________ pairs of earrings.

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  five 
A)  two 
B)  three 
C)  four 
D)  five

Question 8

The formula for MC is

Accepted Answer

A)  TVC/q. 
B)  q/TVC. 
C)  ΔTVC/q. 
D)  ΔTVC/Δq. 
A)  TVC/q. 
B)  q/TVC. 
C)  ΔTVC/q. 
D)  ΔTVC/Δq.

Question 9

All of the following statements about variable costs are true except

Accepted Answer

A)  they are equal to total costs in the long run. 
B)  they are zero if output is zero. 
C)  they are equal to the product of average variable cost and the output level. 
D)  they are constant as output increases. 
A)  they are equal to total costs in the long run. 
B)  they are zero if output is zero. 
C)  they are equal to the product of average variable cost and the output level. 
D)  they are constant as output increases.

Question 10

The Lawn Ranger, a landscaping company, has total costs of $7,000 and total fixed costs of $5,000. The Lawn Ranger's total variable costs are

Accepted Answer

A)  $2,000. 
B)  $3,000. 
C)  $5,000. 
D)  indeterminate because the firm's output level is unknown. 
A)  $2,000. 
B)  $3,000. 
C)  $5,000. 
D)  indeterminate because the firm's output level is unknown.

Question 11

The decision by firms of the quantity of each input to demand is based on

Accepted Answer

A)  techniques of production available. 
B)  the price of output. 
C)  the price of inputs. 
D)  government oversight. 
A)  techniques of production available. 
B)  the price of output. 
C)  the price of inputs. 
D)  government oversight.

Question 12

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow.   Figure 8.3
-Refer to Figure 8.3. The marginal cost of the eleventh basketball is

Accepted Answer

A)  less than $1. 
B)  $1. 
C)  $2. 
D)  greater than $2. 
A)  less than $1. 
B)  $1. 
C)  $2. 
D)  greater than $2.

Question 13

Demand for the product of an industry in perfect competition is assumed to be inelastic.

Accepted Answer

A) True 
 B)False

Question 14

In the short run when the marginal product of labor ________, the marginal cost of an additional unit of output ________.

Accepted Answer

A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; doesn't change 
A)  rises; rises 
B)  falls; falls 
C)  rises; falls 
D)  falls; doesn't change

Question 15

The best combination of inputs at one level of production may not be best at other levels.

Accepted Answer

A) True 
 B)False

Question 16

In the short run, as output increases,

Accepted Answer

A)  the difference between average total cost and average variable cost decreases. 
B)  the difference between total cost and average variable cost decreases. 
C)  marginal cost eventually decreases. 
D)  All of the above are correct. 
A)  the difference between average total cost and average variable cost decreases. 
B)  the difference between total cost and average variable cost decreases. 
C)  marginal cost eventually decreases. 
D)  All of the above are correct.

Question 17

Average variable and average total costs get farther apart as output decreases because ________ as output decreases.

Accepted Answer

A)  diminishing returns set in 
B)  average fixed costs increase 
C)  marginal costs increase 
D)  total and total variable costs get farther apart 
A)  diminishing returns set in 
B)  average fixed costs increase 
C)  marginal costs increase 
D)  total and total variable costs get farther apart

Question 18

When marginal cost is between average variable cost and average total cost, marginal cost is increasing.

Accepted Answer

A) True 
 B)False

Question 19

If an individual perfectly competitive firm charges a price ________ the industry equilibrium price while competitors charge the equilibrium price, the firm will sell all that it produces but forgo revenue that it could have had.

Accepted Answer

A)  above 
B)  below 
C)  equal to 
D)  More information is needed to answer the question. 
A)  above 
B)  below 
C)  equal to 
D)  More information is needed to answer the question.

Question 20

If a perfectly competitive firm's average total cost curve is above its demand schedule at every level of output, then the firm will earn ________ profits.

Accepted Answer

A)  positive 
B)  break-even 
C)  negative 
D)  zero 
A)  positive 
B)  break-even 
C)  negative 
D)  zero

The formula for average fixed costs is

If the corn industry is perfectly competitive, for corn is downward sloping and is horizontal.

The formula for AVC is

A perfectly competitive firm breaks even at the level of output where

Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $5 and its total variable cost is $300. What is the total cost of producing 100 widgets?

The formula for MC is

All of the following statements about variable costs are true except

The Lawn Ranger, a landscaping company, has total costs of $7,000 and total fixed costs of $5,000. The Lawn Ranger's total variable costs are

The decision by firms of the quantity of each input to demand is based on

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3 -Refer to Figure 8.3. The marginal cost of the eleventh basketball is

Demand for the product of an industry in perfect competition is assumed to be inelastic.

In the short run when the marginal product of labor , the marginal cost of an additional unit of output .

The best combination of inputs at one level of production may not be best at other levels.

In the short run, as output increases,

Average variable and average total costs get farther apart as output decreases because ________ as output decreases.

When marginal cost is between average variable cost and average total cost, marginal cost is increasing.

If an individual perfectly competitive firm charges a price ________ the industry equilibrium price while competitors charge the equilibrium price, the firm will sell all that it produces but forgo revenue that it could have had.

If a perfectly competitive firm's average total cost curve is above its demand schedule at every level of output, then the firm will earn ________ profits.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 8: Short-Run Costs and Output Decisions

The formula for average fixed costs is

If the corn industry is perfectly competitive, ________ for corn is downward sloping and ________ is horizontal.

The formula for AVC is

A perfectly competitive firm breaks even at the level of output where

Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $5 and its total variable cost is $300. What is the total cost of producing 100 widgets?

The formula for MC is

All of the following statements about variable costs are true except

The Lawn Ranger, a landscaping company, has total costs of $7,000 and total fixed costs of $5,000. The Lawn Ranger's total variable costs are

The decision by firms of the quantity of each input to demand is based on

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3 -Refer to Figure 8.3. The marginal cost of the eleventh basketball is

Demand for the product of an industry in perfect competition is assumed to be inelastic.

In the short run when the marginal product of labor ________, the marginal cost of an additional unit of output ________.

The best combination of inputs at one level of production may not be best at other levels.

In the short run, as output increases,

Average variable and average total costs get farther apart as output decreases because ________ as output decreases.

When marginal cost is between average variable cost and average total cost, marginal cost is increasing.

If an individual perfectly competitive firm charges a price ________ the industry equilibrium price while competitors charge the equilibrium price, the firm will sell all that it produces but forgo revenue that it could have had.

If a perfectly competitive firm's average total cost curve is above its demand schedule at every level of output, then the firm will earn ________ profits.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

If the corn industry is perfectly competitive, for corn is downward sloping and is horizontal.

In the short run when the marginal product of labor , the marginal cost of an additional unit of output .