Question 1

If marginal cost is greater than average variable cost, average variable cost will:

Accepted Answer

A)  increase as output increases. 
B)  decrease as output increases. 
C)  not change as output increases. 
D)  equal average total cost. 
A)  increase as output increases. 
B)  decrease as output increases. 
C)  not change as output increases. 
D)  equal average total cost.

Question 2

The marginal cost curve intersects the average fixed cost curve at the minimum point of the average fixed cost curve.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the graph shown.   With efficient production, this firm can maximize production at point:

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 4

The law of diminishing marginal productivity holds:

Accepted Answer

A)  when all inputs are variable. 
B)  in the long run. 
C)  when all inputs are fixed. 
D)  in the short run. 
A)  when all inputs are variable. 
B)  in the long run. 
C)  when all inputs are fixed. 
D)  in the short run.

Question 5

Explicit revenue minus explicit measurable costs equals:

Accepted Answer

A)  economic profit. 
B)  normal profit. 
C)  accounting profit. 
D)  average profit. 
A)  economic profit. 
B)  normal profit. 
C)  accounting profit. 
D)  average profit.

Question 6

The forgone income that the owner of a business could have made by spending time working in another job is called:

Accepted Answer

A)  explicit cost. 
B)  marginal cost. 
C)  total cost. 
D)  opportunity cost. 
A)  explicit cost. 
B)  marginal cost. 
C)  total cost. 
D)  opportunity cost.

Question 7

Refer to the table shown. Diminishing marginal productivity begins when the: $\begin{array}{|c|c|}
\hline \text {Number of workers}&\text {Total output}\
\hline 1 & 4 \
\hline 2 & 10 \
\hline 3 & 18 \
\hline 4 & 28 \
\hline 5 & 35 \
\hline 6 & 41 \
\hline 7 & 45 \
\hline 8 & 48 \
\hline 9 & 50 \
\hline 10 & 49 \
\hline
\end{array}$

Accepted Answer

A)  third worker is hired. 
B)  fourth worker is hired. 
C)  fifth worker is hired. 
D)  sixth worker is hired. 
A)  third worker is hired. 
B)  fourth worker is hired. 
C)  fifth worker is hired. 
D)  sixth worker is hired.

Question 8

Refer to the following graph.   This set of cost curves is:

Accepted Answer

A)  correct. 
B)  wrong because the average variable and average total cost curves are switched. 
C)  wrong because the marginal cost curve should go through the minimum points of the AVC and ATC curves. 
D)  wrong because the marginal cost curve does not intersect the average total cost curve. 
A)  correct. 
B)  wrong because the average variable and average total cost curves are switched. 
C)  wrong because the marginal cost curve should go through the minimum points of the AVC and ATC curves. 
D)  wrong because the marginal cost curve does not intersect the average total cost curve.

Question 9

The marginal cost curve intersects the:

Accepted Answer

A)  total cost curve at its minimum point. 
B)  variable cost curve at its minimum point. 
C)  average variable cost curve at its minimum point. 
D)  average fixed cost curve at its minimum point. 
A)  total cost curve at its minimum point. 
B)  variable cost curve at its minimum point. 
C)  average variable cost curve at its minimum point. 
D)  average fixed cost curve at its minimum point.

Question 10

Refer to the table shown. If total output is 41, level of employment is: $$\begin{array} { | c | c | } 
\hline \text { Number of workers } & \text { Mar ginal product of workers } \
\hline 1 & 5 \
\hline 2 & 7 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 11 \
\hline 6 & 7 \
\hline 7 & 5 \
\hline 8 & 3 \
\hline 9 & 0 \
\hline 10 & - 1 \
\hline
\end{array}$$

Accepted Answer

A)  4. 
B)  5. 
C)  6. 
D)  7. 
A)  4. 
B)  5. 
C)  6. 
D)  7.

Question 11

You run a small business producing picture frames. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 picture frames. Given this information, your:

Accepted Answer

A)  average variable cost is $2. 
B)  average total cost is $3. 
C)  average total cost is $1. 
D)  average fixed cost is $1. 
A)  average variable cost is $2. 
B)  average total cost is $3. 
C)  average total cost is $1. 
D)  average fixed cost is $1.

Question 12

Total fixed costs:

Accepted Answer

A)  are positive even when no output is produced. 
B)  are zero when no output is produced. 
C)  decrease as output increases. 
D)  increase as output increases. 
A)  are positive even when no output is produced. 
B)  are zero when no output is produced. 
C)  decrease as output increases. 
D)  increase as output increases.

Question 13

In the long run:

Accepted Answer

A)  no inputs can be varied and all inputs are fixed. 
B)  some inputs can be varied and some inputs are fixed. 
C)  some inputs can be varied and no inputs are fixed. 
D)  all inputs can be varied and no inputs are fixed. 
A)  no inputs can be varied and all inputs are fixed. 
B)  some inputs can be varied and some inputs are fixed. 
C)  some inputs can be varied and no inputs are fixed. 
D)  all inputs can be varied and no inputs are fixed.

Question 14

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

Accepted Answer

A)  $1 
B)  $50 
C)  $100 
D)  $300 
A)  $1 
B)  $50 
C)  $100 
D)  $300

Question 15

The typical average variable cost curve:

Accepted Answer

A)  is U-shaped. 
B)  slopes down and to the right. 
C)  slopes up and to the right. 
D)  rises and then falls sharply. 
A)  is U-shaped. 
B)  slopes down and to the right. 
C)  slopes up and to the right. 
D)  rises and then falls sharply.

Question 16

Refer to the table shown. If the average product is 6, the number of workers could equal: $\begin{array}{|c|c|}
\hline \text {Number of workers}&\text {Total output}\
\hline 1 & 4 \
\hline 2 & 10 \
\hline 3 & 18 \
\hline 4 & 28 \
\hline 5 & 35 \
\hline 6 & 41 \
\hline 7 & 45 \
\hline 8 & 48 \
\hline 9 & 50 \
\hline 10 & 49 \
\hline
\end{array}$

Accepted Answer

A)  1. 
B)  3. 
C)  5. 
D)  7. 
A)  1. 
B)  3. 
C)  5. 
D)  7.

Question 17

The average fixed cost curve is:

Accepted Answer

A)  U-shaped. 
B)  horizontal. 
C)  always upward-sloping. 
D)  always downward-sloping. 
A)  U-shaped. 
B)  horizontal. 
C)  always upward-sloping. 
D)  always downward-sloping.

Question 18

The difference between economic profit and accounting profit is equal to:

Accepted Answer

A)  zero. 
B)  implicit and explicit costs. 
C)  implicit and explicit revenues. 
D)  implicit revenues minus implicit costs. 
A)  zero. 
B)  implicit and explicit costs. 
C)  implicit and explicit revenues. 
D)  implicit revenues minus implicit costs.

Question 19

Fixed costs remain the same regardless of the level of production.

Accepted Answer

A) True 
 B)False

Question 20

If marginal cost equals average total cost:

Accepted Answer

A)  average total cost is minimized. 
B)  marginal cost is minimized. 
C)  average variable cost is minimized. 
D)  average variable cost is falling. 
A)  average total cost is minimized. 
B)  marginal cost is minimized. 
C)  average variable cost is minimized. 
D)  average variable cost is falling.

Exam 11: Production and Cost Analysis I

If marginal cost is greater than average variable cost, average variable cost will:

The marginal cost curve intersects the average fixed cost curve at the minimum point of the average fixed cost curve.

Refer to the graph shown. With efficient production, this firm can maximize production at point:

The law of diminishing marginal productivity holds:

Explicit revenue minus explicit measurable costs equals:

The forgone income that the owner of a business could have made by spending time working in another job is called:

Refer to the table shown. Diminishing marginal productivity begins when the: Number of workers Total output 1 4 2 10 3 18 4 28 5 35 6 41 7 45 8 48 9 50 10 49

Refer to the following graph. This set of cost curves is:

The marginal cost curve intersects the:

Refer to the table shown. If total output is 41, level of employment is: Number of workers Mar ginal product of workers 1 5 2 7 3 8 4 10 5 11 6 7 7 5 8 3 9 0 10 -1

You run a small business producing picture frames. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 picture frames. Given this information, your:

Total fixed costs:

In the long run:

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

The typical average variable cost curve:

Refer to the table shown. If the average product is 6, the number of workers could equal: Number of workers Total output 1 4 2 10 3 18 4 28 5 35 6 41 7 45 8 48 9 50 10 49

The average fixed cost curve is:

The difference between economic profit and accounting profit is equal to:

Fixed costs remain the same regardless of the level of production.

If marginal cost equals average total cost:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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