Question 1

Average variable cost is total variable cost:

Accepted Answer

A) divided by output. 
B) multiplied by output. 
C) divided by input. 
D) multiplied by price. 
A) divided by output. 
B) multiplied by output. 
C) divided by input. 
D) multiplied by price.

Question 2

Why does the minimum point of the AVC curve always occur at a lower output level than that at which the ATC curve has its minimum?

Accepted Answer

The minimum of the AVC curve occurs to t

Question 3

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.

Question 4

What kind of costs remain the same regardless of the level of production?

Accepted Answer

A) Fixed 
B) Variable 
C) Total 
D) Marginal 
A) Fixed 
B) Variable 
C) Total 
D) Marginal

Question 5

Define variable cost.What sorts of things might be included in variable cost? Do variable costs exist in the long run?

Accepted Answer

Variable costs are the costs of variable

Question 6

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 7

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 8

The total fixed cost curve is:

Accepted Answer

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

Question 9

The diagram below shows the production function for Clean-Like-New car wash business.   (a)Compute the total product,marginal product,and the average product values in the following table: $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Workers }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Product }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Product }
\end{array} \
\hline 0 & & & \
\hline 1 & & & \
\hline 2 & & & \
\hline 3 & & & \
\hline 4 & & & \
\hline 5 & & & \
\hline 6 & & & \
\hline 7 & & & \
\hline
\end{array}$$ (b)Where does increasing marginal productivity occur?
(c)Where does diminishing marginal productivity occur?
(d)Where does diminishing absolute productivity occur?

Accepted Answer

(a) \[\begin{array} { | c | c | c | c |

Question 10

Fixed costs plus variable costs equal:

Accepted Answer

A) total costs. 
B) average total costs. 
C) average costs. 
D) marginal costs. 
A) total costs. 
B) average total costs. 
C) average costs. 
D) marginal costs.

Question 11

Refer to the table shown. If the output of bicycles is 4 per week, the average cost of producing each bicycle is: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Tatal cast (dallars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer

A) $100. 
B) $110. 
C) $120. 
D) $140. 
A) $100. 
B) $110. 
C) $120. 
D) $140.

Question 12

The minimum point of the average total cost curve always occurs at a larger output level than the minimum point of the average variable cost curve because:

Accepted Answer

A) marginal cost is falling. 
B) average fixed costs are rising. 
C) average fixed costs are falling. 
D) marginal cost is rising. 
A) marginal cost is falling. 
B) average fixed costs are rising. 
C) average fixed costs are falling. 
D) marginal cost is rising.

Question 13

Accounting profit is equal to:

Accepted Answer

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

Question 14

Distinguish between the following three phases of production: increasing marginal productivity,diminishing marginal productivity and diminishing absolute productivity.

Accepted Answer

Increasing marginal productivity is wher

Question 15

If average fixed cost is $2 and average variable cost is $3, total cost is $5.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the graph shown. Total variable cost of producing Q* is represented by:

Accepted Answer

A) area 0Q*AF. 
B) area 0Q*BE. 
C) area 0Q*CD. 
D) cannot be determined. 
A) area 0Q*AF. 
B) area 0Q*BE. 
C) area 0Q*CD. 
D) cannot be determined.

Question 17

Refer to the table shown. The average total cost of producing 5 units of output is: $\begin{array}{|c|c|}
\hline   \text { Units of output } & \text { Total cost } \
\hline0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

A) $5. 
B) $10. 
C) $15. 
D) $25. 
A) $5. 
B) $10. 
C) $15. 
D) $25.

Question 18

If you have already signed up for a plan with your cell phone company that gives you 4,000 free minutes for $39.99 per month with a cost of $0.35 per minute for any time exceeding the limit, your marginal cost curve is:

Accepted Answer

A) horizontal at a marginal cost of zero. 
B) horizontal at a marginal cost of zero up to 4,000 minutes. 
C) horizontal at a marginal cost of $0.35. 
D) upward-sloping. 
A) horizontal at a marginal cost of zero. 
B) horizontal at a marginal cost of zero up to 4,000 minutes. 
C) horizontal at a marginal cost of $0.35. 
D) upward-sloping.

Question 19

Refer to the graph shown. The line segment that represents average total costs of producing Q* is:

Accepted Answer

A) AQ*. 
B) BQ*. 
C) CQ*. 
D) AB. 
A) AQ*. 
B) BQ*. 
C) CQ*. 
D) AB.

Question 20

Refer to the graph shown. Within which part of the production function is the firm most likely to operate?

Accepted Answer

A) A 
B) B 
C) C 
D) B and C 
A) A 
B) B 
C) C 
D) B and C

Exam 11: Production and Cost Analysis I

Average variable cost is total variable cost:

Why does the minimum point of the AVC curve always occur at a lower output level than that at which the ATC curve has its minimum?

If marginal cost equals average total cost:

What kind of costs remain the same regardless of the level of production?

Define variable cost.What sorts of things might be included in variable cost? Do variable costs exist in the long run?

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

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

The total fixed cost curve is:

Fixed costs plus variable costs equal:

Refer to the table shown. If the output of bicycles is 4 per week, the average cost of producing each bicycle is: Output (bicycles per week) Tatal cast (dallars) 1 100 2 200 3 310 4 440 5 580 6 730 7 900 8 1,200

The minimum point of the average total cost curve always occurs at a larger output level than the minimum point of the average variable cost curve because:

Accounting profit is equal to:

Distinguish between the following three phases of production: increasing marginal productivity,diminishing marginal productivity and diminishing absolute productivity.

If average fixed cost is $2 and average variable cost is $3, total cost is $5.

Refer to the graph shown. Total variable cost of producing Q* is represented by:

Refer to the table shown. The average total cost of producing 5 units of output is: Units of output Total cost 0 5 1 11 2 16 3 20 4 23 5 25 6 26

If you have already signed up for a plan with your cell phone company that gives you 4,000 free minutes for $39.99 per month with a cost of $0.35 per minute for any time exceeding the limit, your marginal cost curve is:

Refer to the graph shown. The line segment that represents average total costs of producing Q* is:

Refer to the graph shown. Within which part of the production function is the firm most likely to operate?

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