Question 1

In the long run all inputs are variable; in the short run some inputs are fixed.

Accepted Answer

A) True 
 B)False

Question 2

You are given that the total cost of producing 10 units of output is $100 and the fixed costs are $20.Calculate VC,ATC,AFC,and AVC.

Accepted Answer

VC = TC - FC = $100 - 20 = $80

Question 3

A business produces 400 items and sells them for $15 each for a total of $6,000. The total cost of producing the items is $4,500 in explicit cost and $1,000 in implicit cost. Economic profit is:

Accepted Answer

A) $0. 
B) $500. 
C) $1,000. 
D) $1,500. 
A) $0. 
B) $500. 
C) $1,000. 
D) $1,500.

Question 4

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

Accepted Answer

A) correct. 
B) wrong because the total cost and variable cost curves are reversed. 
C) wrong because the fixed cost curve is drawn incorrectly. 
D) wrong because the total cost and variable cost curves are actually the average total cost and average variable cost curves. 
A) correct. 
B) wrong because the total cost and variable cost curves are reversed. 
C) wrong because the fixed cost curve is drawn incorrectly. 
D) wrong because the total cost and variable cost curves are actually the average total cost and average variable cost curves.

Question 5

Refer to the table shown. The firm would definitely not hire:

$\begin{array}{|c|c|}
\hline   \text { Number of workers } & \text { Total output } \
\hline 1 & 4 \
\hline 2 & 10 \
\hline 3 & 18 \
\hline 4 & 28 \
\hline 5 & 35 \
\hline 6 & 41 \
\hline 7 & 45 \
\hline 8 & 48 \
\hline 9 & 50 \
\hline 10 & 49 \
\hline
\end{array}$

Accepted Answer

A) 5 workers. 
B) 7 workers. 
C) 9 workers. 
D) 10 workers. 
A) 5 workers. 
B) 7 workers. 
C) 9 workers. 
D) 10 workers.

Question 6

If your latest test grade and your average test grade on previous exams are equal, your average test grade will:

Accepted Answer

A) rise. 
B) remain constant. 
C) fall. 
D) be good enough to pass. 
A) rise. 
B) remain constant. 
C) fall. 
D) be good enough to pass.

Question 7

To make sure that you understand the relationships between all of the cost concepts,fill in the missing values in the table below. $$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Output } & \text { FC } & \text { VC } & \text { TC } & \text { AVC } & \text { ATC } & \text { MC } \
\hline 13 & 1,125 & 975 & & & & \
\hline 14 & & & 2,245 & & & \
\hline 15 & & 1,275 & & & & \
\hline 16 & & & & 90 & & \
\hline 17 & & & & & 161.2 & \
\hline
\end{array}$$ NOTE: Use whole numbers for all values except ATC.

Accepted Answer

The completed table: \[\begin{array} { |

Question 8

Refer to the table shown. The marginal cost of producing the fourth unit 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) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 9

In the short run:

Accepted Answer

A) all inputs are variable. 
B) firms can use any input combination they want. 
C) firms can choose among all possible production techniques. 
D) some inputs are fixed. 
A) all inputs are variable. 
B) firms can use any input combination they want. 
C) firms can choose among all possible production techniques. 
D) some inputs are fixed.

Question 10

Congratulations! You have just been promoted to a new position at the Tootsie Roll Company.In your new position,you have been asked by the accounting department to provide them with some cost data.The basis for your report is a table that was begun by your predecessor.Your task is to fill in the missing values in the table below: $\begin{array}{|c|c|c|c|c|c|c|c|}
\hline 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 \
\hline \begin{array}{c}
\text { Output } \
\text { (bags) }
\end{array} & \text { FC } & \text { VC } & \begin{array}{c}
\text { TC } \
\text { (FC+VC) }
\end{array} & \mathrm{MC} & \begin{array}{c}
\text { AFC } \
\text { (FC/Q) }
\end{array} & \begin{array}{c}
\text { AVC } \
\text { (VC/Q) }
\end{array} & \begin{array}{c}
\text { ATC } \
\text { (TC/Q) }
\end{array} \
\hline 1 & \$ 50 & \$ 86 & & & & & \
\hline 2 & 50 & 96 & & & & & \
\hline 3 & 50 & 100 & & & & & \
\hline 4 & 50 & 106 & & & & & \
\hline 5 & 50 & 120 & & & & & \
\hline 6 & 50 & 147 & & & & & \
\hline 7 & 50 & 182 & & & & & \
\hline 8 & 50 & 230 & & & & & \
\hline 9 & 50 & 290 & & & & & \
\hline 10 & 50 & 360 & & & & & \
\hline 11 & 50 & 440 & & & & & \
\hline
\end{array}$

Accepted Answer

The comple

Question 11

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

Accepted Answer

A) area 0Q*AF. 
B) area ABEF. 
C) area ACDF. 
D) cannot be determined. 
A) area 0Q*AF. 
B) area ABEF. 
C) area ACDF. 
D) cannot be determined.

Question 12

Refer to the table shown. The marginal product of the third worker is:

$\begin{array}{|c|c|}
\hline   \text { Number of workers } & \text { Marginal product of workers } \
\hline 1 & 2 \
\hline 2 & 5 \
\hline 3 & 9 \
\hline 4 & 14 \
\hline 5 & 16 \
\hline 6 & 17 \
\hline 7 & 18 \
\hline 8 & 18 \
\hline 9 & 17 \
\hline 10 & 15 \
\hline
\end{array}$

Accepted Answer

A) 2. 
B) 8. 
C) 9. 
D) 17. 
A) 2. 
B) 8. 
C) 9. 
D) 17.

Question 13

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 14

Other things being equal, when average productivity falls:

Accepted Answer

A) average fixed cost must rise. 
B) marginal cost must rise. 
C) average total cost must rise. 
D) average variable cost must rise. 
A) average fixed cost must rise. 
B) marginal cost must rise. 
C) average total cost must rise. 
D) average variable cost must rise.

Question 15

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 16

When output is 50, fixed costs are $1,000, and variable costs are $2,000, what is the average total cost?

Accepted Answer

A) $20 
B) $40 
C) $60 
D) $80 
A) $20 
B) $40 
C) $60 
D) $80

Question 17

Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her total costs of the new business include:

Accepted Answer

A) only the expenses incurred for office space, equipment, and supplies. 
B) only her forgone salary of $42,000 per year. 
C) both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year. 
D) neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. 
A) only the expenses incurred for office space, equipment, and supplies. 
B) only her forgone salary of $42,000 per year. 
C) both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year. 
D) neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year.

Question 18

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 19

The vertical distance between the average total cost curve and the average variable cost curve is:

Accepted Answer

A) marginal cost. 
B) average fixed cost. 
C) total fixed cost. 
D) total cost. 
A) marginal cost. 
B) average fixed cost. 
C) total fixed cost. 
D) total cost.

Question 20

What is the distinction between the microeconomic short run and the microeconomic long run? How do these definitions relate to specific periods of calendar time?

Accepted Answer

The microeconomic long run is a period o

Exam 11: Production and Cost Analysis I

In the long run all inputs are variable; in the short run some inputs are fixed.

You are given that the total cost of producing 10 units of output is $100 and the fixed costs are $20.Calculate VC,ATC,AFC,and AVC.

A business produces 400 items and sells them for $15 each for a total of $6,000. The total cost of producing the items is $4,500 in explicit cost and $1,000 in implicit cost. Economic profit is:

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

Refer to the table shown. The firm would definitely not hire: 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

If your latest test grade and your average test grade on previous exams are equal, your average test grade will:

To make sure that you understand the relationships between all of the cost concepts,fill in the missing values in the table below. Output FC VC TC AVC ATC MC 13 1,125 975 14 2,245 15 1,275 16 90 17 161.2 NOTE: Use whole numbers for all values except ATC.

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

In the short run:

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

Refer to the table shown. The marginal product of the third worker is: Number of workers Marginal product of workers 1 2 2 5 3 9 4 14 5 16 6 17 7 18 8 18 9 17 10 15

The typical average variable cost curve:

Other things being equal, when average productivity falls:

The marginal cost curve intersects the:

When output is 50, fixed costs are $1,000, and variable costs are $2,000, what is the average total cost?

Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her total costs of the new business include:

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

The vertical distance between the average total cost curve and the average variable cost curve is:

What is the distinction between the microeconomic short run and the microeconomic long run? How do these definitions relate to specific periods of calendar time?

Economics and Economic Reasoning

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Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

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Production and Cost Analysis II

Perfect Competition

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Who Gets What the Distribution of Income

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

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Macro Policy in a Global Setting

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