Question 1

Total fixed cost is the sum of all

Accepted Answer

A)  costs of the firm's fixed factors of production. 
B)  costs associated with the production of goods. 
C)  costs that rise as output increases. 
D)  the marginal costs of the different factors of production. 
A)  costs of the firm's fixed factors of production. 
B)  costs associated with the production of goods. 
C)  costs that rise as output increases. 
D)  the marginal costs of the different factors of production.

Question 2

-The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is

Accepted Answer

A)  $180. 
B)  $190. 
C)  $20. 
D)  None of the above answers is correct. 
A)  $180. 
B)  $190. 
C)  $20. 
D)  None of the above answers is correct.

Question 3

-The above table shows some cost data for Tracey's Tents. What is the average total cost when output is 3?

Accepted Answer

A)  $120 
B)  $30 
C)  $40 
D)  $50 
A)  $120 
B)  $30 
C)  $40 
D)  $50

Question 4

-Using the data in the above table, when the firm increases its output from 4 to 9 units, the marginal cost of a unit is

Accepted Answer

A)  $4.00 a unit. 
B)  $5.00 a unit. 
C)  $6.00 a unit. 
D)  $7.00 a unit. 
A)  $4.00 a unit. 
B)  $5.00 a unit. 
C)  $6.00 a unit. 
D)  $7.00 a unit.

Question 5

What factors of production can a firm change in the short run? In the long run?

Accepted Answer

In the short run, the firm can change it

Question 6

The long run is a time frame in which

Accepted Answer

A)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
B)  the quantities of all factors of production can be varied. 
C)  the quantities of all factors of production are fixed. 
D)  all costs are sunk costs. 
A)  the quantities of some factors of production are fixed and the quantities of other factors of production can be varied. 
B)  the quantities of all factors of production can be varied. 
C)  the quantities of all factors of production are fixed. 
D)  all costs are sunk costs.

Question 7

-Based on the above figure, up to which level of output will Ike's Ice Cream Kitchen have increasing marginal returns?

Accepted Answer

A)  only at 0 gallons 
B)  up to 10 gallons 
C)  up to 40 gallons 
D)  up to 60 gallons 
A)  only at 0 gallons 
B)  up to 10 gallons 
C)  up to 40 gallons 
D)  up to 60 gallons

Question 8

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a variable cost in a hospital?

Accepted Answer

A)  nurses 
B)  An MRI machine 
C)  laboratory equipment 
D)  gurneys 
A)  nurses 
B)  An MRI machine 
C)  laboratory equipment 
D)  gurneys

Question 9

The LRAC curve

Accepted Answer

A)  is the minimum points on all the short-run ATC curves. 
B)  shows the lowest possible marginal cost of producing the different levels of output. 
C)  shows the lowest attainable average total cost for all levels of output when all inputs can be varied. 
D)  generally lies above the short-run ATC curves. 
A)  is the minimum points on all the short-run ATC curves. 
B)  shows the lowest possible marginal cost of producing the different levels of output. 
C)  shows the lowest attainable average total cost for all levels of output when all inputs can be varied. 
D)  generally lies above the short-run ATC curves.

Question 10

Tony's Pizza's production function is shown in the table above. Tony currently operates Plant 1. He hires workers at a wage rate of $50 a day and his total fixed cost is $100.
a) Calculate Tony's Pizza's total variable cost and total cost for each output level.
b) Calculate Tony's marginal costs.
c) Calculate the average fixed costs, average variable costs, and average total costs.
d) Draw Tony's marginal, average variable, and average total cost curves in one figure. What is the relationship between marginal cost and average cost?

Accepted Answer

@#IMG-DLM& a) The total variable cost and total co

Question 11

Marginal cost is

Accepted Answer

A)  all the costs of the fixed inputs. 
B)  all the costs of production of goods. 
C)  all the costs that vary with output. 
D)  the change in the total cost resulting from a one-unit change in output. 
A)  all the costs of the fixed inputs. 
B)  all the costs of production of goods. 
C)  all the costs that vary with output. 
D)  the change in the total cost resulting from a one-unit change in output.

Question 12

When the marginal product of labor is a maximum, the average product of labor is

Accepted Answer

A)  a maximum. 
B)  increasing. 
C)  decreasing. 
D)  equal to marginal product. 
A)  a maximum. 
B)  increasing. 
C)  decreasing. 
D)  equal to marginal product.

Question 13

Average total costs are total costs divided by

Accepted Answer

A)  total output. 
B)  total fixed costs. 
C)  total variable costs. 
D)  the total number of workers employed. 
A)  total output. 
B)  total fixed costs. 
C)  total variable costs. 
D)  the total number of workers employed.

Question 14

The short run is a time period during which

Accepted Answer

A)  a firm can earn a normal profit. 
B)  all factors of production are variable. 
C)  at least one factor of production is fixed. 
D)  all factors of production are fixed. 
A)  a firm can earn a normal profit. 
B)  all factors of production are variable. 
C)  at least one factor of production is fixed. 
D)  all factors of production are fixed.

Question 15

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

Accepted Answer

A)  is less than $40. 
B)  is between $40 and $60. 
C)  is more than $60. 
D)  cannot be determined without more information. 
A)  is less than $40. 
B)  is between $40 and $60. 
C)  is more than $60. 
D)  cannot be determined without more information.

Question 16

-The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the average product of labor exceed the marginal product of labor?

Accepted Answer

A)  at 1000 bagels daily 
B)  at 2000 bagels daily 
C)  at 3000 bagels daily 
D)  all of the above 
A)  at 1000 bagels daily 
B)  at 2000 bagels daily 
C)  at 3000 bagels daily 
D)  all of the above

Question 17

If all inputs are increased by 5 percent and output increases by 8 percent, then the

Accepted Answer

A)  firm experiences constant returns to scale. 
B)  long-run average cost curve slopes downward. 
C)  long-run average cost curve shifts downward. 
D)  firm experiences diseconomies of scale. 
A)  firm experiences constant returns to scale. 
B)  long-run average cost curve slopes downward. 
C)  long-run average cost curve shifts downward. 
D)  firm experiences diseconomies of scale.

Question 18

A firm's minimum efficient scale is the largest quantity of output at which long-run average cost reaches its highest level.

Accepted Answer

A) True 
 B)False

Question 19

A firm's long-run average cost curve is derived from a series of short-run average total cost curves.

Accepted Answer

A) True 
 B)False

Question 20

Tony's Pizza's production function is shown in the table above. Tony hires workers at a wage rate of $50 a day and his total fixed cost is $100 for Plant 1 and $150 for Plant 2.
a) Calculate Tony's Pizza's average total costs for Plant 1. Draw the short-run average total cost curve.
b) Calculate average total costs for Plant 2. Draw the short-run average total cost curve on the same figure that you used for part a.
c) In the figure, illustrate Tony's long-run average cost curve.
d) If Tony wants to produce 34 pizzas per day, what plant size should he choose? Over what output range is it efficient to operate Plant 1?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& a) The table above shows Tony's short-

Total fixed cost is the sum of all

-The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is

-The above table shows some cost data for Tracey's Tents. What is the average total cost when output is 3?

-Using the data in the above table, when the firm increases its output from 4 to 9 units, the marginal cost of a unit is

What factors of production can a firm change in the short run? In the long run?

The long run is a time frame in which

-Based on the above figure, up to which level of output will Ike's Ice Cream Kitchen have increasing marginal returns?

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a variable cost in a hospital?

The LRAC curve

Marginal cost is

When the marginal product of labor is a maximum, the average product of labor is

Average total costs are total costs divided by

The short run is a time period during which

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

-The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the average product of labor exceed the marginal product of labor?

If all inputs are increased by 5 percent and output increases by 8 percent, then the

A firm's minimum efficient scale is the largest quantity of output at which long-run average cost reaches its highest level.

A firm's long-run average cost curve is derived from a series of short-run average total cost curves.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 11: Output and Costs

Total fixed cost is the sum of all

-The above (incomplete) table provides information about the relationships between output and various cost measures. The total cost (TC) of producing 9 units of output is

-The above table shows some cost data for Tracey's Tents. What is the average total cost when output is 3?

-Using the data in the above table, when the firm increases its output from 4 to 9 units, the marginal cost of a unit is

What factors of production can a firm change in the short run? In the long run?

The long run is a time frame in which

-Based on the above figure, up to which level of output will Ike's Ice Cream Kitchen have increasing marginal returns?

Health care costs rose more than 10 percent in 2011, according to a survey of insurers by Aon Consulting Worldwide. Which of the following would be a variable cost in a hospital?

The LRAC curve

Marginal cost is

When the marginal product of labor is a maximum, the average product of labor is

Average total costs are total costs divided by

The short run is a time period during which

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost

-The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the average product of labor exceed the marginal product of labor?

If all inputs are increased by 5 percent and output increases by 8 percent, then the

A firm's minimum efficient scale is the largest quantity of output at which long-run average cost reaches its highest level.

A firm's long-run average cost curve is derived from a series of short-run average total cost curves.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters