Question 1

Average variable cost is equal to the:

Accepted Answer

A)  change in total variable cost divided by the change in output levels. 
B)  total variable cost divided by the level of output. 
C)  marginal cost divided by the average product of the variable input. 
D)  marginal cost divided by the marginal product of the variable input. 
E)  total variable cost divided by the change in output levels. 
A)  change in total variable cost divided by the change in output levels. 
B)  total variable cost divided by the level of output. 
C)  marginal cost divided by the average product of the variable input. 
D)  marginal cost divided by the marginal product of the variable input. 
E)  total variable cost divided by the change in output levels.

Question 2

If price is below average total cost but above average variable cost,the break-even level of output:

Accepted Answer

A)  is greater than the profit-maximizing level of output. 
B)  is zero. 
C)  can't be calculated since losses will be earned at each level of output including the profit-maximizing level. 
D)  approaches infinity. 
E)  equals the profit-maximizing level of output. 
A)  is greater than the profit-maximizing level of output. 
B)  is zero. 
C)  can't be calculated since losses will be earned at each level of output including the profit-maximizing level. 
D)  approaches infinity. 
E)  equals the profit-maximizing level of output.

Question 3

Economies of scale are said to exist whenever:

Accepted Answer

A)  the learning curve is upward-sloping. 
B)  increases in output bring about higher output. 
C)  increases in output bring about higher input prices. 
D)  the elasticity of total cost with respect to output is greater than 1. 
E)  the long-run average cost curve is downward-sloping. 
A)  the learning curve is upward-sloping. 
B)  increases in output bring about higher output. 
C)  increases in output bring about higher input prices. 
D)  the elasticity of total cost with respect to output is greater than 1. 
E)  the long-run average cost curve is downward-sloping.

Question 4

The long-run average cost curve slopes downward if there are:

Accepted Answer

A)  some factors without diminishing marginal returns. 
B)  economies of scope in the management of multiplant operations. 
C)  economies of scale. 
D)  diseconomies of scope in the management of multiplant operations. 
E)  no factors without diminishing marginal returns. 
A)  some factors without diminishing marginal returns. 
B)  economies of scope in the management of multiplant operations. 
C)  economies of scale. 
D)  diseconomies of scope in the management of multiplant operations. 
E)  no factors without diminishing marginal returns.

Question 5

Down and Out Co.operates an executive placement service for corporate executives displaced by corporate restructuring.Its monthly total cost of cases is given by TC = 25Q1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:

Accepted Answer

A)  $100. 
B)  $105. 
C)  $200. 
D)  $205. 
E)  $225. 
A)  $100. 
B)  $105. 
C)  $200. 
D)  $205. 
E)  $225.

Question 6

The long run is a time period during which:

Accepted Answer

A)  all inputs are semivariable. 
B)  all inputs except capital and entrepreneurship are variable. 
C)  average variable costs are strictly less than average total cost. 
D)  all inputs are quasivariable. 
E)  all inputs are variable. 
A)  all inputs are semivariable. 
B)  all inputs except capital and entrepreneurship are variable. 
C)  average variable costs are strictly less than average total cost. 
D)  all inputs are quasivariable. 
E)  all inputs are variable.

Question 7

If total cost is given by TC = a + bQ - cQ2 + dQ3,then average variable cost is minimized at ________units of output.

Accepted Answer

A)  Q* = a/2d 
B)  Q* = b/2d 
C)  Q* = c/3d 
D)  Q* = c/2d 
E)  Q* = d/2c 
A)  Q* = a/2d 
B)  Q* = b/2d 
C)  Q* = c/3d 
D)  Q* = c/2d 
E)  Q* = d/2c

Question 8

Where long-run average cost equals short-run average cost:

Accepted Answer

A)  short-run average cost is minimized. 
B)  long-run average variable cost equals short-run average variable cost. 
C)  long-run average cost equals long-run marginal cost. 
D)  long-run average cost is minimized. 
E)  long-run marginal cost equals short-run marginal cost. 
A)  short-run average cost is minimized. 
B)  long-run average variable cost equals short-run average variable cost. 
C)  long-run average cost equals long-run marginal cost. 
D)  long-run average cost is minimized. 
E)  long-run marginal cost equals short-run marginal cost.

Question 9

Hedge Fun is a landscaping firm that specializes in topiary.It contracts with the owners of 125 local homes and provides its service at an annual fee of $1,300.Its average variable cost is $800,and its annual fixed cost is $28,000.What is the degree of operating leverage?

Accepted Answer

A)  2.7. 
B)  2.1. 
C)  1.8. 
D)  1.3. 
E)  None of the above. 
A)  2.7. 
B)  2.1. 
C)  1.8. 
D)  1.3. 
E)  None of the above.

Question 10

Framjam Sports Equipment produces basketballs at its factory in Kentucky and soccer balls at its factory in Illinois.At its current annual rate of production,the cost of producing basketballs is $80,000 and the cost of producing soccer balls is $45,000.If the firm consolidates production at a single location,the annual cost of production will be $100,000.What is the degree of economies of scope in this case?

Accepted Answer

A)  5. 
B)  4. 
C)  0.75. 
D)  0.25. 
E)  None of the above. 
A)  5. 
B)  4. 
C)  0.75. 
D)  0.25. 
E)  None of the above.

Question 11

If Hilltop Turf Farm's total cost of producing acres of sod is TC = 0.2Q2 + 120Q + 5,000,the marginal cost of producing the 50th acre of sod is:

Accepted Answer

A)  $110. 
B)  $120. 
C)  $130. 
D)  $140. 
E)  $150. 
A)  $110. 
B)  $120. 
C)  $130. 
D)  $140. 
E)  $150.

Question 12

When average variable cost is at its minimum:

Accepted Answer

A)  average total cost is increasing with increases in output. 
B)  average variable cost plus average fixed cost is increasing with increases in output. 
C)  average total cost is equal to average variable cost. 
D)  marginal cost is less than average total cost. 
E)  marginal cost is greater than average total cost. 
A)  average total cost is increasing with increases in output. 
B)  average variable cost plus average fixed cost is increasing with increases in output. 
C)  average total cost is equal to average variable cost. 
D)  marginal cost is less than average total cost. 
E)  marginal cost is greater than average total cost.

Question 13

Leisure Enterprise's total cost of producing speedboats is given by TC = 10Q3 - 4Q2 + 25Q + 500.On the basis of this information,the marginal cost of producing the 25th speedboat is:

Accepted Answer

A)  $1,700. 
B)  $6,050. 
C)  $18,575. 
D)  $18,775. 
E)  $19,075. 
A)  $1,700. 
B)  $6,050. 
C)  $18,575. 
D)  $18,775. 
E)  $19,075.

Question 14

Marginal cost is equal to the:

Accepted Answer

A)  change in total variable cost divided by the change in output. 
B)  total variable cost divided by the level of output. 
C)  price of the input divided by the average product of the variable input. 
D)  price of the input divided by the total product of the variable input. 
E)  total variable cost divided by the change in output levels. 
A)  change in total variable cost divided by the change in output. 
B)  total variable cost divided by the level of output. 
C)  price of the input divided by the average product of the variable input. 
D)  price of the input divided by the total product of the variable input. 
E)  total variable cost divided by the change in output levels.

Average variable cost is equal to the:

If price is below average total cost but above average variable cost,the break-even level of output:

Economies of scale are said to exist whenever:

The long-run average cost curve slopes downward if there are:

Down and Out Co.operates an executive placement service for corporate executives displaced by corporate restructuring.Its monthly total cost of cases is given by TC = 25Q^1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:

The long run is a time period during which:

If total cost is given by TC = a + bQ - cQ² + dQ³,then average variable cost is minimized at ________units of output.

Where long-run average cost equals short-run average cost:

Hedge Fun is a landscaping firm that specializes in topiary.It contracts with the owners of 125 local homes and provides its service at an annual fee of $1,300.Its average variable cost is $800,and its annual fixed cost is $28,000.What is the degree of operating leverage?

If Hilltop Turf Farm's total cost of producing acres of sod is TC = 0.2Q² + 120Q + 5,000,the marginal cost of producing the 50th acre of sod is:

When average variable cost is at its minimum:

Leisure Enterprise's total cost of producing speedboats is given by TC = 10Q³ - 4Q² + 25Q + 500.On the basis of this information,the marginal cost of producing the 25th speedboat is:

Marginal cost is equal to the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Exam 6: The Analysis of Costs

Average variable cost is equal to the:

If price is below average total cost but above average variable cost,the break-even level of output:

Economies of scale are said to exist whenever:

The long-run average cost curve slopes downward if there are:

Down and Out Co.operates an executive placement service for corporate executives displaced by corporate restructuring.Its monthly total cost of cases is given by TC = 25Q1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:

The long run is a time period during which:

If total cost is given by TC = a + bQ - cQ2 + dQ3,then average variable cost is minimized at ________units of output.

Where long-run average cost equals short-run average cost:

Hedge Fun is a landscaping firm that specializes in topiary.It contracts with the owners of 125 local homes and provides its service at an annual fee of $1,300.Its average variable cost is $800,and its annual fixed cost is $28,000.What is the degree of operating leverage?

If Hilltop Turf Farm's total cost of producing acres of sod is TC = 0.2Q2 + 120Q + 5,000,the marginal cost of producing the 50th acre of sod is:

When average variable cost is at its minimum:

Leisure Enterprise's total cost of producing speedboats is given by TC = 10Q3 - 4Q2 + 25Q + 500.On the basis of this information,the marginal cost of producing the 25th speedboat is:

Marginal cost is equal to the:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Auctions

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Down and Out Co.operates an executive placement service for corporate executives displaced by corporate restructuring.Its monthly total cost of cases is given by TC = 25Q^1/2 + 2,500; the average cost at a caseload of 25 attempted placements per month is:

If total cost is given by TC = a + bQ - cQ² + dQ³,then average variable cost is minimized at ________units of output.

If Hilltop Turf Farm's total cost of producing acres of sod is TC = 0.2Q² + 120Q + 5,000,the marginal cost of producing the 50th acre of sod is:

Leisure Enterprise's total cost of producing speedboats is given by TC = 10Q³ - 4Q² + 25Q + 500.On the basis of this information,the marginal cost of producing the 25th speedboat is: