Question 1

Marginal cost can be derived given total cost at all levels of production.

Accepted Answer

A) True 
 B)False

Question 2

When marginal cost is rising, average cost is always rising.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions :
Figure 7-2  
-In Figure 7-2 what is AVC at Q = 5?

Accepted Answer

A) 9 
B) 10 
C) 12 
D) 17.5 
E) None of the above. 
A) 9 
B) 10 
C) 12 
D) 17.5 
E) None of the above.

Question 4

AFC can never rise as output increases.

Accepted Answer

A) True 
 B)False

Question 5

The item "taxes payable" is a long-term liability.

Accepted Answer

A) True 
 B)False

Question 6

Net worth as shown on the company's balance sheet represents capital contributed by the shareholders plus accumulated undistributed profits.

Accepted Answer

A) True 
 B)False

Question 7

Cash is the only asset on the balance sheet whose money value is exact and not merely an estimate.

Accepted Answer

A) True 
 B)False

Question 8

If q = 1, 2, 3 units of output, and total costs are, respectively, $2, 3, 4, then in this range of output marginal cost:

Accepted Answer

A) is constant. 
B) is rising. 
C) is falling. 
D) is $2.00, $1.50, $1.33. 
E) can't be determined by the data given. 
A) is constant. 
B) is rising. 
C) is falling. 
D) is $2.00, $1.50, $1.33. 
E) can't be determined by the data given.

Question 9

Diminishing returns to factors of production cause:

Accepted Answer

A) diminishing opportunity costs. 
B) the ratio of fixed costs to total costs to increase. 
C) average fixed costs to decrease. 
D) marginal costs to rise. 
E) none of the above. 
A) diminishing opportunity costs. 
B) the ratio of fixed costs to total costs to increase. 
C) average fixed costs to decrease. 
D) marginal costs to rise. 
E) none of the above.

Question 10

Average costs and marginal costs always rise and decline at the same time.

Accepted Answer

A) True 
 B)False

Question 11

If I know the variable cost schedule, I can derive the marginal cost schedule with no further information.

Accepted Answer

A) True 
 B)False

Question 12

Use the following to answer questions :
Table 7-1  
-In Table 7-1, where is the minimum of the AVC curve?

Accepted Answer

A) Q = 3 
B) Q = 4 
C) Q = 5 
D) Q = 6 
E) None of the above. 
A) Q = 3 
B) Q = 4 
C) Q = 5 
D) Q = 6 
E) None of the above.

Question 13

Fixed assets are shown on the balance sheet at a figure equivalent to their replacement cost.

Accepted Answer

A) True 
 B)False

Question 14

A driver wishes to buy gasoline and have his car washed.He finds that the wash costs $2.50 when he buys 19 gallons at $1.10 each, but that if he buys 20 gallons, the car wash is free.Thus the marginal cost of the twentieth gallon to him is:

Accepted Answer

A) $1.40. 
B) $1.10. 
C) -$1.40. 
D) -$1.10. 
E) $2.50. 
A) $1.40. 
B) $1.10. 
C) -$1.40. 
D) -$1.10. 
E) $2.50.

Question 15

The incorporation of capital and labor saving technological advance will cause the average cost curve of a firm to:

Accepted Answer

A) shift to the left. 
B) shift upward. 
C) shift downward. 
D) turn more sharply in the neighborhood of its minimum. 
E) none of the above. 
A) shift to the left. 
B) shift upward. 
C) shift downward. 
D) turn more sharply in the neighborhood of its minimum. 
E) none of the above.

Question 16

Marginal cost is the:

Accepted Answer

A) total cost divided by the number of units produced. 
B) fixed cost divided by the number of units produced 
C) extra fixed cost of producing an additional unit of output. 
D) extra average cost of producing an additional unit of output. 
E) extra cost of producing an additional unit of output. 
A) total cost divided by the number of units produced. 
B) fixed cost divided by the number of units produced 
C) extra fixed cost of producing an additional unit of output. 
D) extra average cost of producing an additional unit of output. 
E) extra cost of producing an additional unit of output.

Question 17

Which of the following is true at the quantity of output where average cost has reached its minimum level?

Accepted Answer

A) AVC = FC. 
B) MC = AVC. 
C) MC = AC. 
D) AC = AFC. 
E) Output price = AVC. 
A) AVC = FC. 
B) MC = AVC. 
C) MC = AC. 
D) AC = AFC. 
E) Output price = AVC.

Question 18

Fixed costs are irrelevant to a firm that is trying to maximize profits.

Accepted Answer

A) True 
 B)False

Question 19

A fixed cost is:

Accepted Answer

A) the cost of any input whose per-unit price has been fixed, whether by long-term contract or by some similar means. 
B) a cost whose increases are exactly proportional to increases in output. 
C) any component included in average cost which enters in AC as the same fixed per-unit amount, no matter what the level of plant output may be. 
D) a cost which the firm would incur even if its output were zero. 
E) none of the above. 
A) the cost of any input whose per-unit price has been fixed, whether by long-term contract or by some similar means. 
B) a cost whose increases are exactly proportional to increases in output. 
C) any component included in average cost which enters in AC as the same fixed per-unit amount, no matter what the level of plant output may be. 
D) a cost which the firm would incur even if its output were zero. 
E) none of the above.

Question 20

Suppose that a sneaker company produces output using capital and labor.Capital costs $50 per unit and labor costs $5 per unit.If the firm is minimizing the costs of production when the marginal product of capital is 100 units, the marginal product of labor is:

Accepted Answer

A) 5 units. 
B) 10 units. 
C) 50 units. 
D) 100 units. 
E) none of the above. 
A) 5 units. 
B) 10 units. 
C) 50 units. 
D) 100 units. 
E) none of the above.

Marginal cost can be derived given total cost at all levels of production.

When marginal cost is rising, average cost is always rising.

Use the following to answer questions : Figure 7-2 -In Figure 7-2 what is AVC at Q = 5?

AFC can never rise as output increases.

The item "taxes payable" is a long-term liability.

Net worth as shown on the company's balance sheet represents capital contributed by the shareholders plus accumulated undistributed profits.

Cash is the only asset on the balance sheet whose money value is exact and not merely an estimate.

If q = 1, 2, 3 units of output, and total costs are, respectively, $2, 3, 4, then in this range of output marginal cost:

Diminishing returns to factors of production cause:

Average costs and marginal costs always rise and decline at the same time.

If I know the variable cost schedule, I can derive the marginal cost schedule with no further information.

Use the following to answer questions : Table 7-1 -In Table 7-1, where is the minimum of the AVC curve?

Fixed assets are shown on the balance sheet at a figure equivalent to their replacement cost.

A driver wishes to buy gasoline and have his car washed.He finds that the wash costs $2.50 when he buys 19 gallons at $1.10 each, but that if he buys 20 gallons, the car wash is free.Thus the marginal cost of the twentieth gallon to him is:

The incorporation of capital and labor saving technological advance will cause the average cost curve of a firm to:

Marginal cost is the:

Which of the following is true at the quantity of output where average cost has reached its minimum level?

Fixed costs are irrelevant to a firm that is trying to maximize profits.

A fixed cost is:

Suppose that a sneaker company produces output using capital and labor.Capital costs $50 per unit and labor costs $5 per unit.If the firm is minimizing the costs of production when the marginal product of capital is 100 units, the marginal product of labor is:

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

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Exam 7: Analysis of Costs

Marginal cost can be derived given total cost at all levels of production.

When marginal cost is rising, average cost is always rising.

Use the following to answer questions : Figure 7-2 -In Figure 7-2 what is AVC at Q = 5?

AFC can never rise as output increases.

The item "taxes payable" is a long-term liability.

Net worth as shown on the company's balance sheet represents capital contributed by the shareholders plus accumulated undistributed profits.

Cash is the only asset on the balance sheet whose money value is exact and not merely an estimate.

If q = 1, 2, 3 units of output, and total costs are, respectively, $2, 3, 4, then in this range of output marginal cost:

Diminishing returns to factors of production cause:

Average costs and marginal costs always rise and decline at the same time.

If I know the variable cost schedule, I can derive the marginal cost schedule with no further information.

Use the following to answer questions : Table 7-1 -In Table 7-1, where is the minimum of the AVC curve?

Fixed assets are shown on the balance sheet at a figure equivalent to their replacement cost.

A driver wishes to buy gasoline and have his car washed.He finds that the wash costs $2.50 when he buys 19 gallons at $1.10 each, but that if he buys 20 gallons, the car wash is free.Thus the marginal cost of the twentieth gallon to him is:

The incorporation of capital and labor saving technological advance will cause the average cost curve of a firm to:

Marginal cost is the:

Which of the following is true at the quantity of output where average cost has reached its minimum level?

Fixed costs are irrelevant to a firm that is trying to maximize profits.

A fixed cost is:

Suppose that a sneaker company produces output using capital and labor.Capital costs $50 per unit and labor costs $5 per unit.If the firm is minimizing the costs of production when the marginal product of capital is 100 units, the marginal product of labor is:

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters