Question 1

When marginal cost is BELOW average variable cost,average variable cost must be:

Accepted Answer

A)  above average total cost. 
B)  below average fixed cost. 
C)  falling. 
D)  rising. 
A)  above average total cost. 
B)  below average fixed cost. 
C)  falling. 
D)  rising.

Question 2

Use the following to answer questions : $\text {Table: Bonnie's Production Function for Good Z}$
$\text {The table describes Bonnie's production function for }$
$\text {Good Z. Assume labour is the only variable input that}$
$\text { Bonnie uses to produce Good Z.}$

$ \begin{array}{lr}
\hline \text {Quantity of}&\text {Quantity of}\
\text {Labour Hired}&\text {Good Z Produced}\
\text {(workers)}&\text {(per time period)}\
\hline 0 & 0 \ 1 & 75 \ 2 & 150 \ 3 & 250 \ 4 & 325 \ 5 & 375\end{array} $

-(Table: Bonnie's Production Function for Good Z)Use Table: Bonnie's Production Function for Good Z.The costs that vary with Bonnie's level of production are her:

Accepted Answer

A)  fixed costs. 
B)  variable costs. 
C)  rent and insurance. 
D)  costs that remain the same regardless of what she produces. 
A)  fixed costs. 
B)  variable costs. 
C)  rent and insurance. 
D)  costs that remain the same regardless of what she produces.

Question 3

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Tonya's Production Function for Apples }\
\begin{array} { l c c } 
\hline \begin{array} { l } 
\text { Quantity } \
\text { of Land } \
\text { (hectares) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { of Labour }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Product } \
\text { (apples picked) }
\end{array} \
\hline 10 & 0 & 0 \
10 & 1 & 8 \
10 & 2 & 15 \
10 & 3 & 21 \
10 & 4 & 26
\end{array}
\end{array}$$
-(Table: Tonya's Production Function for Apples)Use Table: Tonya's Production Function for Apples.As she hires more labour,Tonya's production function shows that the number of apples picked increases at a decreasing rate because of:

Accepted Answer

A)  diminishing returns. 
B)  increasing returns. 
C)  constant returns. 
D)  workers becoming lazier. 
A)  diminishing returns. 
B)  increasing returns. 
C)  constant returns. 
D)  workers becoming lazier.

Question 4

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers and bakes 200 cakes per day,what is her average fixed cost?

Accepted Answer

A)  $300 000 
B)  $1 508 
C)  $187.50 
D)  $7.50 
A)  $300 000 
B)  $1 508 
C)  $187.50 
D)  $7.50

Question 5

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Function for Soybeans }\
\begin{array} { l c } 
\begin{array} { l } 
\text { Quantity } \
\text { of Labour } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Soybeans (bushels) }
\end{array} \
\hline 0 & 0 \
1 & 25 \
2 & 45 \
3 & 60 \
4 & 70 \
5 & 75
\end{array}
\end{array}$$
-(Table: Production Function for Soybeans)Use Table: Production Function for Soybeans.Assume that the fixed input,capital,is 10 hectares of land and a tractor,which have a combined cost of $150 per day.The cost of labour is $100 per worker per day.The total cost of producing 75 kilograms of soybeans is:

Accepted Answer

A)  $650. 
B)  $1 150. 
C)  $1 225. 
D)  $7 650. 
A)  $650. 
B)  $1 150. 
C)  $1 225. 
D)  $7 650.

Question 6

In general,if marginal cost is EQUAL to average total cost:

Accepted Answer

A)  average total cost is increasing. 
B)  average total cost is at its maximum. 
C)  average total cost is at its minimum. 
D)  marginal cost is decreasing. 
A)  average total cost is increasing. 
B)  average total cost is at its maximum. 
C)  average total cost is at its minimum. 
D)  marginal cost is decreasing.

Question 7

Use the following to answer questions :
Figure and Table: Variable,Fixed,and Total Costs   $$\begin{array} { l c c c c c } 
\begin{array} { l } 
\text { Points on } \
\text { Graph }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { of Labour } \
\text { (workers), } \boldsymbol { L }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { of Wheat } \
\text { (bushels), } \boldsymbol { Q }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost, } \
\boldsymbol { V C }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Cost, } \
\boldsymbol { F C }
\end{array} & \begin{array} { c } 
\text { Total Cost, } \
\boldsymbol { T C } = \boldsymbol { F C } + \boldsymbol { V } \boldsymbol { C }
\end{array} \
\hline A & 0 & 0 & \$ 0 & \$ 400 & \$ 400 \
B & 1 & 19 & 200 & 400 & 600 \
C & 2 & 36 & 400 & 400 & 800 \
D & 3 & 51 & 600 & 400 & 1000 \
E & 4 & 64 & 800 & 400 & 1200 \
F & 5 & 75 & 1000 & 400 & 1400 \
G & 6 & 84 & 1200 & 400 & 1600 \
H & 7 & 91 & 1400 & 400 & 1800 \
I & 8 & 96 & 1600 & 400 & 2000
\end{array}$$
-(Figure and Table: Variable,Fixed,and Total Costs)Use Figure and Table: Variable,Fixed,and Total Costs.The marginal cost of increasing production from 84 to 91 kilograms of wheat is:

Accepted Answer

A)  $13.00. 
B)  $19.78. 
C)  $22.22. 
D)  $28.57. 
A)  $13.00. 
B)  $19.78. 
C)  $22.22. 
D)  $28.57.

Question 8

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { of Output }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
( \boldsymbol { V C } )
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & 0 & 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & 190 & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Cost Data)Use Table: Cost Data.The average variable cost of producing two purses is:

Accepted Answer

A)  $190. 
B)  $70. 
C)  $50. 
D)  $35. 
A)  $190. 
B)  $70. 
C)  $50. 
D)  $35.

Question 9

When a firm adds physical capital,its variable cost will decrease in the long run.

Accepted Answer

A) True 
 B)False

Question 10

A firm's total fixed cost:

Accepted Answer

A)  stays constant in the short run. 
B)  falls as the firm produces more output in the short run. 
C)  falls as the firm produces more output in the long run. 
D)  increases as the firm produces more output. 
A)  stays constant in the short run. 
B)  falls as the firm produces more output in the short run. 
C)  falls as the firm produces more output in the long run. 
D)  increases as the firm produces more output.

Question 11

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { of Output }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
( \boldsymbol { V C } )
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & 0 & 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & 190 & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Cost Data)Use Table: Cost Data.The average total cost of producing five purses is:

Accepted Answer

A)  $10. 
B)  $38. 
C)  $48. 
D)  $240. 
A)  $10. 
B)  $38. 
C)  $48. 
D)  $240.

Question 12

When marginal cost is rising:

Accepted Answer

A)  average variable cost must be rising. 
B)  average total cost must be rising. 
C)  average variable cost and average total cost must be falling. 
D)  both average variable cost and average total cost may be rising or falling. 
A)  average variable cost must be rising. 
B)  average total cost must be rising. 
C)  average variable cost and average total cost must be falling. 
D)  both average variable cost and average total cost may be rising or falling.

Question 13

Suppose Cyd knows the average total cost of producing nine scones is $5,while the average total cost of producing 10 scones is $5.20.What is the marginal cost of the tenth scone?

Accepted Answer

A)  $7.00 
B)  $5.20 
C)  $0.20 
D)  $5.00 
A)  $7.00 
B)  $5.20 
C)  $0.20 
D)  $5.00

Question 14

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Function for Soybeans }\
\begin{array} { l c } 
\begin{array} { l } 
\text { Quantity } \
\text { of Labour } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Soybeans (bushels) }
\end{array} \
\hline 0 & 0 \
1 & 25 \
2 & 45 \
3 & 60 \
4 & 70 \
5 & 75
\end{array}
\end{array}$$
-(Table: Production Function for Soybeans)Use Table: Production Function for Soybeans.Assume that the fixed input,capital,is 10 hectares of land and a tractor,which have a combined cost of $150 per day.The cost of labour is $100 per worker per day.The total cost of producing 45 kilograms of soybeans is:

Accepted Answer

A)  $100. 
B)  $200. 
C)  $350. 
D)  $4 500. 
A)  $100. 
B)  $200. 
C)  $350. 
D)  $4 500.

Question 15

If Marie Marionettes is operating under the conditions of diminishing marginal product,the marginal costs will be:

Accepted Answer

A)  equal to average total cost. 
B)  decreasing. 
C)  increasing. 
D)  constant. 
A)  equal to average total cost. 
B)  decreasing. 
C)  increasing. 
D)  constant.

Question 16

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Total Cost Data }\
\begin{array} { c c c } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Variable } \
\text { Cost } \
( \text { VC) }
\end{array} & \begin{array} { c } 
\text { Total Cost } \
( \boldsymbol { T C } )
\end{array} \
\hline 0 & \$ 0 & \$ 50 \
1 & 50 & 100 \
2 & 70 & 120 \
3 & 100 & 150 \
4 & 140 & 190 \
5 & & 240 \
6 & 250 & 300 \
7 & 320 & 370 \
\hline
\end{array}
\end{array}$$
-(Table: Total Cost Data)Use Table: Total Cost Data.What is the total variable cost for this bicycle firm when the firm produces 5 bicycles?

Accepted Answer

A)  $50 
B)  $240 
C)  $60 
D)  $190 
A)  $50 
B)  $240 
C)  $60 
D)  $190

Question 17

Use the following to answer questions :  
-(Figure: Short-Run Costs)Use Figure: Short-Run Costs.C is the _____ cost curve.

Accepted Answer

A)  average total 
B)  total 
C)  marginal 
D)  average variable 
A)  average total 
B)  total 
C)  marginal 
D)  average variable

Question 18

When a caterer produces 30 catered meals,its marginal cost and average variable cost each equal $10.Therefore,assuming normally shaped cost curves,at 29 meals its marginal cost is _____ $10 and its average variable cost is _____ $10.

Accepted Answer

A)  greater than;less than 
B)  less than;greater than 
C)  greater than;greater than 
D)  equal to;equal to 
A)  greater than;less than 
B)  less than;greater than 
C)  greater than;greater than 
D)  equal to;equal to

Question 19

Use the following to answer questions :
Figure: The Average Total Cost Curve  
-(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing three pairs of boots is approximately:

Accepted Answer

A)  $24. 
B)  $72. 
C)  $75. 
D)  $216. 
A)  $24. 
B)  $72. 
C)  $75. 
D)  $216.

Question 20

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Cakes }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { mixers }
\end{array} & \begin{array} { c } 
\text { Fixed } \
\text { Costs }
\end{array} & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 1 & \$ 1,000 & \$ 10 \
2 & 1,500 & 7 \
3 & 2,500 & 4
\end{array}
\end{array}$$
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 1 mixer and bakes 200 cakes per day,what is her average fixed cost?

Accepted Answer

A)  $5 
B)  $10 
C)  $200 
D)  $1 000 
A)  $5 
B)  $10 
C)  $200 
D)  $1 000

When marginal cost is BELOW average variable cost,average variable cost must be:

In general,if marginal cost is EQUAL to average total cost:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average variable cost of producing two purses is:

When a firm adds physical capital,its variable cost will decrease in the long run.

A firm's total fixed cost:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average total cost of producing five purses is:

When marginal cost is rising:

Suppose Cyd knows the average total cost of producing nine scones is $5,while the average total cost of producing 10 scones is $5.20.What is the marginal cost of the tenth scone?

If Marie Marionettes is operating under the conditions of diminishing marginal product,the marginal costs will be:

Use the following to answer questions : -(Figure: Short-Run Costs)Use Figure: Short-Run Costs.C is the _____ cost curve.

When a caterer produces 30 catered meals,its marginal cost and average variable cost each equal $10.Therefore,assuming normally shaped cost curves,at 29 meals its marginal cost is _ $10 and its average variable cost is _ $10.

Use the following to answer questions : Figure: The Average Total Cost Curve -(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing three pairs of boots is approximately:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 11: Behind the Supply Curve- Inputs and Costs

When marginal cost is BELOW average variable cost,average variable cost must be:

In general,if marginal cost is EQUAL to average total cost:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average variable cost of producing two purses is:

When a firm adds physical capital,its variable cost will decrease in the long run.

A firm's total fixed cost:

Use the following to answer questions : Table: Cost Data Quantity of Output Variable Cost ( ) Total Cost ( ) 0 0 50 1 50 100 2 70 120 3 100 150 4 140 190 5 190 240 6 250 300 7 320 370 -(Table: Cost Data)Use Table: Cost Data.The average total cost of producing five purses is:

When marginal cost is rising:

Suppose Cyd knows the average total cost of producing nine scones is $5,while the average total cost of producing 10 scones is $5.20.What is the marginal cost of the tenth scone?

If Marie Marionettes is operating under the conditions of diminishing marginal product,the marginal costs will be:

Use the following to answer questions : -(Figure: Short-Run Costs)Use Figure: Short-Run Costs.C is the _____ cost curve.

When a caterer produces 30 catered meals,its marginal cost and average variable cost each equal $10.Therefore,assuming normally shaped cost curves,at 29 meals its marginal cost is _____ $10 and its average variable cost is _____ $10.

Use the following to answer questions : Figure: The Average Total Cost Curve -(Figure: The Average Total Cost Curve)Use Figure: The Average Total Cost Curve.The total cost of producing three pairs of boots is approximately:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

When a caterer produces 30 catered meals,its marginal cost and average variable cost each equal $10.Therefore,assuming normally shaped cost curves,at 29 meals its marginal cost is _ $10 and its average variable cost is _ $10.