Question 1

A firm's marginal cost is $30, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

Accepted Answer

A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080.

Question 2

Jefferson's Cleaners
 
-Based on the above table, what is the marginal product of the 6th worker hired at Jefferson's Cleaners?

Accepted Answer

A)  10 suits per day 
B)  11 suits per day 
C)  14 suits per day 
D)  84 suits per day

Question 3

Sticky Cakes is a bakery. A decrease in the wage rate that Sticky Cakes pays its workers

Accepted Answer

A)  does not shift its MC curve or its ATC curve. 
B)  shifts its MC curve downward but not its ATC curve. 
C)  shifts both its MC curve and its ATC curve downward. 
D)  does not shift its MC curve but shifts its ATC curve downward.

Question 4

As output increases, total cost ________, total fixed cost ________, and total variable cost ________.

Accepted Answer

A)  increases; increases; increases 
B)  increases; increases; does not change 
C)  increases; does not change; increases 
D)  does not change; increases; increases

Question 5

A firm's total cost (TC) equals the sum of its fixed cost plus its

Accepted Answer

A)  marginal cost. 
B)  variable cost. 
C)  variable cost plus its marginal cost. 
D)  sunk cost plus its variable cost plus its marginal cost.

Question 6

A firm's marginal cost is $82, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is

Accepted Answer

A)  less than $40,000. 
B)  between $40,000 and $40,050. 
C)  between $40,050 and $40,080. 
D)  greater than $40,080.

Question 7

What does the average product of labor equal?

Accepted Answer

The answer of What does the average product of labor...

Question 8

Cost schedule
 
-In the above table, the average variable cost of producing 14 units of output is

Accepted Answer

A)  $0.175. 
B)  $5.71. 
C)  $7.86. 
D)  $10.00.

Question 9

If Dell Computer Company could produce more computers at lower long-run average cost by increasing the quantity of all the inputs it uses, Dell definitely would experience

Accepted Answer

A)  decreasing marginal returns. 
B)  diseconomies of scale. 
C)  increasing marginal returns. 
D)  economies of scale.

Question 10

Jefferson's Cleaners
 
-Using the data in the above table, which worker at Jefferson's Cleaners has the highest marginal product?

Accepted Answer

A)  the second 
B)  the third 
C)  the fourth 
D)  the fifth

Question 11

Cost schedule
 
-In the above table, the total variable cost of producing 16 units of output is

Accepted Answer

A)  $20. 
B)  $60. 
C)  $100. 
D)  $120.

Question 12

-Cindy's Sweaters' production function is shown in the above table. What is the marginal product of labor when the 4th worker is hired?

Accepted Answer

A)  4 sweaters per day 
B)  2 sweaters per day 
C)  20 sweaters per day 
D)  5 sweaters per day

Question 13

The average total cost curve eventually slopes upwards because of the

Accepted Answer

A)  law of diminishing returns. 
B)  reductions in average fixed costs. 
C)  increase in capital costs. 
D)  decrease in labor costs.

Question 14

-The above table shows the short-run total product schedule for the campus book store. With which employee do diminishing marginal returns set in?

Accepted Answer

A)  the 9th employee 
B)  the 6th employee 
C)  the 5th employee 
D)  the 2nd employee

Question 15

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is

Accepted Answer

A)  $50. 
B)  $200. 
C)  $250. 
D)  More information is needed to answer the question.

Question 16

"Marginal cost eventually increases because of the law of diminishing returns." True or false? Explain.

Accepted Answer

The answer of "Marginal cost eventually increases because of the...

Question 17

A firm's long-run average cost curve

Accepted Answer

A)  shows the lowest attainable average total cost of producing any level of output when the plant and labor are variable. 
B)  is U-shaped. 
C)  tells the firm which plant size to use and which quantity of labor to use to minimize the cost of producing any level of output. 
D)  all of the above

Question 18

Fernando charges the restaurant Flaming Fernando's $1,000 annually for use of his name. If Fernando increases the fee for use of his name

Accepted Answer

A)  the restaurant's average fixed cost, average variable cost, average total cost, and marginal cost curves all shift upward. 
B)  the restaurant's average fixed cost, average total cost, and marginal cost curves shift upward. 
C)  the restaurant's average variable cost, average total cost, and marginal cost curves shift upward. 
D)  the restaurant's average fixed cost and average total cost curves shift upward.

Question 19

When plotted against the total output, what does the total fixed cost curve look like?

Accepted Answer

The answer of When plotted against the total output, what...

Question 20

-In the above figure, the minimum efficient scale of output is

Accepted Answer

A)  5,000 pounds of coffee. 
B)  10,000 pounds of coffee. 
C)  13,000 pounds of coffee. 
D)  15,000 pounds of coffee.

Exam 11: Output and Costs