Deck 8: Short-Run Costs and Output Decisions

Question 1

Refer to the information provided in Figure 8.1 below to answer the question(s) that follow. Figure 8.1
Refer to Figure 8.1 above. If Cyndyʹs Floral Arrangements produces 100 silk flower arrangements, the average fixed costs are

A) $0.10.
B) $10.
C) $1,000.
D) There is not enough information in the graph to answer this question.

Answer 1

$10.

Question 2

Which type of cost does depend on a firm's output?

A) variable cost
B) total cost
C) marginal cost
D) all of the above

Answer 2

all of the above

Question 3

Total variable cost ________ as output increases, and total fixed cost ________ as output increases.

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

Answer 3

increases; does not change

Question 4

Average fixed costs

A) are the costs associated with producing an additional unit of output.
B) provide a per unit measure of costs.
C) fall as output rises.
D) reach their minimum at the output level where the average fixed cost curve is intersected by the marginal cost curve.

Question 5

Total cost is calculated as

A) the sum of total fixed cost and total variable cost.
B) the product of average total cost and price.
C) the sum of all the firm's explicit costs.
D) the sum of average fixed cost and average variable cost.

Question 6

Firms have ________ over their ________ costs in the short run.

A) control; fixed
B) no control; fixed
C) control; overhead
D) no control; variable

Question 7

Amy spends $5,000 on remodeling a storefront that she then opens as a take-out deli. Business has not been very successful, and she needs an additional $1,000 to keep the deli open. Which of the following is true?

A) The $5,000 Amy spent on remodeling represents a part of the total variable cost of her business.
B) The $5,000 Amy spent is a fixed cost of her business.
C) The $1,000 represents her marginal costs of production.
D) The $1,000 Amy needs to keep the deli open represents her total fixed costs.

Question 8

The Lawn Ranger, a landscaping company, has total costs of $4,000 and total variable costs of $1,000. The Lawn Ranger's total fixed costs are

A) $0.
B) $3,000.
C) $5,000.
D) indeterminate because the firm's output level is not known.

Question 9

The Lawn Ranger, a landscaping company, has total costs of $5,000 and total fixed costs of $3,000. The Lawn Ranger's total variable costs are

A) $2,000.
B) $3,000.
C) $5,000.
D) indeterminate because the firm's output level is not known.

Question 10

Dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful, and she needs an additional $3,000 to keep the shoe store open. Which of the following is true?

A) The $10,000 Dana spent on remodeling represents a part of the total variable cost of her business.
B) The $3,000 represents her marginal costs of production.
C) The $10,000 Dana spent on remodeling is a fixed cost of her business.
D) The $3,000 Dana needs to keep the deli open represents her total fixed costs.

Question 11

Refer to the information provided in Figure 8.2 below to answer the question(s) that follow. Figure 8.2
Refer to Figure 8.2 above. The total fixed costs for The Barber Shop are $3,000. If The Barber Shop produces 300 haircuts, the average fixed costs are

A) $0.20.
B) $5.
C) $10.
D) $100.

Question 12

In the short run

A) existing firms do not face limits imposed by a fixed input.
B) all firms have costs that they must bear regardless of their output.
C) new firms can enter an industry.
D) existing firms can exit an industry.

Question 13

The formula for total fixed cost is

A) TFC = TC + TVC.
B) TFC = TVC -TC.
C) TFC = TC/TVC.
D) TFC = TC -TVC.

Question 14

The Farley Farm, a dairy company, has total costs of $15,000 and total variable costs of $2,000. The Farley Farm's total fixed costs are

A) $0.
B) $13,000.
C) $17,000.
D) indeterminate because the firm's output level is not known.

Question 15

The formula for average fixed costs is

A) TFC - q.
B) TFC/q.
C) q/TFC.
D) Δq/ΔTFC.

Question 16

Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $5 and its total variable cost is $300. What is the total cost of producing 100 widgets?

A) $300
B) $305
C) $500
D) $800

Question 17

Refer to the information provided in Figure 8.1 below to answer the question(s) that follow. Figure 8.1
Refer to Figure 8.1 above. The total fixed costs for Cyndy's Floral Arrangements are $1,000. If Cyndy's Floral Arrangements produces 200 silk flower arrangements, the average fixed costs are

A) $0.20.
B) $5.
C) $20.
D) $200.

Question 18

Which type of cost does not depend on a firm's output?

A) fixed cost
B) variable cost
C) total cost
D) marginal cost

Question 19

Economists usually assume that ________ is a fixed input in the ________ run.

A) labor; short
B) capital; short
C) labor; long
D) capital; long

Question 20

Refer to the information provided in Figure 8.2 below to answer the question(s) that follow. Figure 8.2
Refer to Figure 8.2 above. If The Barber Shop produces more than 300 hair cuts, the average fixed costs are

A) < $10.
B) $10.
C) > $10.
D) There is not enough information in the graph to answer this question.

Question 21

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. Assume the price of labor (L) is $5 per unit, the price of capital (K) is $10 per unit, and that firms attempt to minimize costs. The marginal cost of producing the third unit of output is

A) $30.
B) $40.
C) $50.
D) indeterminate from this information.

Question 22

As output increases, average fixed costs

A) decrease.
B) initially decrease and then increase.
C) remain constant.
D) increase.

Question 23

Marginal cost

A) is the increase in total cost resulting from producing one more unit.
B) is the average cost of production divided by output.
C) equals the increase in AVC resulting from producing one more unit.
D) always equals average cost.

Question 24

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. In the short run, if the price of labor (L) is $5 per unit, the price of capital (K) is $10 per unit, and firms attempt to minimize costs, then this firm's total cost of producing one unit of output is

A) $100.
B) $120.
C) $220.
D) indeterminate from this information.

Question 25

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. Assume that the relevant time period is the short run. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, the average variable cost of producing two units of output is

A) $20.
B) $40.
C) $90.
D) $100.

Question 26

A point on a total variable cost curve shows the ________ variable cost a firm will bear to produce a certain output.

A) highest
B) lowest
C) change in
D) average

Question 27

Which of the following is most likely to be a variable cost for a firm?

A) the interest payments made on loans
B) the franchiser's fee that a restaurant must pay to the national restaurant chain
C) the monthly rent on office space that it leased for a year
D) the payroll taxes that are paid on employee wages

Question 28

Both Kate and John own saltwater taffy factories. Kate's factory has low fixed costs and high variable costs. John's factory has high fixed costs and low variable costs. Currently, each factory is producing 1,000 boxes of taffy at the same total cost. Complete the following statement with the correct answer. If each produces

A) less, their costs will be equal.
B) more, their costs will be equal.
C) more, the costs of Kate's factory will exceed those of John's factory.
D) less, the costs of Kate's factory will exceed those of John's factory.

Question 29

A firm will begin to experience diminishing returns at the point where

A) marginal cost increases.
B) marginal cost decreases.
C) marginal product increases.
D) Both B and C are correct.

Question 30

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, which of the following statements is true?

A) The firm will use production technique A to produce all three units of output.
B) The firm will use production technique B to produce all three units of output.
C) The firm will use production technique B to produce the first two units of output and production technique A to produce the third unit of output.
D) The firm will use production technique A to produce the first unit and production technique B to produce the second and third units of output.

Question 31

Diminishing marginal returns implies

A) decreasing average variable costs.
B) decreasing marginal costs.
C) increasing marginal costs.
D) decreasing average fixed costs.

Question 32

Which statement is not true regarding the total variable cost curve?

A) It increases as output increases.
B) It shows the variable cost of production given current factor prices.
C) It starts at the origin.
D) It is a horizontal line.

Question 33

Marginal cost is ________ average variable cost when ________.

A) equal to; average total cost is minimized
B) less than; total cost is maximized
C) greater than; average fixed cost is minimized
D) equal to; average variable cost is minimized.

Question 34

Total variable costs

A) initially increase as output increases, and then decrease.
B) always decrease with output.
C) always increase with output.
D) initially decrease and then increase with output.

Question 35

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, what production technique should this firm use to produce 2 units of output?

A) production technique A
B) production technique B
C) The firm is indifferent between production technique A and production technique B.
D) It is impossible to determine if the firm should select production technique A or B because total fixed costs are not given.

Question 36

Short-run costs that depend on the level of output are

A) total fixed cost only.
B) total variable costs only.
C) total costs only.
D) both total variable costs and total costs.

Question 37

The explanation for why marginal cost is positive and rising in the short run is ________ marginal product of labor in the production process.

A) a zero
B) a constant
C) an increasing
D) a diminishing

Question 38

In the short run when the marginal product of labor ________, the marginal cost of an additional unit of output ________.

A) rises; rises
B) falls; falls
C) rises; falls
D) falls; doesn't change

Question 39

________ are likely a fixed cost of a firm.

A) Wages paid to employees
B) The payments for supplies
C) Lease payments for office space
D) Travel expenses to meet with clients

Question 40

Refer to the information provided in Table 8.1 below to answer the question(s) that follow.
Table 8.1 $$\begin{array} { l c c c } \text { Produce } & \begin{array} { c } \text { Using } \\\text { Techniques }\end{array} & \begin{array} { c } \text { Units of Variable } \\\text { K }\end{array} & \begin{array} { c } \text { Inputs } \\\text { L }\end{array} \\\hline \text { 1 unit of output } & & & \\& \text { A } & 8 & 8 \\& \text { B } & 4 & 12 \\\text { 2 units of output } & & & \\& \text { A } & 14 & 12 \\& \text { B } & 8 & 20 \\3 \text { units of output } & & & \\& \text { A } & 16 & 12 \\& \text { B } & 12 & 22 \\\hline\end{array}$$

-Refer to Table 8.1. Assume the price of labor (L) is $5 per unit, the price of capital (K) is $10 per unit, and that firms attempt to minimize costs. The total variable cost of producing one unit of output is

A) $16.
B) $100.
C) $120.
D) $220.

Question 41

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. Assume that Sherry's Earrings is producing in a perfectly competitive market and the market price for earrings is $60. To maximize profits Sherry should produce ________ pairs of earrings.

A) two
B) three
C) four
D) five

Question 42

The formula for AVC is

A) q/TVC.
B) TVC/q.
C) ΔTVC/Δq.
D) Δq/ΔTVC.

Question 43

In the short run, as output increases,

A) the difference between average total cost and average variable cost decreases.
B) the difference between total cost and average variable cost decreases.
C) marginal cost eventually decreases.
D) All of the above are correct.

Question 44

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3
Refer to Figure 8.3. If the total fixed cost is $50, then average total cost of producing 10 basketballs is

A) $3.
B) $5.
C) $8.
D) $80.

Question 45

The formula for MC is

A) TVC/q.
B) q/TVC.
C) ΔTVC/q.
D) ΔTVC/Δq.

Question 46

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3
Refer to Figure 8.3. The marginal cost of the 10th basketball is

A) $2.
B) $3.
C) $3.05.
D) $5.80.

Question 47

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3
Refer to Figure 8.3. The marginal cost of the eleventh basketball is

A) less than $1.
B) $1.
C) $2.
D) greater than $2.

Question 48

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3
Refer to Figure 8.3. If total fixed costs are $100, then average total cost of producing 10 basketballs is

A) $2.
B) $10.
C) $13.
D) $130.

Question 49

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces one pair of earrings, her total variable costs are

A) $50.
B) $100.
C) $150.
D) indeterminate from this information.

Question 50

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces five pairs of earrings, her total costs are

A) $320.
B) $360.
C) $370.
D) $400.

Question 51

Refer to the information provided in Figure 8.3 below to answer the question(s) that follow. Figure 8.3
Refer to Figure 8.3. The marginal cost of the ninth basketball is

A) less than $2.
B) $2.
C) $3.
D) greater than $3.

Question 52

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces three pairs of earrings, her total variable costs are

A) $26.67.
B) $140.
C) $175.
D) $225.

Question 53

For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is

A) $5.
B) $9.83.
C) $19.52.
D) indeterminate from the information given.

Question 54

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces two pairs of earrings, her marginal cost is

A) $40.
B) $45.
C) $72.50.
D) $122.50.

Question 55

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & && \\1 & 20& & & & \\2 & & 10& & & &30& \\3 & & & & 110&& \\4 & & &20 & & & \\5 & & & &180 &\\\hline\end{array}$


-Refer to Table 8.3. What is the total cost of producing zero units of output?

A) $0
B) $30
C) $60
D) indeterminate from the given information

Question 56

In the short run where total variable cost is ________ at a(n) ________ rate, marginal cost is positive and increasing.

A) increasing; increasing
B) increasing; decreasing
C) decreasing; increasing
D) decreasing; decreasing

Question 57

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces four pairs of earrings, her average fixed costs are

A) $4.
B) $20.
C) $25.
D) $100.

Question 58

Because marginal cost is always ________ in the short run, total variable cost always ________ when output increases.

A) positive; increases
B) positive; decreases
C) negative; increases
D) negative; decreases

Question 59

In the short run where total variable cost is ________ at a(n) ________ rate, marginal cost is positive and decreasing.

A) increasing; increasing
B) increasing; decreasing
C) decreasing; increasing
D) decreasing; decreasing

Question 60

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & &100 & \\1 & & 50 & & & \\2 & & & & & &&95 \\3 & & & 46.67 & & \\4 & & & & &300 & \\5 & 270 & & &\\\hline\end{array}$


-Refer to Table 8.2. If Sherry produces zero earrings, her total fixed costs are

A) $0.
B) $50.
C) $100.
D) indeterminate from this information.

Question 61

If we know average total cost and the amount of output, then we can always calculate total cost by

A) adding average total cost and the amount of output.
B) subtracting the amount of output from average total cost.
C) multiplying average total cost by the amount of output.
D) dividing average total cost by the amount of output.

Question 62

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & && \\1 & 20& & & & \\2 & & 10& & & &30& \\3 & & & & 110&& \\4 & & &20 & & & \\5 & & & &180 &\\\hline\end{array}$


-Refer to Table 8.3. From the information in the given table,

A) the firm is in the long run.
B) the firm eventually experiences diminishing returns to its variable input.
C) the marginal cost curve intersects the average total cost curve between 3 and 4 units of output.
D) the difference between total cost and total variable cost decreases as output increases.

Question 63

The marginal cost curve intersects the average variable cost curve at the ________ value of the average variable cost curve.

A) maximum
B) minimum
C) zero
D) average

Question 64

If a firm's total costs are $80 when 10 units of output are produced and $90 when 11 units of output are produced, the marginal cost of the 11th unit is

A) $1.
B) $5.
C) $8.09.
D) $10.

Question 65

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. If three microwave ovens are produced, Micro Oven's total variable costs are

A) $150.
B) $200.
C) $300.
D) $500.

Question 66

If a firm's total costs are $100 when 10 units of output are produced and $103 when 11 units of output are produced, the marginal cost of the 11th unit is

A) $1.
B) $3.
C) $5.
D) $9.36.

Question 67

The marginal cost curve intersects the ________ at its minimum.

A) average variable cost curve
B) average total cost curve
C) average fixed cost curve
D) A and B are both correct.

Question 68

Twenty‐five students in a class take a test for which the average grade is 75. Then a twenty‐sixth student enters the class, takes the test, and scores 80. The test average calculated with 26 students will

A) rise above 75.
B) fall below 75.
C) change from 75 but the direction is unclear.
D) still equal 75.

Question 69

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & && \\1 & 20& & & & \\2 & & 10& & & &30& \\3 & & & & 110&& \\4 & & &20 & & & \\5 & & & &180 &\\\hline\end{array}$


-Refer to Table 8.3. If the firm is in a perfectly competitive industry with a market price of $30 per unit, the firm will produce ________ units and earn a profit of ________.

A) three; $20
B) four; $20
C) four; -$20
D) five; $30

Question 70

If the average variable cost of the fifth hat is $30, then the total variable cost of five hats is

A) $6.
B) $150.
C) $1,800.
D) indeterminate from this information.

Question 71

If marginal cost is above average variable cost, then

A) average variable cost is increasing.
B) marginal cost must be decreasing.
C) average variable cost is constant.
D) average variable cost is decreasing.

Question 72

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. If two microwave ovens are produced, Micro Oven's total variable costs are

A) $150.
B) $300.
C) $450.
D) indeterminate from this information.

Question 73

If marginal cost is between average variable cost and average total cost, then

A) both average variable cost and average total cost are increasing.
B) both average variable cost and average total cost are decreasing.
C) average variable cost is increasing and average total cost is decreasing.
D) average variable cost is decreasing and average total cost is increasing.

Question 74

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. Micro Oven's average fixed costs of producing two units of output are

A) $150.
B) $300.
C) $450.
D) indeterminate from this information.

Question 75

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. If two microwave ovens are produced, average variable costs are

A) $75.
B) $150.
C) $225.
D) indeterminate from this information.

Question 76

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. Micro Oven's average fixed costs of producing three units of output are

A) $100.
B) $150.
C) $166.67.
D) indeterminate from this information.

Question 77

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow

Figure 8.5
Refer to Figure 8.4. If three microwave ovens are produced, average variable costs are

A) $50.
B) $66.67.
C) $100.
D) indeterminate from this information.

Question 78

If the marginal cost curve is below the average variable cost curve, then

A) average variable costs are increasing.
B) average variable costs are decreasing.
C) marginal cost must be decreasing.
D) average variable costs could either be increasing or decreasing.

Question 79

If the average variable cost curve is above the marginal cost curve, then

A) marginal costs must be decreasing.
B) average variable costs must be increasing.
C) marginal costs must be increasing.
D) marginal costs can be either increasing or decreasing.

Question 80

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\\\hline0 & & & & && \\1 & 20& & & & \\2 & & 10& & & &30& \\3 & & & & 110&& \\4 & & &20 & & & \\5 & & & &180 &\\\hline\end{array}$


-Refer to Table 8.3. The marginal cost of the fourth unit is ________ and the average total cost of four units is ________.

A) $10; $30
B) $20; $45
C) $30; $35
D) indeterminate from the given information