Econ Exam 2 Chapter 8 MC
In the long run A. all costs become fixed B. all costs become variable C. all costs are a combination of fixed and variable
B
When the average total cost is at its minimum, it is A. greater than MC B. equal to MC C. smaller than MC
B
In the short run, the ATC curve is _____ above the AVC curve. A. always B. sometime C. snever
A
When average total cost is declining A. marginal cost must be less than average total cost B. marginal cost must be greater than average total cost C. average total cost must be greater than average fixed cost D. average variable cost must also be declining
A
Fixed costs are best defined as A. costs that will not vary with the firm's output level over some period of time B. costs that are paid on a yearly basis rather than a weekly or monthly basis C. costs of inputs that cannot be moved, such as real estate D. costs that will last as long as the firm exists
A
When average total cost is declining A.marginal cost must be less than average total cost B. marginal cost must be greater than average total cost C. average total cost must be greater than average fixed cost D. average variable cost must also be declining
A
Which statement is false? A. The AFC curve is U-shaped B. The AVC curve is U-shaped C. The ATC curve is U-shaped D. None of these is false
A
Which statement is true? A. The marginal cost curve intersects both the average variable cost curve and the average total cost curve at their minimum points B. The marginal cost curve intersects neither the average variable cost curve nor the average total cost curve at their minimum points. C. The marginal cost curve intersects the average variable cost curve at its minimum point, but it does not intersect the average total cost curve at its minimum point D. The marginal cost curve intersects the average total cost curve at its minimum point, but it does not intersect the average variable cost curve at its minimum point
A
_____ expresses the maximum amounts of output a firm can produce from various combinations of factor inputs. A. A production function B. The law of diminishing returns C. An economy of scale D. Marginal output
A
A firm has a fixed cost of $2,000, and at an output of 1 variable cost is $1,500. How much is marginal cost at an output of 1? A. $1,000 B. $1,500 C. $2,000 D. $3,500
B
As output rises A. AFC rises B. AFC falls C. AFC remains the same D. There is no to determine what happens to AFC
B
If fixed cost is $5,000, and at an output of 3 variable cost is $4,000, how much is average total cost at an output of 3? A. $1,333.33 B. $3,000 C. $4,500 D. $9,000
B
If fixed cost is $8,000, and variable cost is $5,000 at an output of 2 and $9,000 at an output of 3, how much is marginal cost at an output of 3? A. $3,000 B. $4,000 C. $5,000 D. $8,000
B
In the long run, all costs are A. fixed B. variable C. equal to zero D. none of these is true
B
The law of diminishing returns A. has been debunked by economists B. states that if units of a resource are added to a fixed proportion of other resources, eventually marginal product will decline C. only applies to a small subset of business firms D. states that profit margins decline as output rises
B
The phrase "spreading the overhead" refers to A. the decrease in total cost that occurs as a firm reduces the size of its work force B. the decrease in average fixed cost that occurs as a firm increases its output C. the decrease in average variable cost that occurs as a firm increases its output D. the decrease in total fixed cost that occurs as a firm increases its output
B
The average fixed cost curve A. is a vertical line B. is a horizontal line C. slopes downward to the right as output rises D. is U-shaped
C
Which statement is false? A. The MC always intersects the ATC at its minimum point B. The MC always intersects the AVC at its minimum point C. The MC always intersects the AFC at its minimum point D. None of these is false
C
Which statement is true? A. Going out of business is a short-run option B. Operating or shutting down are long-run options C. Going out of business or not going out of business are long-run options
C
Average variable cost is equal to A. average total cost plus average fixed cost B. marginal cost plus average fixed cost C. marginal cost D. average total cost minus average fixed cost
D
Both Jill and John own toothpick factories. Jill'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 toothpicks at the same total cost. Complete the following statement with the correct answer. If each produces A. more, their costs will be equal B. less, their costs will be equal C. less, the costs of Jill's factory will exceed those of John's factory D. more, the costs of Jill's factory will exceed those of John's factory
D
If a firm cannot cover its variable costs, it will A. operate in the short run and stay in business in the long run B. operate in the short run and go out of business in the long run C. shut down in the short run and stay in business in the long run D. shut down in the short run and go out of business in the long run
D
If marginal output is rising, then it is A. possible to have diminishing returns but not negative returns B. possible to have negative returns but not diminishing returns C. possible to have both diminishing returns and negative returns D. not possible to have diminishing returns or negative returns
D
The MC curve intersects the AVC and ATC curves at their minimum points A. none of the time B. in the real world, but not in economic models C. in economic models, but not in the real world D. all of the time
D
The law of diminishing returns states that as output rises, eventually _____ output will decline. A. total B. average C. fixed D. marginal
D
Which statement is true? A. Both fixed costs and variable costs vary with output B. Neither fixed costs nor variable costs vary with output C. Only fixed costs vary with output D. Only variable costs vary with output
D