Mine- Microeconomics Quiz Chapter 13

Refer to table 13-9. The average variable cost of producing 240 units is Labor: Output: FC: VC: 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75

$0.19.

Refer to Table 13-9. The average total cost of producing 240 units is Labor: Output: FC: VC: 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75

$0.32.

Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year. Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?

$18,000

Refer to Table 13-8. What is the average fixed cost of producing 5 units of output? Output: Fixed cost: Variable cost: 0 20 0 1 20 10 2 20 40 3 20 80 4 20 130 5 20 200 6 20 300

$4

Refer to Table 13-8. What is the marginal cost of producing the fifth unit of output? Output: Fixed cost: Variable cost: 0 20 0 1 20 10 2 20 40 3 20 80 4 20 130 5 20 200 6 20 300

$70

Refer to Table 13-3. At which number of workers does diminishing marginal product begin? Labor: Output: FC: VC: TC: 0 0 50 0 50 1 90 50 20 70 2 170 50 40 90 3 230 50 60 110 4 240 50 80 130

2

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?

8 houses

Refer to Table 13-3. The marginal product of the second worker is Labor: Output: FC: VC: TC: 0 0 50 0 50 1 90 50 20 70 2 170 50 40 90 3 230 50 60 110 4 240 50 80 130

80 units

Refer to Figurer 13-6. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

ATCA

Refer to Figure 13-2. Curve C represents which type of cost curve?

Average fixed cost

Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is Labor: Output: FC: VC: 0 0 30 0 1 100 30 15 2 180 30 30 3 240 30 45 4 280 30 60 5 300 30 75

U-shaped.

The average fixed cost curve

always declines with increased levels of output.

Refer to Table 13-6. Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases Labor: Marginal Product: 1 3 2 5 3 8 4 10 5 7 6 4 7 2

as output rises from 0 to 26, but rises after that.

Marginal cost is equal to average total cost when

average total cost is at its minimum.

In the long run a company that produces and sells popcorn incurs total costs of $1,150 when output is 70 canisters and $1,000 when output is 100 canisters. The popcorn company exhibits

economies of scale because average total cost is falling as output rises.

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

economies of scale.

Firms may experience diseconomies of scale when

large management structures are bureaucratic and inefficient.

Refer to Figure 13-1. As the number of workers increases,

marginal product increases but at a decreasing rate.

If marginal cost is rising,

marginal product must be falling.

Refer to Figure 13-1 The graph illustrates a typical

production function