Chapter 11 - Practice Problems

(Table: Production of Bagels) Look at the table Production of Bagels. The marginal product of the fifth worker is _____ bagels

9,000

If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, average total cost is

$35

(Table: Cost Data) Look at the table Cost Data. The average VARIABLE cost of producing 5 purses is

$38

If Jakob, who runs a sports jersey assembly factory, knows the marginal cost of producing the seventh sports jersey is $21, then the total cost of seven sports jerseys is:

Answer cannot be determined

(Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled W represents the firm's ________ curve

Average total cost

(Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve X represents the firm's ________ curve

Average variable cost

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week

Average variable cost is $8

The U-shape of the long-run average total cost curve is primarily due to

Economies and diseconomies of scale

Buffalo Aircraft doubles the amount of all of the inputs it uses—the factory doubles in size and twice as many workers are hired. After this expansion, the number of aircraft produced triples. This means that Buffalo Aircraft is operating with

Economies of scale

It is common in large beer breweries for the long-run average total cost to decline as output increases. This indicates that many breweries operate under

Economies of scale

If a firm has lower costs per unit as it increases production in the long run, this is an example of

Increasing returns to scale

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits

Increasing returns to scale

Average variable cost is the ratio of

variable cost to the quantity of output

For Heidi, the marginal cost of producing one additional photograph equals the change in ________ divided by the change in the ________.

Total cost; number of photographs

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At six units of output, AVERAGE TOTAL cost is approximately:

$170

(Table: Output and Costs) Using the information in the accompanying table, when quantity equals 4, total variable cost equals:

48

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

Increasing

(Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled V represents the firm's ________ curve

Marginal Cost

The long-run average total cost curve is tangent to an infinite number of

Short run average total cost curves

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. Curve 1 crosses the average total cost curve at

The minimum value of curve 2

Marginal cost can be calculated as

VC/Q

As output increases, the total cost curbe

gets steeper

Total cost curve

positively sloped

Average variable cost

total variable cost divided by output

If Jakob knows the marginal cost of the 1st sports jersey is $21, the marginal cost of the 2nd sports jersey is $40, and the marginal cost of the 3rd jersey is $17, what is the total variable cost of producing 3 jerseys?

$78

When an increase in the firm's output reduces its long-run average total cost, it undergoe

Increasing returns to scale

The marginal cost curve intersects the average variable cost curve at

Its lowest point

The sum of fixed and variable costs is

total cost

The total product curve:

will become flatter as output increases if there are diminishing returns to the variable input

Fixed cost curve is

Horizontal

Total cost divided by the quantity of output produced is

Average total cost

Given constant quantities of all other factors of production, when additional units of a variable factor of production add less and less to total output, then the firm is experiencing

diminishing marginal returns

A firm that has diminishing returns in the management's ability to use and disseminate information as it increases production in the long run is an example of

dis-economies of scale

Diminishing marginal returns means that

each additional unit of an input used will increase output, but by smaller and smaller amounts

A manufacturing company that benefits from lower costs per unit as it grows is an example of a firm exhibiting

increasing returns to scale

A factor of production whose quantity can be changed during a particular period is a

variable factor of production

Buford Bus Manufacturing installs a new assembly line. As a result, the output per worker increases. The marginal cost of output at Buford:

will decrease (the MC curve will shift down)

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

Falling

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory. The MARGINAL cost of producing the fourth purse is:

$40

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory. The average FIXED cost of producing 4 purses is

$12.50

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At six units of output, AVG VARIABLE cost is approximately

$120

(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. In the figure, the total cost of producing 10 pairs of boots is approximately:

$1308

Darren runs a barbershop with average fixed costs equal to $60 per day and a total output of 50 haircuts per day. What is his weekly total fixed cost if he is open six days per week?

$18,000

(Figure: Short-Run Costs II) Look at the figure Short-Run Costs II. At six units of output, MARGINAL cost is approximately

$200

When a cherry orchard in Oregon adds a worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is

$40

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory. The average TOTAL cost of producing 4 purses is:

$47.50

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory. The average TOTAL cost of producing 6 purses is

$50

A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $35 in average total cost. The total fixed cost of producing 10 pairs of eyeglasses is

$50

(Table: Output and Costs) Look at the table Output and Costs. Using the information in the table, when output increases from one to two, marginal cost equals:

8

(Table: Output and Costs) Using the information in the accompanying table, when quantity increases from 1 to 2, marginal cost equals:

8

(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product of labor for eight workers is _____ bushels

96

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that the firm producing this output has

Constant returns to scale

Austin's total fixed cost at the bakery is $3,600 a month. Austin employs 20 workers and pays each worker $8 an hour. The marginal product of the twentieth worker is 12 iced cupcakes an hour. What is the marginal cost of the last cupcake produced by the last worker Austin hired?

$0.66

(Table: Total Product and Marginal Product) Look at the table Total Product and Marginal Product. The marginal product of the second worker is:

20

In the long run

All inputs are variable

The change in total output resulting from one unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is:

Marginal product

Once diminishing returns have set in, as output increases, the total cost curve

gets steeper

Average total cost is

total cost divided by the quantity of output

The total cost curve for a snowmobile dealership shows how _____ cost depends on the quantity of _____

total; output

Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns

Decreases; increases

The horizontal curve gets steeper as output increases because

Decreasing returns to the variable input

In the short run, the average total cost curve slopes upward because of

Diminishing Returns

(Table: Cost Data) Look at the table Cost Data. When the purse factory produces five units of output (purses), which of the following is true about the firm's cost curves?

Marginal cost is greater than average total cost, and average total cost is rising

The marginal cost curve is the mirror image of the

Marginal product curve

You own a deli. Which of the following is most likely a fixed input at your deli?

The dining room