Quiz 6
58. Refer to the above diagram. At output level Q total cost is: A. 0BEQ. B. BCDE. C. 0BEQ plus BCDE. D. 0AFQ plus BCDE.
0BEQ plus BCDE.
27. Refer to the above short-run data. Which of the following is correct? A. This firm will maximize its profit at 440 units of output. B. Any level of output between 100 and 440 units will yield an economic profit. C. This firm's marginal revenue rises with output. D. Any level of output less than 100 units or greater than 440 units is profitable.
Any level of output between 100 and 440 units will yield an economic profit.
71. Refer to the above data. The profit-maximizing output for this firm: A. is 3. B. is 4. C. is 5. D. cannot be determined from the information given.
cannot be determined from the information given.
106. Refer to the above data. The average variable cost of 4 units of output is: A. $33.50. B. $28.50. C. $19.00. D. $21.00.
$28.50.
100. Refer to the above information. The average total cost of 3 units of output is: A. $65. B. $21.67. C. $40. D. $35.
$35.
107. Refer to the above data. The marginal cost of the fourth unit of output is: A. $2. B. $12. C. $37. D. $16.
$37.
67. Refer to the above data. The total variable cost of producing 5 units is: A. $61. B. $48. C. $37. D. $24.
$37.
63. Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. The firm's total fixed costs are: A. $5,000. B. $500. C. $0.50. D. $50.
$5,000.
93. Refer to the above data. If the firm closed down in the short run and produced zero units of output, its total cost would be: A. zero. B. $50. C. $150. D. $100.
$50.
90. Refer to the above data. Total fixed cost is: A. $6.25. B. $100.00. C. $150.00. D. $50.00.
$50.00.
91. Refer to the above data. The average total cost of five units of output is: A. $69. B. $78. C. $3. D. $10.
$78.
69. Refer to the above data. The average fixed cost of producing 3 units of output is: A. $8. B. $7.40. C. $5.50. D. $6.
$8.
70. Refer to the above data. The marginal cost of producing the sixth unit of output is: A. $24. B. $12. C. $16. D. $8.
$8.
94. Refer to the above data. The marginal cost of the fifth unit of output is: A. $3. B. $62. C. $80. D. $78.
$80.
56. Refer to the above diagram. At output level Q total variable cost is: A. 0BEQ. B. BCDE. C. 0CDQ. D. 0AFQ.
0BEQ.
125. Suppose a firm is in a range of production where it is experiencing economies of scale. Knowing this, we can predict that: A. the long-run average total cost curve is upsloping. B. a 10 percent increase in all inputs will increase output by less than 10 percent. C. a 10 percent increase in all inputs will increase output by more than 10 percent. D. the firm is encountering problems of managerial bureaucracy because of its size.
a 10 percent increase in all inputs will increase output by more than 10 percent.
130. (Consider This) Which of the following is an example of a sunk cost, as it relates to a firm? A. an expenditure on raw materials used in the production process. B. an expenditure on a nonrefundable, nontransferable airline ticket. C. an expenditure to buy a delivery van. D. an expenditure for a new factory.
an expenditure on a nonrefundable, nontransferable airline ticket.
126. Because of higher gasoline prices, firms using gasoline intensively in the production or distribution of their goods have experienced: A. an upward shift in their MC, AVC, and ATC curves. B. an upward shift in their AFC, AVC, and ATC curves. C. a downward shift in their MC, AFC, and AVC curves. D. greater economies of scale.
an upward shift in their MC, AVC, and ATC curves.
83. Refer to the above short-run production and cost data. In Figure A curve (1) is: A. total product and curve (2) is average product. B. total product and curve (2) is marginal product. C. average product and curve (2) is marginal product. D. marginal product and curve (2) is average product.
average product and curve (2) is marginal product.
53. For most producing firms: A. marginal cost rises as output is carried to a certain level, and then begins to decline. B. total costs rise as output is carried to a certain level, and then begin to decline. C. average total costs decline as output is carried to a certain level, and then begin to rise. D. average total costs rise as output is carried to a certain level, and then begin to decline.
average total costs decline as output is carried to a certain level, and then begin to rise.
115. If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that: A. technology precludes both economies and diseconomies of scale. B. the industry will be a natural monopoly. C. both relatively small and relatively large firms can be viable in the industry. D. the industry will be comprised of a very large number of small firms.
both relatively small and relatively large firms can be viable in the industry.
17. A perfectly elastic demand curve implies that the firm: A. must lower price to sell more output. B. can sell as much output as it chooses at the existing price. C. realizes an increase in total revenue which is less than product price when it sells an extra unit. D. is selling a differentiated (heterogeneous) product.
can sell as much output as it chooses at the existing price.
104. Refer to the above diagram. The profit-maximizing level of output for this firm: A. is at point a. B. is at point b. C. is at point c. D. cannot be determined from the information given.
cannot be determined from the information given.
52. Marginal cost is the: A. rate of change in total fixed cost that results from producing one more unit of output. B. change in total cost that results from producing one more unit of output. C. change in average variable cost that results from producing one more unit of output. D. change in average total cost that results from producing one more unit of output.
change in total cost that results from producing one more unit of output.
77. Which of the following is correct? A. There is no relationship between MP and MC. B. When AP is rising MC is falling, and when AP is falling MC is rising. C. When MP is rising MC is rising, and when MP is falling MC is falling. D. When MP is rising MC is falling, and when MP is falling MC is rising.
When MP is rising MC is falling, and when MP is falling MC is rising.
12. Price is constant or given to the individual firm selling in a purely competitive market because: A. the firm's demand curve is downsloping. B. of product differentiation reinforced by extensive advertising. C. each seller supplies a negligible fraction of total supply. D. there are no good substitutes for its product.
each seller supplies a negligible fraction of total supply.
62. Marginal cost: A. equals both average variable cost and average total cost at their respective minimums. B. is the difference between total cost and total variable cost. C. rises for a time, but then begins to decline when diminishing returns set in. D. declines continuously as output increases.
equals both average variable cost and average total cost at their respective minimums.
120. Refer to the above diagram. Minimum efficient scale: A. occurs at some output greater than Q3. B. is achieved at Q1. C. is achieved at Q3. D. cannot be identified in this diagram.
is achieved at Q1.
81. The vertical distance between the total cost and the total variable cost curves differs by an amount which: A. initially increases, but then decreases, as output increases. B. is constant as output changes. C. decreases as output increases. D. increases as output increases.
is constant as output changes.
15. The marginal revenue curve of a purely competitive firm: A. lies below the firm's demand curve. B. is downsloping because price must be reduced to sell more output. C. is horizontal at the market price. D. has all of these characteristics.
is horizontal at the market price.
59. Refer to the above diagram. At output level Q average fixed cost: A. is equal to EF. B. is equal to QE. C. is measured by both QF and ED. D. cannot be determined from the information given.
is measured by both QF and ED.
114. The minimum efficient scale of a firm: A. is realized somewhere in the range of diseconomies of scale. B. occurs where marginal product becomes zero. C. is in the middle of the range of constant returns to scale. D. is the smallest level of output at which long-run average total cost is minimized.
is the smallest level of output at which long-run average total cost is minimized.
124. If a firm increases all of its inputs by 10 percent and its output increases by 10 percent, then: A. it is encountering diseconomies of scale. B. it is encountering economies of scale. C. it is encountering constant returns to scale. D. the marginal products of all inputs are falling.
it is encountering constant returns to scale.
121. Refer to the above diagram. Constant returns to scale: A. occur over the 0Q1 range of output. B. occur over the Q1Q3 range of output. C. begin at output Q3. D. are in evidence at all output levels.
occur over the Q1Q3 range of output.
98. The short-run average total cost curve is U-shaped because: A. average fixed costs decline continuously as output increases. B. of increasing and diminishing returns. C. of economies and diseconomies of scale. D. minimum efficient scale is encountered.
of increasing and diminishing returns.
97. If marginal cost is: A. falling, then average total cost must also be falling. B. rising, then average total cost must also be rising. C. rising, then average total cost could be either falling or rising. D. falling, then average total cost could be either falling or rising.
rising, then average total cost could be either falling or rising.
80. Average fixed costs can be determined graphically by: A. summing the marginal costs of any number of units of output and dividing the sum by that output. B. the vertical distance between TC and TVC. C. the vertical distance between AVC and MC. D. the vertical distance between ATC and AVC.
the vertical distance between ATC and AVC
108. Economies and diseconomies of scale explain: A. the profit-maximizing level of production. B. why the firm's long-run average total cost curve is U-shaped. C. why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. D. the distinction between fixed and variable costs.
why the firm's long-run average total cost curve is U-shaped.
11. If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. may be either greater or less than $5. B. will also be $5. C. will be less than $5. D. will be greater than $5.
will also be $5.
105. Refer to the above data. The total cost of producing 4 units of output is: A. $31. B. $87. C. $124. D. $134.
$124.
101. Refer to the above information. The average fixed cost of 3 units of output is: A. $13.33. B. $12.50. C. $40. D. $18.50.
$13.33.
102. Refer to the above information. The marginal cost of the third unit of output is: A. $105. B. $25. C. $15. D. $20.
$15.
96. Assume a firm closes down in the short run and produces no output. Under these conditions: A. TVC is positive, but TFC and TC are zero. B. TFC is positive, but TVC and TC are zero. C. TFC and TC are positive, but TVC is zero. D. TFC, TVC, and TC will all be positive.
TFC and TC are positive, but TVC is zero.
9. Refer to the above information. For a purely competitive firm, marginal revenue graphs as a: A. straight, upsloping line. B. straight line, parallel to the vertical axis. C. straight line, parallel to the horizontal axis. D. straight, downsloping line.
straight line, parallel to the horizontal axis.
16. The demand curve in a purely competitive industry is _____, while the demand curve to a single firm in that industry is _____. A. perfectly inelastic, perfectly elastic B. downsloping, perfectly elastic C. downsloping, perfectly inelastic D. perfectly elastic, downsloping
downsloping, perfectly elastic
113. If a firm doubles its output in the long run and its unit costs of production decline, we can conclude that: A. technological progress has occurred. B. economies of scale are being realized. C. the firm is encountering diminishing returns. D. diseconomies of scale are being encountered.
economies of scale are being realized.
127. Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices? A. firms like UPS that use a fleet of gasoline-powered vehicles. B. taxi cab and limousine companies. C. companies that operate bus tours to popular vacation destinations. D. firms like iTunes that distribute their products over the Internet.
firms like iTunes that distribute their products over the Internet.
86. As output increases, total variable cost: A. increases more rapidly than does total cost. B. increases continuously at a decreasing rate. C. increases at a decreasing rate and then at an increasing rate. D. increases at a constant rate.
increases at a decreasing rate and then at an increasing rate.
123. If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then: A. it is encountering diseconomies of scale. B. it is encountering economies of scale. C. the law of diminishing returns is taking hold. D. the firm's long-run ATC curve will be rising.
it is encountering economies of scale.
66. If a firm decides to produce no output in the short run, its costs will be: A. its marginal costs. B. its variable costs. C. its fixed costs. D. zero.
its fixed costs.
118. Refer to the above diagram. Economies of scale: A. are evident over the entire range of output. B. occur over the 0Q1 range of output. C. begin at output Q3. D. occur only over the Q1Q3 range of output.
occur over the 0Q1 range of output.
18. The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that: A. product price increases as output increases. B. product price decreases as output increases. C. product price is constant at all levels of output. D. marginal revenue declines as more output is produced.
product price is constant at all levels of output.
50. Which of the following is most likely to be a fixed cost? A. shipping charges B. property insurance premiums C. wages for unskilled labor D. expenditures for raw materials
property insurance premiums
3. An industry comprised of a very large number of sellers producing a standardized product is known as: A. monopolistic competition. B. oligopoly. C. pure monopoly. D. pure competition.
pure competition.
10. Refer to the above information. For a purely competitive firm: A. marginal revenue will graph as an upsloping line. B. the demand curve will lie above the marginal revenue curve. C. the marginal revenue curve will lie above the demand curve. D. the demand and marginal revenue curves will coincide.
the demand and marginal revenue curves will coincide.
110. When diseconomies of scale occur: A. the long-run average total cost curve falls. B. marginal cost intersects average total cost. C. the long-run average total cost curve rises. D. average fixed costs will rise.
the long-run average total cost curve rises.
7. Which of the following is characteristic of a purely competitive seller's demand curve? A. Price and marginal revenue are equal at all levels of output. B. Average revenue is less than price. C. Its elasticity coefficient is 1 at all levels of output. D. It is the same as the market demand curve.
Price and marginal revenue are equal at all levels of output.
21. Refer to the above diagram, which pertains to a purely competitive firm. Curve C represents: A. total revenue and marginal revenue. B. marginal revenue only. C. total revenue and average revenue. D. average revenue and marginal revenue.
average revenue and marginal revenue.
49. Fixed cost is: A. the cost of producing one more unit of capital, for example, machinery. B. any cost which does not change when the firm changes its output. C. average cost multiplied by the firm's output. D. usually zero in the short run.
any cost which does not change when the firm changes its output.
87. In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs: A. are $2.50. B. are $1,250. C. are $750. D. are $1,100.
are $1,250.
74. Total fixed cost (TFC): A. falls as the firm expands output from zero, but eventually rises. B. falls continuously as total output expands. C. varies directly with total output. D. does not change as total output increases or decreases.
does not change as total output increases or decreases.
99. Refer to the above information. The total cost of producing 3 units of output is: A. $65. B. $105. C. $145. D. $185.
$105.
68. Refer to the above data. The average total cost of producing 3 units of output is: A. $14. B. $12. C. $13.50. D. $16.
$16.
82. The vertical distance between a firm's ATC and AVC curves represents: A. AFC, which increases as output increases. B. AFC, which decreases as output increases. C. marginal costs, which decrease as output decreases. D. marginal costs, which increase as output increases.
AFC, which decreases as output increases
95. Other things equal, if the wage rates paid to a firm's labor inputs were to rise, we would expect the: A. AFC, AVC, ATC, and MC curves all to rise. B. AVC, ATC, and MC curves all to rise. C. AFC and ATC curves to fall. D. MP curve to fall.
AVC, ATC, and MC curves all to rise.
65. Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which of the following would happen? A. Marginal costs and average variable costs would both rise. B. Average fixed costs and average variable costs would rise. C. Average fixed costs and average total costs would rise. D. Average fixed costs would rise, but marginal costs would fall.
Average fixed costs and average total costs would rise.
57. Refer to the above diagram. At output level Q total fixed cost is: A. 0BEQ. B. BCDE. C. 0BEQ - 0AFQ. D. 0CDQ.
BCDE.
4. Which of the following statements applies to a purely competitive producer? A. It will not advertise its product. B. In long-run equilibrium it will earn an economic profit. C. Its product will have a brand name. D. Its product is slightly different from those of its competitors.
It will not advertise its product.
5. A purely competitive seller is: A. both a "price maker" and a "price taker." B. neither a "price maker" nor a "price taker." C. a "price taker." D. a "price maker."
a "price taker."
117. In the above diagram it is assumed that: A. some costs are fixed and other costs are variable. B. all costs are variable. C. the law of diminishing returns determines the shape of the cost curve. D. marginal product first falls, but ultimately rises as output is increased.
all costs are variable.
119. Refer to the above diagram. Diseconomies of scale: A. begin at output Q1. B. occur over the Q1Q3 range of output. C. begin at output Q3. D. are in evidence at all output levels.
begin at output Q3.
88. Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This: A. firm's ATC is $35. B. firm's ATC is $57. C. firm's total cost is $270. D. firm's total cost is $30.
firm's total cost is $270.
23. Firms seek to maximize: A. per unit profit. B. total revenue. C. total profit. D. market share.
total profit.
111. When a firm does more of something, it gets better at it. This learning-by-doing is: A. a source of diseconomies of scale. B. a source of economies of scale. C. called the principle of natural progression. D. called "spreading the overhead."
a source of economies of scale.
92. Refer to the above data. The total cost of four units of output is: A. $260. B. $77.50. C. $310. D. $215.
$310.
26. Refer to the above short-run data. The profit-maximizing output for this firm is: A. above 440 units. B. 440 units. C. 320 units. D. 100 units.
320 units.
85. In the short run: A. TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate. B. TVC will increase for a time at an increasing rate, but then beyond some point will increase at a diminishing rate. C. TVC will increase by the same absolute amount for each additional unit of output produced. D. one cannot generalize concerning the behavior of TVC as output increases.
TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate.
131. (Consider This) Susie purchased a non-refundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match, and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost? A. The $20 ticket to the match. B. The $10 cost to drive to the match. C. The $5 cost to park at the stadium. D. The $100 offered by Susie's boss.
The $20 ticket to the match.
19. Which of the following statements is correct? A. The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping. B. The demand curve for a purely competitive firm is downsloping, but the demand curve for a purely competitive industry is perfectly elastic. C. The demand curves are downsloping for both a purely competitive firm and a purely competitive industry. D. The demand curves are perfectly elastic for both a purely competitive firm and a purely competitive industry.
The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.
73. In the short run, which of the following statements is correct? A. The marginal cost curve intersects the average variable and average fixed cost curves at their minimum points. B. Average variable cost declines continuously as total output is expanded. C. Total cost will exceed total variable cost. D. If the inputs of all resources are increased by equal amounts, total output will expand by diminishing amounts.
Total cost will exceed total variable cost.
1. Which of the following industries most closely approximates pure competition? A. agriculture B. farm implements C. clothing D. steel
agriculture
109. In the long run: A. all costs are variable costs. B. all costs are fixed costs. C. variable costs equal fixed costs. D. fixed costs are greater than variable costs.
all costs are variable costs.
13. For a purely competitive seller, price equals: A. average revenue. B. marginal revenue. C. total revenue divided by output. D. all of these.
all of these.
51. If you operated a small bakery, which of the following would be a variable cost in the short run? A. baking ovens B. interest on business loans C. annual lease payment for use of the building D. baking supplies (flour, salt, etc.)
baking supplies (flour, salt, etc.)
22. Marginal revenue is the: A. change in product price associated with the sale of one more unit of output. B. change in average revenue associated with the sale of one more unit of output. C. difference between product price and average total cost. D. change in total revenue associated with the sale of one more unit of output.
change in total revenue associated with the sale of one more unit of output.
54. Average fixed cost: A. equals marginal cost when average total cost is at its minimum. B. may be found for any output by adding average variable cost and average total cost. C. graphs as a U-shaped curve. D. declines continually as output increases.
declines continually as output increases.
14. For a purely competitive firm total revenue: A. is price times quantity sold. B. increases by a constant absolute amount as output expands. C. graphs as a straight upsloping line from the origin. D. has all of these characteristics.
has all of these characteristics.
122. The long-run average total cost curve: A. displays declining unit costs so long as output is increasing. B. indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size. C. has a shape which is the inverse of the law of diminishing returns. D. can be derived by summing horizontally the average total cost curves of all firms in an industry.
indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size.
64. Other things equal, if the prices of a firm's variable inputs were to fall: A. one could not predict how unit costs of production would be affected. B. marginal cost, average variable cost, and average fixed cost would all fall. C. marginal cost, average variable cost, and average total cost would all fall. D. average variable cost would fall, but marginal cost would be unchanged.
marginal cost, average variable cost, and average total cost would all fall.
60. Refer to the above diagram. At output level Q: A. marginal product is falling. B. marginal product is rising. C. marginal product is negative. D. one cannot determine whether marginal product is falling or rising.
marginal product is falling.
24. A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating: A. price and average total cost. B. price and average fixed cost. C. marginal revenue and marginal cost. D. price and marginal revenue.
marginal revenue and marginal cost.
116. Diseconomies of scale arise primarily because: A. the short-run average total cost curve rises when marginal product is increasing. B. of the difficulties involved in managing and coordinating a large business enterprise. C. firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available. D. beyond some point marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital).
of the difficulties involved in managing and coordinating a large business enterprise
6. The demand schedule or curve confronted by the individual purely competitive firm is: A. relatively elastic, that is, the elasticity coefficient is greater than unity. B. perfectly elastic. C. relatively inelastic, that is, the elasticity coefficient is less than unity. D. perfectly inelastic.
perfectly elastic
In answering the question, assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. 8. Refer to the above information. For a purely competitive firm, total revenue graphs as a: A. straight, upsloping line. B. straight line, parallel to the vertical axis. C. straight line, parallel to the horizontal axis. D. straight, downsloping line.
straight, upsloping line.
129. (Consider This) Past costs that are not affected by new decisions are known as: A. variable costs. B. fixed costs. C. marginal costs. D. sunk costs.
sunk costs.
75. Fixed costs are associated with: A. highly adjustable inputs such as labor. B. both the short run and the long run. C. the short run only. D. the long run only.
the short run only.
103. Refer to the above diagram. This firm's average fixed costs are: A. not shown. B. the vertical distance between AVC and MC. C. the vertical distance between AVC and ATC. D. equal to the per unit change in MC.
the vertical distance between AVC and ATC.
2. Economists use the term imperfect competition to describe: A. all industries which produce standardized products. B. any industry in which there is no nonprice competition. C. a pure monopoly only. D. those markets which are not purely competitive.
those markets which are not purely competitive.
76. In the above diagram curves 1, 2, and 3 represent: A. average variable cost, marginal cost, and average fixed cost respectively. B. total variable cost, total fixed cost, and total cost respectively. C. total fixed cost, total variable cost, and total cost respectively. D. marginal product, average variable cost, and average total cost respectively.
total fixed cost, total variable cost, and total cost respectively.
29. A firm reaches a break-even point (normal profit position) where: A. marginal revenue cuts the horizontal axis. B. marginal cost intersects the average variable cost curve. C. total revenue equals total variable cost. D. total revenue and total cost are equal.
total revenue and total cost are equal.
28. A competitive firm will maximize profits at that output at which: A. total revenue exceeds total cost by the greatest amount. B. total revenue and total cost are equal. C. price exceeds average total cost by the largest amount. D. the difference between marginal revenue and price is at a maximum.
total revenue exceeds total cost by the greatest amount.
20. Refer to the above diagram, which pertains to a purely competitive firm. Curve A represents: A. total revenue and marginal revenue. B. marginal revenue only. C. total revenue and average revenue. D. total revenue only.
total revenue only.
25. In the short run a purely competitive firm that seeks to maximize profit will produce: A. where the demand and the ATC curves intersect. B. where total revenue exceeds total cost by the maximum amount. C. that output where economic profits are zero. D. at any point where the total revenue and total cost curves intersect.
where total revenue exceeds total cost by the maximum amount.
84. Refer to the above short-run production and cost data. In Figure B curve (3) is: A. AVC and curve (4) is MC. B. MC and curve (4) is AVC. C. MC and curve (4) is AFC. D. AFC and curve (4) is MC.
MC and curve (4) is AVC.
78. If a firm wanted to know how much it would save by producing one less unit of output, it would look to: A. MC. B. ATC. C. AVC. D. AFC.
MC.
55. Which of the following is correct as it relates to cost curves? A. Average variable cost intersects marginal cost at the latter's minimum point. B. Marginal cost intersects average total cost at the latter's minimum point. C. Average fixed cost intersects marginal cost at the latter's minimum point. D. Marginal cost intersects average fixed cost at the latter's minimum point.
Marginal cost intersects average total cost at the latter's minimum point.
79. Which of the following holds true? A. There is no relationship between AP and AVC. B. When MP is rising AVC is falling, and when MP is falling AVC is rising. C. When AP is rising AVC is falling, and when AP is falling AVC is rising. D. When AP is rising AVC is rising, and when AP is falling AVC is falling.
When AP is rising AVC is falling, and when AP is falling AVC is rising
128. (Consider This) If the law of diminishing returns applies to study time: A. the 10th hour of study will likely be less productive than the 3rd. B. this implies that longer lectures are less productive than shorter ones. C. there is no benefit to studying a subject more than 5 hours in any given day. D. people with less intelligence necessarily experience diminishing returns sooner than those with greater intelligence.
the 10th hour of study will likely be less productive than the 3rd.
61. Refer to the above diagram. The vertical distance between ATC and AVC reflects: A. the law of diminishing returns. B. the average fixed cost at each level of output. C. marginal cost at each level of output. D. the presence of economies of scale.
the average fixed cost at each level of output.
89. In comparing the changes in TC and TVC associated with an additional unit of output, we find that: A. the change in TVC is equal to MC, while the change in TC is equal to TFC. B. the change in TC exceeds the change in TVC. C. the change in TVC exceeds the change in TC. D. the change in both are equal to MC.
the change in both are equal to MC.
72. In comparing the changes in TVC and TC associated with an additional unit of output, we find that: A. no generalization about the changes in TC and TVC can be made. B. the changes in TC and TVC are equal. C. the change in TC is greater than the change in TVC. D. the change in TVC is greater than the change in TC.
the changes in TC and TVC are equal.
112. Economies of scale are indicated by: A. the rising segment of the average variable cost curve. B. the declining segment of the long-run average total cost curve. C. the difference between total revenue and total cost. D. a rising marginal cost curve.
the declining segment of the long-run average total cost curve.
