4.3 quiz

Which of the following is most likely to be a fixed cost? a) expenditures for raw materials b) wages for unskilled labor c) property insurance premiums d) shipping charges

c

Answer the question on the basis of the following cost data: The total cost of four units of output is: a) $310. b) $215. c) $260. d) $77.50.

a

Answer the question on the basis of the following cost data: Total fixed cost is: a) $50.00. b) $150.00. c) $6.25. d) $100.00.

a

As output increases, total variable cost: a) increases at a decreasing rate and then at an increasing rate. b) increases more rapidly than does total cost. c) increases continuously at a decreasing rate. d) increases at a constant rate.

a

If you operated a small bakery, which of the following would be a variable cost in the short run? a) baking supplies (flour, salt, etc.) b) annual lease payment for use of the building c) baking ovens d) interest on business loans

a

Refer to the above diagram. If labor is the only variable input, the marginal product of labor is at a: a) maximum at point a. b) maximum at point b. c) minimum at point a. d) minimum at point b.

a

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.

b

Which of the following is correct? a) When AP is rising MC is falling, and when AP is falling MC is rising. b) When MP is rising MC is falling, and when MP is falling MC is rising. c) There is no relationship between MP and MC. d) When MP is rising MC is rising, and when MP is falling MC is falling.

b

Answer the question on the basis of the following cost data: The average total cost of producing 3 units of output is: a) $13.50. b) $14. c) $16. d) $12.

c

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) $0.50. b) $50. c) $5,000. d) $500.

c

Average fixed costs can be determined graphically by: a) the vertical distance between TC and TVC. b) the vertical distance between AVC and MC. c) the vertical distance between ATC and AVC. d) summing the marginal costs of any number of units of output and dividing the sum by that output.

c

Refer to the above diagram, where variable inputs of labor are being added to a constant amount of property resources. Average variable cost will be at a minimum when the firm is hiring: a) Q1 workers. b) more than Q3 workers. c) Q2 workers. d) Q3 workers.

c

Refer to the above diagram, where variable inputs of labor are being added to a constant amount of property resources. Marginal cost will be at a minimum for this firm when it is hiring: a) Q2 workers. b) more than Q3 workers. c) Q1 workers. d) Q3 workers.

c

Refer to the above diagram, where variable inputs of labor are being added to a constant amount of property resources. The total output of this firm will cease to expand: a) only if the marginal product curve becomes negative at all levels of output. b) if a labor force in excess of Q2 is employed. c) if a labor force in excess of Q3 is employed. d) if a labor force in excess of Q1 is employed.

c

Answer the question on the basis of the following cost data: The total variable cost of producing 5 units is: a) $61. b) $48. c) $24. d) $37.

d

Fixed cost is: a) the cost of producing one more unit of capital, for example, machinery. b) average cost multiplied by the firm's output. c) usually zero in the short run. d) any cost which does not change when the firm changes its output.

d

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then: a) the marginal cost of the tenth unit is $90. b) the average variable cost of 10 units is $10. c) the firm is operating in the range of increasing marginal returns. d) the average variable cost of 9 units is $10.

d

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) both are equal to MC.

d

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) Average fixed costs would rise, but marginal costs would fall. b) Marginal costs and average variable costs would both rise. c) Average fixed costs and average variable costs would rise. d) Average fixed costs and average total costs would rise.

d

Which of the following is correct as it relates to cost curves? a) Average fixed cost intersects marginal cost at the latter's minimum point. b) Marginal cost intersects average fixed cost at the latter's minimum point. c) Average variable cost intersects marginal cost at the latter's minimum point. d) Marginal cost intersects average total cost at the latter's minimum point.c

d