Econ 202: Chapter 6 Part 1 Handout

The marginal cost curve crosses a. both the average total cost and average variable cost curves at their respective minimum points b. the average total cost curve at its minimum point, and the average variable cost curve at its maximum point c. the average total cost curve and the average variable cost curves at the same output level d. both the average total cost and average variable cost curves at their respective maximum points e. the average total cost curve at its maximum point, and the average variable cost curve at its minimum point

a. both the average total cost and average variable cost curves at their respective minimum points

Figure 7-8 shows three different cost curves, labeled A, B, and C, for a firm. Which of these curves could most likely represent average total cost? a. curve A b. curve B c. curve C d. curves A or B e. none of the curves can represent total cost

a. curve A

Total cost is a. fixed cost plus variable cost b. irrelevant to decision making c. marginal cost plus fixed cost d. total product minus total input e. the additional cost associated with producing an additional unit

a. fixed cost plus variable cost

Marginal cost is a. the increase in total cost from producing one more unit of output b. total variable cost per unit of output c. fixed cost per marginal unit d. average total cost divided by the quantity of inputs used e. total cost per unit of output

a. the increase in total cost from producing one more unit of output

If a firm increases its output level in the short run, then a. variable cost rises but fixed cost remains unchanged b. both variable cost and fixed cost rise c. variable cost rises, but fixed cost fall d. both variable cost and fixed cost fall e. variable cost remains unchanged, but fixed cost rises

a. variable cost rises but fixed cost remains unchanged

Figure 7-8 shows three different cost curves, labeled A, B, and C. Which of these curves is most likely to represent marginal cost? a. curve A b. curve B c. curve C d. neither A, B, nor C e. cannot be determined without more information

b. curve B

Average variable cost is a. total cost minus fixed cost b. total variable cost divided by the quantity of output c. total cost plus marginal cost d. total cost per unit of output e. output divided by the quantity of inputs used

b. total variable cost divided by the quantity of output

Figure 2 shows the total cost for six different levels of output for a particular firm. What is the marginal cost (MC) of the last unit of output listed in the table (i.e., the fifth unit of output)? a. $2,700 b. $540 c. $100 d. $90 e. $500

c. $100

Figure 2 shows the total cost for six different levels of output for a particular firm. Total fixed cost (TFC) if five units of output are produced is a. $1,700 b. $540 c. $1,000 d. $100 e. $2,700

c. $1000

Figure 2 shows the total cost for six different levels of output for a particular firm. What is the average total cost (ATC) of producing four units of output? a. $2,600 b. $200 c. $650 d. $50 e. $10,400

c. $650

Average total cost is a. the change in cost as output decreases b. the change in cost as output increases c. TC / quantity of output d. MC - TC e. AVC - AFC

c. TC / quantity of output

Variable costs are a. the same as sunk costs b. irrelevant to decision making, because they are sunk c. the costs of inputs that vary with the level of production d. the costs of inputs that do not vary with the level of production e. the additional total cost associated with producing an additional unit of output

c. the costs of inputs that vary with the level of production

In a firm's planning horizon, the long run refers to a. a period of one year or more b. the term to which the current board of directors has been elected c. the period during which all of the firm's inputs can be varied d. the period during which at least one of the firm's inputs is fixed e. the period during which the level of available technology is fixed

c. the period during which all of the firm's inputs can be varied

Figure 1 shows the amounts of coal that a mining company could produce per week by changing the number of workers while capital and technology remain constant. The marginal product of employing the fourth worker is a. 120 tons of coal b. 480 tons of coal c. 319 tons of coal d. 180 tons of coal e. 106.33 tons of coal

d. 180 tons of coal

Figure 7-8 shows three different cost curves, labeled A, B, and C for a firm. What does curve C most likely represent? a. average total cost b. marginal cost c. total cost d. average fixed cost e. total fixed cost

d. average fixed cost

The short run for Barbara's Bakery is defined as a. one year b. one month c. the period of time during which all inputs are variable d. the period of time during which at least one input is fixed e. the time needed for a transaction to occur

d. the period of time during which at least one input is fixed

Average fixed cost is a. the sum of variable and fixed costs b. total cost minus variable cost c. variable cost plus marginal cost d. total fixed cost per unit of output

d. total fixed cost per unit of output

In the short run, a. utilization of any input can be varied b. production takes less than one year c. all resources are limited in supply d. utilization of some inputs is assumed constant e. equilibrium cannot occur

d. utilization of some inputs is assumed constant

Which of the following is the best example of a variable cost? a. property taxes b. lease payments for equipment rental c. rent on office space d. wages for hourly workers e. interest on outstanding loans

d. wages for hourly workers

Which of the following is most likely to be a fixed input in the short run for Joe's Garage? a. the grease used to lubricate cars b. the part-time labor employed to repair cars c. the inventory of replacement parts d. the electricity used to heat and light the garage e. Rent paid on the garage

e. Rent paid on the garage