Econ #7

1. In the short run, if average variable cost equals $50, average total cost equals $75, and output equals 100, the total fixed cost must be: a. $25. b. $2,500. c. $5,000. d. $7,500.

b

3. Which of the following will become smaller and smaller as the firm expands output? a. average total cost. b. average fixed cost . c. marginal cost. d. total fixed cost .

b

6. In Exhibit 6-6, the total fixed cost is: a. 0. b. 1,000. c. 3,000. d. 5,000. e. 6,000.

b

7. By filling in the blanks in Exhibit 6-8, the total cost of producing zero pizzas is shown to be equal to: a. zero. b. $100. c. $5. d. $105. e. $95.

b

9. By filling in the blanks in Exhibit 6-8, the variable cost of producing 4 pizzas is shown to be equal to: a. $100. b. $40. c. $60. d. $85. e. $185.

b

10. When marginal cost is below average total cost: a. total cost is falling. b. total cost is rising. c. average total cost is falling. d. average fixed cost is rising. e. total variable cost is falling.

c

2. Which of the following best describes average variable cost? a. The change in total cost when one additional unit of output is produced. b. Total cost divided by the quantity of output produced. c. Total variable cost divided by the quantity of output produced. d. Total fixed cost divided by the quantity of output produced. e. Costs that do not vary as output varies.

c

4. Marginal cost is best defined as: a. a cost that does not vary with the rate of output. b. the difference between fixed and variable cost at any level of output. c. the amount added to total cost when one more unit of output is produced. d. the difference between price and average total cost at the profit-maximizing level of output.

c

What is the average total cost at an output level of four units? a. $1,200. b. $1,400. c. $1,500. d. $2,000. Graph on 7

c

8. By filling in the blanks in Exhibit 6-8, the total cost of producing 5 pizzas is shown to be equal to: a. $100. b. $105. c. $113. d. $123. e. $160.

e