Marginal & Average Cost Curves

Variable cost divided by the quantity of output produced is _____ cost. average variable marginal average fixed average total

Average variable

In the long run, some of a firm's costs are fixed, while others are variable. True False

False

The term diminishing returns refers to: a decrease in total output due to the firm hiring uneducated workers. a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant. a falling interest rate that can be expected as one's investment in a single asset increases. a reduction in profits caused by increasing output beyond the optimal point.

a decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant

The _____ cost curve is NOT affected by diminishing returns. average total average fixed marginal average variable

average fixed

When an additional unit of a variable input adds less to total product than the previous unit, the firm has: diminishing marginal returns. increasing returns. diminishing marginal returns and diminishing total returns. diminishing total returns.

diminishing marginal returns

In the short run, the average total cost curve slopes upward because of: diseconomies of scale. economies of scale. increasing returns. diminishing returns.

diminishing returns

A factor of production whose quantity CANNOT be changed during the short run is a(n) _____ factor of production. variable fixed incremental marginal

fixed

An input whose quantity CANNOT be changed in the short run is: marginal. incremental. fixed. variable.

fixed

When a fine caterer produces 30 catered meals, its marginal cost and average variable cost each equal $10. Therefore, assuming normally shaped cost curves, at 29 meals its marginal cost is _____ $10 and its average variable cost is _____ $10. less than; more than more than; more than equal to; equal to more than; less than

less than; more than

The change in total cost resulting from a one-unit change in quantity is _____ cost. average total average fixed marginal average variable

marginal

You own a deli. Which of the following is most likely a fixed input at your deli? the bread used to make sandwiches the dining room the employees the tomato sauce used to make soups

the dining room

Average total cost is: total cost times output. the change in output divided by the change in costs. the change in cost divided by the change in output. total cost divided by output.

total cost divided by output

Tankao makes Bluetooth sets for mobile devices. When 50 Bluetooth sets are produced in the short run, the average variable cost is $30. Tankao's average _____ cost is _____. fixed; $30. total; greater than $30. total; $30. total; less than $30.

total; greater than 30

Average total cost is the ratio of _____ cost to _____. total; quantity of output total; amount of variable input marginal; amount of variable input total; marginal cost

total; quantity of output

The short-run average total cost curve is -shaped because at low output levels the spreading effect of falling average fixed costs dominates the diminishing returns effect, while at high output levels the reverse is true. False True

true

You run a business producing picture frames. This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames. It follows that average _____ cost is _____. fixed; $1 total; $3 total; $1 variable; $2

variable; 2

If two firms are identical in all respects except that one has more of the fixed input capital than another, the total product curve for the firm with more capital: will lie below the total product curve for the firm with less capital. will lie above the total product curve for the firm with less capital. must equal the total product curve for the firm with less capital. will show no diminishing marginal returns.

will lie above the total product curve for the firm with less capital