ECON1101 Test 2

(Table: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

$0.10

(Table: Costs of Producing Bagels) The average total cost of producing six bagels is:

$0.15

(Table: Costs of Producing Bagels) The average total cost of producing two bagels is:

$0.20

(Table: Costs of Producing Bagels) The marginal cost of producing the sixth bagel is:

$0.20

(Table: Costs of Producing Bagels) The total cost of producing two bagels is:

$0.40

(Table: Costs of Producing Bagels) The total cost of producing six bagels is:

$0.90

(Figure: Average Total Cost Curve) In the figure, the total cost of producing 10 pairs of boots is approximately:

$1,308

The slope of a long-run average total cost curve exhibiting increasing returns to scale is:

negative

The slope of a long-run average total cost curve exhibiting decreasing returns to scale is:

positive

In the short run:

some inputs are fixed and some inputs are variable

(Figure: Short-Run Costs II) Curve 1 crosses the average total cost curve at:

the minimum value of Curve 2

(Figure: Short-Run Costs) At seven units of output, average fixed cost is approximately ________, and average variable cost is approximately ________.

$40; $100

(Table: Total Product and Marginal Product) The marginal product of the second worker is:

20

(Figure: Short-Run Costs II) Curve 1 crosses the average variable cost curve at:

3 units of output

(Figure: Short-Run Costs) The vertical difference between curve B and curve C at any quantity of output is:

average fixed cost

(Figure: Short-Run Costs II) Curve 2 is the ________ cost curve.

average total

(Figure: Short-Run Costs) B is the ________ cost curve.

average total

If marginal cost is equal to average total cost, then:

average total cost is at its minimum

(Figure: Short-Run Costs II) Curve 3 is the ________ cost curve.

average variable

Ashley Bakery expects its marginal cost curve will eventually slope upward, because in baking there is (are):

diminishing marginal returns

Diminishing marginal returns means that:

each additional unit of an input used will increase output, but by smaller and smaller amounts

(Table: Total Product and Marginal Product) Negative marginal returns begin when the ________ worker is added.

eighth

Marginal cost ________ over the range of increasing marginal returns and ________ over the range of diminishing marginal returns.

falls; increases

(Table: Costs of Producing Bagels) Average total cost reaches its minimum value for the ________ bagel.

fourth

If a firm experiences lower costs per unit as it increases production in the long run, this is an example of:

increasing returns to scale

The marginal cost curve intersects the average variable cost curve at:

its lowest point

Decreasing and increasing returns to scale account for the shape of the:

long-run average total cost curve

(Figure: Short-Run Costs II) Curve 1 is the ________ cost curve.

marginal

(Figure: Short-Run Costs) A is the ________ cost curve.

marginal

The curve that shows the additional cost of each additional unit of output is called the:

marginal cost curve