Microeconomics Quiz Chapter 13

Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory?

ATCA

If marginal cost is rising,

marginal product must be falling.

Curve C represents which type of cost curve?

Average fixed cost

The average variable cost of producing 240 units is

$0.19.

The average total cost of producing 240 units is

$0.32.

Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?

$18,000

What is the average fixed cost of producing 5 units of output?

$4

What is the marginal cost of producing the fifth unit of output?

$70

At which number of workers does diminishing marginal product begin?

2

Eldin is a house painter. He can paint three houses per week. He is considering hiring his friend Murphy. Murphy can paint five houses per week. What is the maximum total output possible if Eldin hires Murphy?

8 houses

The marginal product of the second worker is

80 units

For the firm whose production function and costs are specified in the table, its average-total-cost curve is

U-shaped.

The average fixed cost curve

always declines with increased levels of output.

Bobby pays all his workers the same wage, and labor is his only variable cost. From this information we can conclude that Bobby's average variable cost decreases

as output rises from 0 to 26, but rises after that.

A firm that wants to achieve economies of scale could do so by

assigning limited tasks to its employees, so they can master those tasks.

Marginal cost is equal to average total cost when

average total cost is at its minimum.

In the long run a company that produces and sells popcorn incurs total costs of $1,150 when output is 70 canisters and $1,000 when output is 100 canisters. The popcorn company exhibits

economies of scale because average total cost is falling as output rises.

If long-run average total cost decreases as the quantity of output increases, the firm is experiencing

economies of scale.

Firms may experience diseconomies of scale when

large management structures are bureaucratic and inefficient.

The minimum points of the average variable cost and average total cost curves occur where the

marginal cost curve intersects those curves.

As the number of workers increases,

marginal product increases but at a decreasing rate.

The graph illustrates a typical

production function