15. At any level of output:
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B) marginal cost will exceed average variable cost by the level of average fixed cost.
C) average variable cost will exceed average fixed cost by the level of average total cost.
D) average total cost will exceed average variable cost by the level of average fixed cost.
16. Marginal cost can be defined as the:
A) change in fixed cost resulting from one more unit of production.
B) difference between fixed and variable cost at any level of output.
C) amount which one more unit of output adds to total cost.
D) difference between price and average total cost at the profit-maximizing level of output.
17. When marginal cost is increasing:
A) total cost must be increasing.
B) average total cost must be increasing.
C) average total cost must be decreasing.
D) average fixed costs might be increasing or decreasing.
The fixed cost of the firm is $500. The firm’s total variable cost is indicated in the table.
18. Refer to the above table and information. The average variable cost of the firm when 5 units of output are produced is:
A) $100. B) $200. C) $300. D) $400.
19. Refer to the above table and information. The average total cost of the firm when 3 units of output are being produced is:
A) $350. B) $400. C) $500. D) $700.
20. Refer to the above table and information. The marginal cost of the sixth unit of output is:
A) $400. B) $600. C) $1400. D) $1600.
21. Refer to the above table. The total cost of five units of output will be:
A) $290. B) $320. C) $420. D) $500.
Answer: C
22. Refer to the above table. The average fixed cost of four units of output will be:
A) $40.00. B) $50.00. C) $66.67. D) $100.00.
23. Refer to the above table. The average total cost of two units of output will be:
A) $90.00. B) $106.67. C) $145.00. D) $250.00.
24. Refer to the above table. The marginal cost of the third unit of output is:
A) $30. B) $40. C) $45. D) $50.
25. Refer to the above table. If output is zero, total cost is:
A) $90. B) $50. C) $40. D) $0.
26. Refer to the above table. The total cost of producing 20 units of output is:
A) $50. B) $80. C) $120. D) $130.
27. Refer to the above table. The total variable cost of producing 35 units of output is:
A) $90. B) $120. C) $160. D) $210.
28. Refer to the above table. The average total cost of producing 35 units of output is:
A) $1.41. B) $4.57. C) $6.00. D) $7.00.
29. Refer to the above graph. At which point is marginal product (MP) at its maximum?
A) point A B) point B C) point C D) pointD
30. Refer to the above graph. At which point does marginal product (MP) equal average product (AP) at a level of output?
A) point A B) point B C) point C D) pointD
31. If marginal cost is below average variable cost:
A) average total cost is increasing but average variable cost is decreasing.
B) both average total cost and average variable cost are decreasing.
C) both average total cost and average variable cost are increasing.
D) average variable cost is less than average fixed cost.
The following cost data are for a firm in the short run:
32. What is the firm’s average variable cost at an output of 5 units?
A) $30 B) $60 C) $120 D) $140
33. If marginal cost exceeds average variable cost, then:
A) average variable cost must be increasing. C) average fixed costs must be increasing.
B) average total cost must be increasing. D) marginal cost must be decreasing.
34. At an output of 20,000 units per year, a firm’s variable costs are $80,000 and its average fixed costs are $3. The total costs per year for the firm are:
A) $80,000. B) $100,000. C) $140,000. D) $240,000.
35. A firm encountering economies of scale over some range of output will have a:
A) rising long-run average cost curve.
B) falling long-run average cost curve.
C) constant long-run average cost curve.
D) rising, then falling, then rising long-run average cost curve.
36. The term diseconomies of scale is reflected in:
A) decreasing short-run average costs. C) increasing short-run marginal costs.
B) increasing long-run average costs. D) decreasing long-run prices.
37. If the long-run average total cost curve for a firm is horizontal in the relevant range of production, then it indicates that there:
A) is a minimum efficient scale. C) are diseconomies of scale.
B) are constant returns to scale. D) are economies of scale.
38. Refer to the above graph. There are economies of scale:
A) to the left of point A. C) at pointsA and B.
B) to the right of point B. D) between pointsA and B.
39. Refer to the above graph. There are diseconomies of scale:
A) to the left of point A. C) at pointsA and B.
B) to the right of point B. D) between pointsA and B.
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