A) diminishes at all levels of production. B) may initially increase,then diminish,but never become negative. C) may initially increase,then diminish,and ultimately become negative. D) is always less than average product. A) diminishes at all levels of production. B) may initially increase,then diminish,but never become negative. C) may initially increase,then diminish,and ultimately become negative. D) is always less than average product. C

A) TVC will increase for a time at a diminishing rate,but then beyond some point will increase at an increasing rate. B) TVC will increase for a time at an increasing rate,but then beyond some point will increase at a diminishing rate. C) TVC will increase by the same absolute amount for each additional unit of output produced. D) one cannot generalize concerning the behavior of TVC as output increases. A) TVC will increase for a time at a diminishing rate,but then beyond some point will increase at an increasing rate. B) TVC will increase for a time at an increasing rate,but then beyond some point will increase at a diminishing rate. C) TVC will increase by the same absolute amount for each additional unit of output produced. D) one cannot generalize concerning the behavior of TVC as output increases.

Answer the question on the basis of the following cost data: $\begin{array}{c} \begin{array}{c} \\ \\ \underline{\text {Output}}\\ 1 \\ 2 \\ 3 \\ 4 \\ 5 \\ 6 \\ 7 \\ 8 \end{array} \begin{array}{c} \text {Average}\\ \text {Fixed}\\ \underline{\text {Cost }}\\ \$ 50.00 \\ 25.00 \\ 16.67 \\ 12.50 \\ 10.00 \\ 8.37 \\ 7.14 \\ 6.25 \end{array} \begin{array}{c} \text {Average}\\ \text {Variable}\\ \underline{\text {Cost }}\\ \$ 100.00 \\ 80.00 \\ 66.67 \\ 65.00 \\ 68.00 \\ 73.33 \\ 80.00 \\ 87.50 \end{array} \end{array}$ Refer to the data.The average total cost of five units of output is:

A) $69. B) $78. C) $3. D) $10. A) $69. B) $78. C) $3. D) $10.

Answer the question on the basis of the following cost data: $\begin{array}{c} \begin{array}{c} \\ \\ \underline{\text {Output}}\\ 1 \\ 2 \\ 3 \\ 4 \\ 5 \\ 6 \\ 7 \\ 8 \end{array} \begin{array}{c} \text {Average}\\ \text {Fixed}\\ \underline{\text {Cost }}\\ \$ 50.00 \\ 25.00 \\ 16.67 \\ 12.50 \\ 10.00 \\ 8.37 \\ 7.14 \\ 6.25 \end{array} \begin{array}{c} \text {Average}\\ \text {Variable}\\ \underline{\text {Cost }}\\ \$ 100.00 \\ 80.00 \\ 66.67 \\ 65.00 \\ 68.00 \\ 73.33 \\ 80.00 \\ 87.50 \end{array} \end{array}$ Refer to the data.The marginal cost curve would intersect the average variable cost curve at about:

A) 2 units of output. B) 4 units of output. C) 6 units of output. D) 7 units of output. A) 2 units of output. B) 4 units of output. C) 6 units of output. D) 7 units of output.

Answer the question on the basis of the following output data for a firm.Assume that the amounts of all nonlabor resources are fixed. \[\begin{array}{l} \begin{array} { c c c } \text { Number of}&&\text{ Units of }\\ \text { Workers } & & \text { Output } \\ \hline 0 & & 0 \\ 1 & & 40 \\ 2 & & 90 \\ 3 & & 126 \\ 4 & & 150 \\ 5 & & 165 \\ 6 & & 180 \end{array} \end{array}\] Refer to the data.Diminishing marginal returns become evident with the addition of the:

A) sixth worker. B) fourth worker. C) third worker. D) second worker. A) sixth worker. B) fourth worker. C) third worker. D) second worker.

Answer the question on the basis of the following cost data: \[\begin{array} { c c c } &&\text { Total } \\ \text { Output }&&\text { Cost }\\ \hline 0 & & \$ 24 \\ 1 & & 33 \\ 2 & & 41 \\ 3 & & 48 \\ 4 & & 54 \\ 5 & & 61 \\ 6 & & 69 \end{array}\] Refer to the data.The average fixed cost of producing 3 units of output is:

A) $8. B) $7.40. C) $5.50. D) $6. A) $8. B) $7.40. C) $5.50. D) $6.

Exam 9: Businesses and the Cost of Production

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity,water,disposal)costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data.Creamy Crisp's explicit costs are:

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

B

Marginal product:

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

C

To the economist,total cost includes:

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

A

If a firm doubles its output in the long run and its unit costs of production decline,we can conclude that:

(Multiple Choice)

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Question 4

Which of the following best expresses the law of diminishing returns?

(Multiple Choice)

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Question 5

In the short run:

(Multiple Choice)

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Question 6

Answer the question on the basis of the following cost data: 1 2 3 4 5 6 7 8 Average Fixed \ 50.00 25.00 16.67 12.50 10.00 8.37 7.14 6.25 Average Variable \ 100.00 80.00 66.67 65.00 68.00 73.33 80.00 87.50 Refer to the data.The average total cost of five units of output is:

(Multiple Choice)

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Question 7

Because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased:

(Multiple Choice)

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Question 8

The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity,water,disposal)costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data.Creamy Crisp's implicit costs,including a normal profit,are:

(Multiple Choice)

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Question 9

Which of the following is a short-run adjustment?

(Multiple Choice)

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Question 10

If a firm increases all of its inputs by 10 percent and its output increases by 10 percent,then:

(Multiple Choice)

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Question 11

The long run is characterized by:

(Multiple Choice)

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Question 12

Average fixed costs for a given level of output can be determined graphically by:

(Multiple Choice)

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Question 13

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent.This means that initially it was producing:

(Multiple Choice)

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Question 14

Answer the question on the basis of the following cost data: 1 2 3 4 5 6 7 8 Average Fixed \ 50.00 25.00 16.67 12.50 10.00 8.37 7.14 6.25 Average Variable \ 100.00 80.00 66.67 65.00 68.00 73.33 80.00 87.50 Refer to the data.The marginal cost curve would intersect the average variable cost curve at about:

(Multiple Choice)

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Question 15

In which of the following industries are economies of scale exhausted at relatively low levels of output?

(Multiple Choice)

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Question 16

(Last Word)Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

(Multiple Choice)

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Question 17

Answer the question on the basis of the following output data for a firm.Assume that the amounts of all nonlabor resources are fixed. Number of Units of Workers Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Refer to the data.Diminishing marginal returns become evident with the addition of the:

(Multiple Choice)

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Question 18

Answer the question on the basis of the following cost data: Total Output Cost 0 \ 24 1 33 2 41 3 48 4 54 5 61 6 69 Refer to the data.The average fixed cost of producing 3 units of output is:

(Multiple Choice)

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Question 19

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120,then:

(Multiple Choice)

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Question 20

Marginal product:

To the economist,total cost includes:

If a firm doubles its output in the long run and its unit costs of production decline,we can conclude that:

Which of the following best expresses the law of diminishing returns?

In the short run:

Answer the question on the basis of the following cost data: 1 2 3 4 5 6 7 8 Average Fixed \ 50.00 25.00 16.67 12.50 10.00 8.37 7.14 6.25 Average Variable \ 100.00 80.00 66.67 65.00 68.00 73.33 80.00 87.50 Refer to the data.The average total cost of five units of output is:

Because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased:

Which of the following is a short-run adjustment?

If a firm increases all of its inputs by 10 percent and its output increases by 10 percent,then:

The long run is characterized by:

Average fixed costs for a given level of output can be determined graphically by:

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent.This means that initially it was producing:

In which of the following industries are economies of scale exhausted at relatively low levels of output?

(Last Word)Which of the following is predicted to deliver a Third Industrial Revolution characterized by low production and transportation costs?

Answer the question on the basis of the following output data for a firm.Assume that the amounts of all nonlabor resources are fixed. Number of Units of Workers Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Refer to the data.Diminishing marginal returns become evident with the addition of the:

Answer the question on the basis of the following cost data: Total Output Cost 0 \ 24 1 33 2 41 3 48 4 54 5 61 6 69 Refer to the data.The average fixed cost of producing 3 units of output is:

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120,then:

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