Question 1

The slope of the total variable cost curve equals the:

Accepted Answer

A) average variable cost. 
B) marginal cost. 
C) average cost. 
D) marginal physical product. 
A) average variable cost. 
B) marginal cost. 
C) average cost. 
D) marginal physical product.

Question 2

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

Accepted Answer

Oil refineries are large scale plants,pr

Question 3

When output expands from the fourth to the fifth unit,the total variable cost of production rises from $400 to $500,while the total fixed cost remains constant at $100.Compute the marginal cost of producing the fifth unit.

Accepted Answer

A) $50 
B) $200 
C) $400 
D) $100 
A) $50 
B) $200 
C) $400 
D) $100

Question 4

Talco Inc. ,a manufacturer of steel pipes,uses 500 workers and 100 machines to produce 10,000 pipes,each 28mm thick,every day.Its operations research team reports that the marginal productivity of labor is 40 steel pipes while that of capital is 240 steel pipes.If workers are paid $8 per day and the rental cost of capital is $40 per day,examine whether the company is following the golden rule of cost minimization.

Accepted Answer

The golden rule of cost minimization say

Question 5

Identify the example of sunk cost from the following.

Accepted Answer

A) A higher wage demanded by the labor union 
B) Failure to meet the annual sales target 
C) The lumber used to produce office furniture 
D) Raw materials damaged by fire in the warehouse 
A) A higher wage demanded by the labor union 
B) Failure to meet the annual sales target 
C) The lumber used to produce office furniture 
D) Raw materials damaged by fire in the warehouse

Question 6

In the short run,a firm's marginal cost rises because of:

Accepted Answer

A) a decline in output prices. 
B) a decline in marginal productivity of inputs. 
C) decreasing returns to scale. 
D) the flexibility in input usage. 
A) a decline in output prices. 
B) a decline in marginal productivity of inputs. 
C) decreasing returns to scale. 
D) the flexibility in input usage.

Question 7

For the cubic total cost function TC = a + bQ + cQ2 + dQ3,where a = 0,b = 25,c = -10,and d = 1,the marginal cost at an output of one unit equals:

Accepted Answer

A) $0. 
B) $5. 
C) $8. 
D) $10. 
A) $0. 
B) $5. 
C) $8. 
D) $10.

Question 8

Suppose you quit your job as an accountant earning an annual salary of $50,000 to buy foreclosed homes,fix them up,and then resell them.You have $200,000 of your own money to invest in this,half of which you use to purchase three homes for a combined $500,000 (borrowing the remaining $400,000),and spend the remaining $100,000 of your money on materials.Over the course of one year you fix up all three homes and resell them for a total of $700,000.Assume that your loan to purchase the homes is payable in one lump sum at the end of one year.If you can borrow and lend money at a 6% annual rate of interest,what was your total cost of renovating these three homes?

Accepted Answer

A) $572,000 
B) $600,000 
C) $624,000 
D) $686,000 
A) $572,000 
B) $600,000 
C) $624,000 
D) $686,000

Question 9

If fixed costs are $1,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 2,000 units are produced?

Accepted Answer

A) $0.50 
B) $1.00 
C) $1.50 
D) $2.00 
A) $0.50 
B) $1.00 
C) $1.50 
D) $2.00

Question 10

At 30 units of output,the slope of a firm's average cost curve is recorded as +1.20.Calculate the firm's marginal cost at this output level if its average cost is $300.

Accepted Answer

A) $300 
B) $130 
C) $336 
D) $120 
A) $300 
B) $130 
C) $336 
D) $120

Question 11

If fixed costs are $10,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 10,000 units are produced?

Accepted Answer

A) $0.20 
B) $2.00 
C) $5.00 
D) $1.00 
A) $0.20 
B) $2.00 
C) $5.00 
D) $1.00

Question 12

Consider a graph with a total variable cost curve.Cost is on the vertical axis and output on the horizontal axis.The marginal cost can be represented by:

Accepted Answer

A) a ray from the origin to a point tangent to the total variable cost curve. 
B) a ray from the origin to a point on the total variable cost curve. 
C) the slope at a particular point on the total variable cost curve. 
D) the distance from the origin to a point on the total variable cost curve. 
A) a ray from the origin to a point tangent to the total variable cost curve. 
B) a ray from the origin to a point on the total variable cost curve. 
C) the slope at a particular point on the total variable cost curve. 
D) the distance from the origin to a point on the total variable cost curve.

Question 13

The long-run average cost curve always:

Accepted Answer

A) reflects the law of diminishing returns. 
B) reflects constant returns to scale. 
C) shows the least-cost method of production for each level of output. 
D) has an inverted U-shape. 
A) reflects the law of diminishing returns. 
B) reflects constant returns to scale. 
C) shows the least-cost method of production for each level of output. 
D) has an inverted U-shape.

Question 14

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and average total cost is $6,what is average fixed cost?

Accepted Answer

A) $1 
B) $5 
C) $10 
D) $1,000 
A) $1 
B) $5 
C) $10 
D) $1,000

Question 15

Marico Corp.can manufacture 45,000 ball bearings per day at one of its production facilities.If the company uses the same facility for manufacturing rivets,a total of 30,000 rivets can be produced each day.Calculate Marico Corp.'s implicit cost per day of producing rivets at this facility.

Accepted Answer

A) The monetary value of 45,000 ball bearings 
B) The monetary value of 30,000 rivets 
C) The monetary value of 15,000 ball bearings 
D) The monetary value of 15,000 rivets 
A) The monetary value of 45,000 ball bearings 
B) The monetary value of 30,000 rivets 
C) The monetary value of 15,000 ball bearings 
D) The monetary value of 15,000 rivets

Question 16

Consider the cost function C0 = 20L + 30K and production function Q = L0.3K0.7 of a firm.Derive the first order conditions if the firm is maximizing its output subject to the given cost constraint.

Accepted Answer

For dealing with a constrained optimizat

Question 17

At 20 units of output,the slope of a firm's average cost curve is recorded as +1.5.Calculate the firm's average cost at this output level if its marginal cost is $300.

Accepted Answer

A) $270 
B) $300 
C) $230 
D) $200 
A) $270 
B) $300 
C) $230 
D) $200

Question 18

A total product curve whose slope is continually rising at an increasing rate:

Accepted Answer

A) indicates that an infinite amount of labor is needed to produce a given level of output. 
B) does not reflect diminishing marginal returns. 
C) does not reflect increasing marginal returns. 
D) describes a production function where labor is the only input. 
A) indicates that an infinite amount of labor is needed to produce a given level of output. 
B) does not reflect diminishing marginal returns. 
C) does not reflect increasing marginal returns. 
D) describes a production function where labor is the only input.

Question 19

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

Accepted Answer

A) 10 
B) 100 
C) 1,000 
D) 1,100 
A) 10 
B) 100 
C) 1,000 
D) 1,100

Question 20

If the marginal cost curve intersects the average variable cost curve at 1,000 units per day,the rate of output at which average total cost is minimized is _____.

Accepted Answer

A) 1,000 units 
B) more than 1,000 units 
C) less than 500 units 
D) 500 units 
A) 1,000 units 
B) more than 1,000 units 
C) less than 500 units 
D) 500 units

The slope of the total variable cost curve equals the:

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

When output expands from the fourth to the fifth unit,the total variable cost of production rises from $400 to $500,while the total fixed cost remains constant at $100.Compute the marginal cost of producing the fifth unit.

Identify the example of sunk cost from the following.

In the short run,a firm's marginal cost rises because of:

For the cubic total cost function TC = a + bQ + cQ² + dQ³,where a = 0,b = 25,c = -10,and d = 1,the marginal cost at an output of one unit equals:

If fixed costs are $1,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 2,000 units are produced?

At 30 units of output,the slope of a firm's average cost curve is recorded as +1.20.Calculate the firm's marginal cost at this output level if its average cost is $300.

If fixed costs are $10,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 10,000 units are produced?

Consider a graph with a total variable cost curve.Cost is on the vertical axis and output on the horizontal axis.The marginal cost can be represented by:

The long-run average cost curve always:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and average total cost is $6,what is average fixed cost?

Marico Corp.can manufacture 45,000 ball bearings per day at one of its production facilities.If the company uses the same facility for manufacturing rivets,a total of 30,000 rivets can be produced each day.Calculate Marico Corp.'s implicit cost per day of producing rivets at this facility.

Consider the cost function C₀ = 20L + 30K and production function Q = L^0.3K^0.7 of a firm.Derive the first order conditions if the firm is maximizing its output subject to the given cost constraint.

At 20 units of output,the slope of a firm's average cost curve is recorded as +1.5.Calculate the firm's average cost at this output level if its marginal cost is $300.

A total product curve whose slope is continually rising at an increasing rate:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

If the marginal cost curve intersects the average variable cost curve at 1,000 units per day,the rate of output at which average total cost is minimized is _____.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 8: The Cost of Production

The slope of the total variable cost curve equals the:

Do you think the marginal cost curve of a petroleum refinery will be U-shaped? Explain your answer.

When output expands from the fourth to the fifth unit,the total variable cost of production rises from $400 to $500,while the total fixed cost remains constant at $100.Compute the marginal cost of producing the fifth unit.

Identify the example of sunk cost from the following.

In the short run,a firm's marginal cost rises because of:

For the cubic total cost function TC = a + bQ + cQ2 + dQ3,where a = 0,b = 25,c = -10,and d = 1,the marginal cost at an output of one unit equals:

If fixed costs are $1,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 2,000 units are produced?

At 30 units of output,the slope of a firm's average cost curve is recorded as +1.20.Calculate the firm's marginal cost at this output level if its average cost is $300.

If fixed costs are $10,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 10,000 units are produced?

Consider a graph with a total variable cost curve.Cost is on the vertical axis and output on the horizontal axis.The marginal cost can be represented by:

The long-run average cost curve always:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and average total cost is $6,what is average fixed cost?

Marico Corp.can manufacture 45,000 ball bearings per day at one of its production facilities.If the company uses the same facility for manufacturing rivets,a total of 30,000 rivets can be produced each day.Calculate Marico Corp.'s implicit cost per day of producing rivets at this facility.

Consider the cost function C0 = 20L + 30K and production function Q = L0.3K0.7 of a firm.Derive the first order conditions if the firm is maximizing its output subject to the given cost constraint.

At 20 units of output,the slope of a firm's average cost curve is recorded as +1.5.Calculate the firm's average cost at this output level if its marginal cost is $300.

A total product curve whose slope is continually rising at an increasing rate:

If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and the average total cost is $6,how many units are being produced?

If the marginal cost curve intersects the average variable cost curve at 1,000 units per day,the rate of output at which average total cost is minimized is _____.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

For the cubic total cost function TC = a + bQ + cQ² + dQ³,where a = 0,b = 25,c = -10,and d = 1,the marginal cost at an output of one unit equals:

Consider the cost function C₀ = 20L + 30K and production function Q = L^0.3K^0.7 of a firm.Derive the first order conditions if the firm is maximizing its output subject to the given cost constraint.