Exam 41: Supply: the Costs of Doing Business

The following table shows the cost of producing different units of ball point pens by a firm. Table 21.1 Refer to Table 21.1.What is the marginal cost of producing the fourth and the fifth unit?

The table given below shows the average total cost of production of a firm at different levels of the output. Table 21.5 Refer to Table 21.5.At what level of production will the average total cost curve intersect the marginal cost curve?

The figure given below shows the average fixed cost (AFC)and the average variable cost (AVC)curves of a competive firm. Figure 21.1 Refer to Figure 21.1.Compute the total cost of producing 4 units of the output.

Suppose that the total fixed cost of producing five sailboats is $4, 000, total variable cost is $4, 000, and the total cost of producing six sailboats is $10, 000.The marginal cost of the sixth sailboat is:

Marginal fixed cost:

If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a line that is perfectly horizontal implies:

If average variable cost is falling, then:

Diseconomies of scale:

According to economic theory, the difference between the long run and the short run is:

The figure given below shows three Short Run Average Total Cost (SRATC)curves and the Long Run Average Total Cost (LRATC)curve of a firm. Figure 21.3 Which of the following would account for the shape of the long-run average-total-cost curve in Figure 21.3?

If a firm experiences economies of scale,

In the long run, total variable cost:

In the long run,

Which of the following is not a reason for economies of scale?

If long-run costs are plotted on the vertical axis and quantity of output plotted on the horizontal axis, a positively sloped line implies _____.

Why does the law of diminishing return not apply in the long run?

When a firm expands in size such that its workers can specialize in any one activity, the long run average total cost of the firm gradually increases.

For a steel manufacturing firm, overhead costs would include:

The minimum efficient scale is the level of output where the short-run average-total-cost curve reaches its minimum point.

If the cost borne by a firm when output is zero is $100 and that of producing 5 units is $250, then the variable cost of the firm is equal to $150.