Question 1

Austin's total fixed cost is $3,600 a month for making 100,000 cupcakes at his cupcake bakery.Austin employs 20 workers and pays each worker $600 a month.If labor is his only variable cost,what is Austin's total cost per month for making 100,000 cupcakes?

Accepted Answer

- Austin's fixed cost is $3,600.
- The variable cost is the labor cost. He employs 20 workers and pays each worker $600 a month, so his total labor cost is $12,000 a month.
- Adding the fixed cost and variable cost, his total cost per month is $15,600 for making 100,000 cupcakes.

Question 2

Average variable cost is the ratio of:

Accepted Answer

Average variable cost is the variable cost per unit of output. Therefore, it is the ratio of variable cost to the quantity of output.

Question 3

When marginal cost is rising:

Accepted Answer

When marginal cost is rising, it means the cost of producing one more unit of a good is increasing. However, this does not necessarily dictate the behavior of average variable cost (AVC) and average total cost (ATC). Both AVC and ATC could be increasing if the marginal cost is above them, or they could be decreasing if the marginal cost is still below them but rising. The direction of change for AVC and ATC depends on their relationship to the marginal cost at that point, not solely on the fact that marginal cost is increasing.

Question 4

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The average total cost of producing 10 pairs of eyeglasses is:

Accepted Answer

The average total cost is the sum of the average variable cost and the average fixed cost. Therefore, the average total cost is $30 (average variable cost) + $5 (average fixed cost) = $35.

Question 5

A business produces 10 pairs of eyeglasses.It incurs $35 in average total cost and $5 in average fixed cost.The average variable cost of producing 10 pairs of eyeglasses is:

Accepted Answer

Average Variable Cost (AVC) is found by subtracting Average Fixed Cost (AFC) from Average Total Cost (ATC). So, AVC = ATC - AFC = $35 - $5 = $30.

Question 6

Average variable cost is the ratio of:

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the quantity of output. Therefore, choice C is the correct option.

Question 7

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The total cost of producing 10 pairs of eyeglasses is:

Accepted Answer

The total cost of producing 10 pairs of eyeglasses is calculated by adding the total variable cost and the total fixed cost. The average variable cost is $30 per pair, so for 10 pairs, the total variable cost is $30 * 10 = $300. The average fixed cost is $5 per pair, so for 10 pairs, the total fixed cost is $5 * 10 = $50. Adding these together gives $300 + $50 = $350.

Question 8

Tankao makes earbuds for mobile devices.When Tankao produces 20 sets of earbuds,its average variable cost is $5 per set and its average total cost is $8 per set.Tankao's:

Accepted Answer

The average total cost (ATC) is $8 per set, and the average variable cost (AVC) is $5 per set. The difference between ATC and AVC gives the average fixed cost (AFC), which is $3 per set. Marginal cost (MC) information is not provided directly, so we cannot accurately determine its relationship to AFC without additional data.

Question 9

Average total cost is the ratio of _____ cost to _____.

Accepted Answer

Average total cost is the total cost of production divided by the quantity of output produced.

Question 10

Average total cost is:

Accepted Answer

Average total cost is the total cost of production divided by the quantity produced. Therefore, the correct choice is B.

Question 11

Variable cost divided by the quantity of output produced is _____ cost.

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the quantity of output produced.

Question 12

Suppose the marginal cost curve in the short run first decreases and then increases.If marginal cost is increasing,_____ must be _____.

Accepted Answer

When marginal cost is increasing, it typically means that each additional unit of output is costing more to produce than the previous one, which usually occurs because the marginal product of labor (or other inputs) is decreasing. This is due to the law of diminishing returns, where after a certain point, adding more of a variable input to a fixed input will yield lower increments of output.

Question 13

Average variable cost is:

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the output (or quantity of goods produced). This gives the cost of producing each unit, excluding fixed costs.

Question 14

Suppose the marginal cost curve in the short run first decreases and then increases.If marginal cost is decreasing,_____ must be _____ and _____ must be _____.

Accepted Answer

When marginal cost is decreasing, it implies that each additional unit of output is costing less to produce than the previous one, which typically happens when the marginal product of labor (or other inputs) is increasing. This is because the firm is becoming more efficient in its production process. Additionally, if the marginal cost is decreasing, the average variable cost must also be decreasing because the cost of producing each additional unit is lower, thus pulling the average variable costs down.

Question 15

Average variable cost is:

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the quantity of output produced. This gives the cost of producing each unit of output, excluding fixed costs.

Question 16

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $35 in average total cost.The total fixed cost of producing 10 pairs of eyeglasses is:

Accepted Answer

The average total cost (ATC) is the sum of average variable cost (AVC) and average fixed cost (AFC). Given ATC is $35 and AVC is $30, the AFC is $5. For 10 pairs, total fixed cost (TFC) is 10 * $5 = $50.

Question 17

Total cost divided by the quantity of output produced is:

Accepted Answer

Total cost divided by the quantity of output produced is the definition of average total cost.

Question 18

When Aishe's Bar-B-Que produces 10 pork sandwiches,the total cost is $5.When 11 pork sandwiches are produced,the total cost rises to $6.From this we know that the marginal cost of the eleventh pork sandwich:

Accepted Answer

The fact that the cost increased by $1 for the 11th sandwich means that the marginal cost of the 11th sandwich is $1. The average cost of 11 sandwiches is ($6 total cost for 11 sandwiches)/(11 sandwiches) = $0.545 per sandwich. Therefore, the marginal cost ($1) is greater than the average cost ($0.545) for the 11th sandwich.

Question 19

Tankao makes Bluetooth headphones for mobile devices.When 50 Bluetooth headphones are produced in the short run,the average variable cost is $30.Fixed costs are greater than zero.Therefore,Tankao's average _____ cost is _____.

Accepted Answer

Since fixed costs are greater than zero, the average total cost must include both variable costs and fixed costs, making it greater than the average variable cost alone, which is $30.

Question 20

Total cost divided by the quantity of output produced is:

Accepted Answer

This is because the definition of average total cost is the total cost divided by the quantity of output produced. Therefore, the answer is C.

Quiz 11: Behind the Supply Curve: Inputs and Costs

Austin's total fixed cost is $3,600 a month for making 100,000 cupcakes at his cupcake bakery.Austin employs 20 workers and pays each worker $600 a month.If labor is his only variable cost,what is Austin's total cost per month for making 100,000 cupcakes?

Average variable cost is the ratio of:

When marginal cost is rising:

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The average total cost of producing 10 pairs of eyeglasses is:

A business produces 10 pairs of eyeglasses.It incurs $35 in average total cost and $5 in average fixed cost.The average variable cost of producing 10 pairs of eyeglasses is:

Average variable cost is the ratio of:

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $5 in average fixed cost.The total cost of producing 10 pairs of eyeglasses is:

Tankao makes earbuds for mobile devices.When Tankao produces 20 sets of earbuds,its average variable cost is $5 per set and its average total cost is $8 per set.Tankao's:

Average total cost is the ratio of _ cost to _.

Average total cost is:

Variable cost divided by the quantity of output produced is _____ cost.

Suppose the marginal cost curve in the short run first decreases and then increases.If marginal cost is increasing,_ must be _.

Average variable cost is:

Suppose the marginal cost curve in the short run first decreases and then increases.If marginal cost is decreasing,___ must be _ and _ must be ___.

Average variable cost is:

A business produces 10 pairs of eyeglasses.It incurs $30 in average variable cost and $35 in average total cost.The total fixed cost of producing 10 pairs of eyeglasses is:

Total cost divided by the quantity of output produced is:

When Aishe's Bar-B-Que produces 10 pork sandwiches,the total cost is $5.When 11 pork sandwiches are produced,the total cost rises to $6.From this we know that the marginal cost of the eleventh pork sandwich:

Tankao makes Bluetooth headphones for mobile devices.When 50 Bluetooth headphones are produced in the short run,the average variable cost is $30.Fixed costs are greater than zero.Therefore,Tankao's average _ cost is _.

Total cost divided by the quantity of output produced is: