Question 1

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  The distance EF represents:

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 2

Refer to the table shown. The average fixed cost of producing 5 units of output is: $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

The answer of Refer to the table shown. The average...

Question 3

Refer to the table shown. The average total cost of producing 5 units of output is: $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

The answer of Refer to the table shown. The average...

Question 4

The average fixed cost curve is:

Accepted Answer

The average fixed cost curve is always downward-sloping because as output increases, the fixed cost is spread over more units, reducing the average fixed cost per unit.

Question 5

If a firm's average fixed cost is $4 and its average total cost is $6, its average variable cost is:

Accepted Answer

The answer of If a firm's average fixed cost is...

Question 6

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  Why does the distance between curves II and III get smaller as quantity increases?

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 7

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  Average variable cost is minimized when output equals:

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 8

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  The average total cost curve is represented by which curve?

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 9

If output changes by 10 units while total costs rise by $500, marginal cost is approximately:

Accepted Answer

Marginal cost is calculated as the change in total cost divided by the change in output. Here, $500/10 units = $50 per unit.

Question 10

Refer to the table shown. The average variable cost of producing 5 units of output is: $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

The answer of Refer to the table shown. The average...

Question 11

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  Marginal cost is minimized when output equals:

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 12

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production.  The average variable cost curve is represented by which curve?

Accepted Answer

The answer of The following graph shows average fixed costs,...

Question 13

Which short-run cost curve continually declines as output increases?

Accepted Answer

Average fixed cost continually declines as output increases because fixed costs are spread over a larger number of units.

Question 14

When output is 20, fixed costs are $100 and variable costs are $400. When output rises to 21, fixed costs are $100 and variable costs are $450. This implies that the marginal cost of the last unit of output equals:

Accepted Answer

The marginal cost is the change in total cost when output is increased by one unit. The variable cost increases from $400 to $450, so the marginal cost is $450 - $400 = $50.

Question 15

The only variable input used in producing bicycles in a small factory is labor. Currently four workers are employed; each works 40 hours per week and is paid $10 per hour. If fixed cost is $2,000 per week and total output is 10 bicycles per week, average cost is:

Accepted Answer

The total labor cost is 4 workers * 40 hours/week * $10/hour = $1,600. Adding the fixed cost of $2,000, the total cost is $3,600. The average cost per bicycle is $3,600 / 10 bicycles = $360.

Question 16

Refer to the table shown. The marginal cost of producing the fourth unit of output is: $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

The marginal cost of producing the fourth unit is the change in total cost from producing the third unit to the fourth unit: $23 - 20 = 3$.

Question 17

The total fixed cost curve is:

Accepted Answer

The total fixed cost curve is horizontal because fixed costs do not change with the level of output.

Question 18

Refer to the table shown. Marginal cost is minimized when how many units of output are produced? $\begin{array}{|c|c|}
\hline \text { Units of output } & \text { Total cost } \
\hline 0 & 5 \
\hline 1 & 11 \
\hline 2 & 16 \
\hline 3 & 20 \
\hline 4 & 23 \
\hline 5 & 25 \
\hline 6 & 26 \
\hline
\end{array}$

Accepted Answer

Marginal cost is the change in total cost when one more unit is produced. It is minimized at the point where the increase in total cost is the smallest. From the table, the marginal cost is minimized at 6 units, where the total cost increases by only 1 unit (from 25 to 26).

Question 19

The vertical distance between the average total cost curve and the average variable cost curve is:

Accepted Answer

The answer of The vertical distance between the average total...

Question 20

A firm's total variable cost increases from $4,000 to $4,020 as the firm increases its output from 400 to 401 units. What is the marginal cost of producing the 401st unit?

Accepted Answer

The marginal cost is the change in total variable cost divided by the change in quantity. Here, it is ($4,020 - $4,000) / (401 - 400) = $20.

Quiz 11: Production and Cost Analysis I

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The distance EF represents:

Refer to the table shown. The average fixed cost of producing 5 units of output is: $\begin{array}{|c|c|}\hline \text { Units of output } & \text { Total cost } \\\hline 0 & 5 \\\hline 1 & 11 \\\hline 2 & 16 \\\hline 3 & 20 \\\hline 4 & 23 \\\hline 5 & 25 \\\hline 6 & 26 \\\hline\end{array}$

Refer to the table shown. The average total cost of producing 5 units of output is: $\begin{array}{|c|c|}\hline \text { Units of output } & \text { Total cost } \\\hline 0 & 5 \\\hline 1 & 11 \\\hline 2 & 16 \\\hline 3 & 20 \\\hline 4 & 23 \\\hline 5 & 25 \\\hline 6 & 26 \\\hline\end{array}$

The average fixed cost curve is:

If a firm's average fixed cost is $4 and its average total cost is $6, its average variable cost is:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. Why does the distance between curves II and III get smaller as quantity increases?

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. Average variable cost is minimized when output equals:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The average total cost curve is represented by which curve?

If output changes by 10 units while total costs rise by $500, marginal cost is approximately:

Refer to the table shown. The average variable cost of producing 5 units of output is: $\begin{array}{|c|c|}\hline \text { Units of output } & \text { Total cost } \\\hline 0 & 5 \\\hline 1 & 11 \\\hline 2 & 16 \\\hline 3 & 20 \\\hline 4 & 23 \\\hline 5 & 25 \\\hline 6 & 26 \\\hline\end{array}$

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. Marginal cost is minimized when output equals:

The following graph shows average fixed costs, average variable costs, average total costs, and marginal costs of production. The average variable cost curve is represented by which curve?

Which short-run cost curve continually declines as output increases?

When output is 20, fixed costs are $100 and variable costs are $400. When output rises to 21, fixed costs are $100 and variable costs are $450. This implies that the marginal cost of the last unit of output equals:

The only variable input used in producing bicycles in a small factory is labor. Currently four workers are employed; each works 40 hours per week and is paid $10 per hour. If fixed cost is $2,000 per week and total output is 10 bicycles per week, average cost is:

Refer to the table shown. The marginal cost of producing the fourth unit of output is: $\begin{array}{|c|c|}\hline \text { Units of output } & \text { Total cost } \\\hline 0 & 5 \\\hline 1 & 11 \\\hline 2 & 16 \\\hline 3 & 20 \\\hline 4 & 23 \\\hline 5 & 25 \\\hline 6 & 26 \\\hline\end{array}$

The total fixed cost curve is:

The vertical distance between the average total cost curve and the average variable cost curve is:

A firm's total variable cost increases from $4,000 to $4,020 as the firm increases its output from 400 to 401 units. What is the marginal cost of producing the 401st unit?