Question 1

Figure 13-6 
-Refer to Figure 13-6. Which of the following can be inferred from the figure above? (i)
Marginal cost is increasing at all levels of output.
(ii)
Marginal product is increasing at low levels of output.
(iii)
Marginal product is decreasing at high levels of output.

Accepted Answer

Marginal product typically increases at low levels of output due to efficiencies gained from specialization, and decreases at high levels of output due to diminishing returns.

Question 2

Figure 13-7 
-Refer to Figure 13-7. Which of the figures represents the total cost curve for a typical firm?

Accepted Answer

Figure 2 represents the typical shape of a total cost curve, with an initial steep increase in costs and then a gradual flattening as output increases.

Question 3

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Marginal cost will be

Accepted Answer

With decreasing marginal product of labor, as more workers are added, each additional worker will add less to the total output than the previous worker. This means that the cost of producing each additional unit of output will increase, causing marginal cost to rise at all points.

Question 4

Figure 13-5 
-Refer to Figure 13-5. Curve A represents which type of cost curve?

Accepted Answer

The answer of Figure 13-5 
-Refer to Figure 13-5. Curve...

Question 5

Figure 13-5 
-Refer to Figure 13-5. Curve C represents which type of cost curve?

Accepted Answer

Curve C represents the average total cost curve, as it is the sum of the average variable cost and the average fixed cost.

Question 6

Figure 13-6 
-Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0)?

Accepted Answer

The total cost curve does not begin at the origin because fixed costs have to be incurred regardless of the amount of output produced. Therefore, even when output is zero, there are positive fixed costs that add to the total cost of production.

Question 7

Figure 13-5 
-Refer to Figure 13-5. Which curve is most likely to represent average total cost?

Accepted Answer

The curve representing average total cost should start high and then decrease towards lower levels of output, indicating economies of scale. Curve C fits this description the best.

Question 8

Figure 13-5 
-Refer to Figure 13-5. Curve D intersects curve C

Accepted Answer

Curve D represents the long-run average total cost curve, while curve C represents the short-run average total cost curve. The point where they intersect represents the efficient scale of production, which is the output level where the firm is producing at the minimum point on its long-run average total cost curve. Therefore, the correct answer is C, at the efficient scale.

Question 9

Figure 13-5 
-Refer to Figure 13-5. Curve A is always declining because

Accepted Answer

Curve A represents average fixed cost, which declines as output increases because fixed costs are spread over a larger number of units.

Question 10

Figure 13-5 
-Refer to Figure 13-5. Curve D is increasing because

Accepted Answer

The answer of Figure 13-5 
-Refer to Figure 13-5. Curve...

Question 11

Figure 13-5 
-Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?

Accepted Answer

Average fixed cost (AFC) decreases as output increases because fixed costs are spread over a larger output. Thus, the curve representing AFC must be downward sloping. Curve A is the only curve that satisfies this condition. The other curves all have a U-shape, which indicates increasing average cost at low levels of output due to insufficient economies of scale, and decreasing average cost at higher levels of output due to economies of scale becoming effective.

Question 12

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
a
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.252 - Given data on a firm's cost structure, calculate the firm's marginal cost at different quantities.
TOPICS:
Producer theory
Production costs
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
177.13.3 - MC - MANK08
-Refer to Figure 13-7. Which of the figures represents the production function for a typical firm?

Accepted Answer

The answer of Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
a
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.252 -...

Question 13

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production function
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
178.13.3 - MC - MANK08
Figure 13-8 
-Refer to Figure 13-8. Quantity C represents the output level where the firm

Accepted Answer

The efficient scale is where the firm produces at the minimum efficient scale (MES), where total costs are minimized, and economies of scale are fully exploited. At quantity C, the firm is producing at the MES, as it is the lowest point on the long-run average total cost (LRATC) curve. Therefore, C is the correct answer.

Question 14

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production function
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
178.13.3 - MC - MANK08
Figure 13-8 
-Refer to Figure 13-8. The efficient scale of production occurs at which quantity?

Accepted Answer

The efficient scale of production occurs where the average total cost is minimized, which is at point C in the graph. At point C, the firm is producing at the lowest possible cost per unit of output. Points A, B, and D are not efficient scales of production because they have higher average total costs.

Question 15

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production costs
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
176.13.3 - MC - MANK08
-Refer to Figure 13-7. Which of the figures represents the marginal cost curve for a typical firm?

Accepted Answer

The answer of Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 -...

Question 16

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average variable cost will be

Accepted Answer

If each additional worker is adding less and less to output, then the cost of producing each unit of output will be increasing. This means that average variable cost will also be increasing at all points.

Question 17

Figure 13-5 
-Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Accepted Answer

The answer of Figure 13-5 
-Refer to Figure 13-5. Which...

Question 18

Figure 13-5 
-Refer to Figure 13-5. Curve D represents which type of cost curve?

Accepted Answer

Curve D represents the marginal cost curve. Marginal cost is the change in total cost that results from producing one additional unit of output. In Figure 13-5, Curve D is upward sloping, which indicates that the marginal cost of producing each additional unit of output increases as output increases.

Question 19

Figure 1
b.
Figure 2
c.
Figure 3
d.
Figure 4
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
ECON.MANK.174 - Given a graph of the production function and input costs, derive the firm's total-cost curve.
TOPICS:
Producer theory
Production function
KEYWORDS:
BLOOM'S: Comprehension
CUSTOM ID:
178.13.3 - MC - MANK08
Figure 13-8 
-Refer to Figure 13-8. Quantity B represents the output level where the firm

Accepted Answer

Quantity B represents the output level where the firm minimizes average variable costs, as this is where the AVC curve intersects the total cost curve. This is not necessarily the level where the firm maximizes profits, produces at the efficient scale, or minimizes marginal costs.

Question 20

Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average fixed cost will be

Accepted Answer

Average fixed cost falls as output increases because fixed costs are spread over a larger number of units, regardless of the marginal product of labor.

Quiz 13: The Costs of Production

Figure 13-6 -Refer to Figure 13-6. Which of the following can be inferred from the figure above? (i) Marginal cost is increasing at all levels of output. (ii) Marginal product is increasing at low levels of output. (iii) Marginal product is decreasing at high levels of output.

Figure 13-7 -Refer to Figure 13-7. Which of the figures represents the total cost curve for a typical firm?

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Marginal cost will be

Figure 13-5 -Refer to Figure 13-5. Curve A represents which type of cost curve?

Figure 13-5 -Refer to Figure 13-5. Curve C represents which type of cost curve?

Figure 13-6 -Refer to Figure 13-6. Why doesn't the total cost curve begin at the origin (the point 0,0) ?

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent average total cost?

Figure 13-5 -Refer to Figure 13-5. Curve D intersects curve C

Figure 13-5 -Refer to Figure 13-5. Curve A is always declining because

Figure 13-5 -Refer to Figure 13-5. Curve D is increasing because

Figure 13-5 -Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average variable cost will be

Figure 13-5 -Refer to Figure 13-5. Which curve is most likely to represent marginal cost?

Figure 13-5 -Refer to Figure 13-5. Curve D represents which type of cost curve?

Scenario 13-20 Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. -Refer to Scenario 13-20. Average fixed cost will be