Question 1

To answer,refer to the following: "Ford built 18 vehicles per auto employee in North America last year,while GM could only manage 12."
In comparison with GM,Ford had
A)higher average variable cost.
B)lower average variable cost.
C)higher total variable cost.
D)both a and c
E)none of the above

Accepted Answer

The statement only provides information about the number of vehicles built per auto employee in North America by Ford and GM. It does not provide any information about the cost of manufacturing or the total variable cost. Therefore, B is the best choice as it is the only option that can be inferred from the given information. Ford was able to build more vehicles per auto employee than GM, indicating that they were able to operate more efficiently or with lower costs per unit.

Question 2

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily."
Today,at the Huffy bicycle factory,
A)the total product is 15,000 bicycles per day.
B)the marginal product of labor is 10 additional bicycles per additional employee.
C)the average product of labor is 8.8 bicycles per employees.
D)both a and b
E)both a and c

Accepted Answer

This is because the passage states that 1,700 employees produce 15,000 bicycles per day, which means the total product is 15,000 bicycles per day (choice A is correct). Additionally, we can calculate the average product of labor by dividing the total product (15,000) by the number of employees (1,700), which gives us 8.8 bicycles per employee (choice C is correct). The passage does not provide information to calculate the marginal product of labor, so choice B is incorrect. Therefore, the best choice is E.

Question 3

To answer,refer to the following:
 "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily."
Holding all else equal,we can conclude that,over the past 5 years,
A)Huffy's average variable cost decreased.
B)Huffy's average variable cost increased.
C)Huffy's marginal cost decreased.
D)Huffy's marginal cost increased.
E)both a and c

Accepted Answer

The answer of To answer,refer to the following:
 "At Huffy's...

Question 4

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,if the firm produces 30 units of output,how many units of labor does the firm use?
A)30
B)45
C)54
D)60
E)none of the above

Accepted Answer

The average variable cost (AVC) at 30 units of output is $45. Since the price of labor is $25 per unit, the total variable cost (TVC) for 30 units of output is $45 * 30 = $1350. Therefore, the firm uses $1350 / $25 = 54 units of labor.

Question 5

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,how much does the 23rd unit of output add to the firm's total cost?
A)$75
B)$135
C)$750
D)$1,350
E)none of the above

Accepted Answer

The 23rd unit of output adds $30 to the firm's total variable cost and $30 to the firm's total fixed cost, for a total of $60.

Question 6

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  At what output does the firm reach minimum average variable cost?
A)7,400
B)8,000
C)100
D)6,000
E)600

Accepted Answer

The point where the AVC curve reaches its minimum is where it intersects with the MC curve. This occurs at an output of approximately 8,000 units. At this level of output, the AVC is at its lowest point, which means the firm is operating most efficiently in terms of labor use. At any output level below 8,000, the AVC is higher, which means the firm is not using labor as efficiently as possible.

Question 7

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average } \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,if the firm produces 40 units of output,what is total variable cost?
A)$1.50
B)$60
C)$100
D)$2,400
E)none of the above

Accepted Answer

The average variable cost for producing 40 units is $60. Therefore, the total variable cost is 40 units * $60 = $2,400.

Question 8

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 40 units of labor,what is AVC at this level of output?
A)$120
B)$400
C)$40
D)$70
E)$86

Accepted Answer

The answer of The following graph shows the marginal and...

Question 9

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  What is AVC at its minimum?
A)$80
B)$100
C)$8
D)$50
E)$35

Accepted Answer

The answer of The following graph shows the marginal and...

Question 10

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 120 units of labor,what is its marginal cost at this output?
A)$65
B)$70
C)$50
D)$56
E)$120

Accepted Answer

Marginal cost is the change in total cost that comes from producing one more unit of output:
MC = ΔTC / ΔQ
From the graph, we can see that at 120 units of labor, the marginal product of labor is approximately 140 units. So:
MC = $2,800 / 140 = $20
However, we need to adjust for the fact that the fixed cost must be spread out over the total output. At 140 units of output, we can see from the graph that the average product of labor is approximately 15 units. So:
ATC = ($160,000 + $2,800 x 120) / 140 = $35,428.57 / 140 = $253.06
AVC = $2,800 / 15 = $186.67
AFC = $160,000 / 140 = $1,142.86
So we can also calculate:
MC = ATC - AVC = $253.06 - $186.67 = $66.39
Therefore, the closest answer choice is D) $56.

Question 11

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 120 units of labor,how much output does it produce?
A)7,000 units
B)70 units
C)8,400 units
D)9,200 units
E)7,500 units

Accepted Answer

At the point where the marginal product curve intersects the average product curve, the average product is at its maximum, and from that point on, the marginal product curve lies below the average product curve. This means that when the firm uses 120 units of labor, the average product is at its maximum, and therefore the firm is producing its maximum output. 
From the graph, we can see that the maximum output is approximately 8,400 units, so the answer is (C) 8,400 units.

Question 12

To answer,refer to the following: "Ford built 18 vehicles per auto employee in North America last year,while GM could only manage 12."
In comparison with GM,Ford had a higher
A)average product of labor.
B)average product of capital.
C)marginal product of labor.
D)marginal product of capital.

Accepted Answer

The statement mentions "vehicles per auto employee" which is a measure of average product of labor. Therefore, Ford had a higher average product of labor than GM.

Question 13

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 120 units of labor,what is average total cost at this output?
A)$59
B)$40
C)$190
D)$84
E)$120

Accepted Answer

The answer of The following graph shows the marginal and...

Question 14

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 40 units of labor,how much output does it produce?
A)1,600 units
B)400 units
C)4,000 units
D)2,800 units
E)none of the above

Accepted Answer

The answer of The following graph shows the marginal and...

Question 15

In the above figure,what is the AVERAGE total cost of producing 10 units of output?
A)$4
B)$8
C)$12
D)$50
E)$360

Accepted Answer

The average total cost is found by dividing the total cost (TC) by the quantity (Q). At Q=10, the TC is $120 and therefore the average total cost is $12 ($120/10). The other answer choices are either too low or too high to be the average total cost.

Question 16

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 40 units of labor,what is average total cost at this output?
A)$140
B)$40
C)$70
D)$170
E)none of the above

Accepted Answer

The answer of The following graph shows the marginal and...

Question 17

The capital stock is fixed at 50 units,the price of capital is $30 per unit,and the price of labor is $25 per unit. $$\begin{array} { c c } 
\text { Output } & \begin{array} { c } 
\text { Average} \
\text { Variable Cost }
\end{array} \
\hline 10 & \$ 40 \
20 & 30 \
30 & 45 \
40 & 60
\end{array}$$ Given the above,if the firm produces 20 units of output,what is average fixed cost?
A)$1.50
B)$50
C)$150
D)$600
E)none of the above

Accepted Answer

The average fixed cost (AFC) is calculated as the total fixed cost (TFC) divided by the quantity of output produced. The total fixed cost is the cost of the fixed inputs, which in this case is the capital stock. Since the capital stock is fixed at 50 units and the price per unit of capital is $30, the total fixed cost is $50 \times $30 = $1500$. Producing 20 units of output, the AFC is $\frac{$1500}{20} = $75$, which is not listed among the options provided.

Question 18

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 40 units of labor,what is marginal cost at this level of output?
A)$70
B)$35
C)$60
D)$280
E)$55

Accepted Answer

The answer of The following graph shows the marginal and...

Question 19

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000.  When the firm uses 120 units of labor,what is its AVC at this output?
A)$40
B)$70
C)$60
D)$56
E)none of the above

Accepted Answer

The answer of The following graph shows the marginal and...

Question 20

In the above figure,what is the AVERAGE variable cost of producing 5 units of output?
A)$12
B)$20
C)$40
D)$60
E)$80

Accepted Answer

The answer of  In the above figure,what is the...

Quiz 8: Production and Cost in the Short Run

To answer,refer to the following: "Ford built 18 vehicles per auto employee in North America last year,while GM could only manage 12." In comparison with GM,Ford had

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily." Today,at the Huffy bicycle factory,

To answer,refer to the following: "At Huffy's ...bicycle factory,1,700 employees turn out 15,000 bicycles a day.Five years ago,it required 2,200 workers to make 10,000 bikes daily." Holding all else equal,we can conclude that,over the past 5 years,

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. At what output does the firm reach minimum average variable cost?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 40 units of labor,what is AVC at this level of output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. What is AVC at its minimum?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,what is its marginal cost at this output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,how much output does it produce?

To answer,refer to the following: "Ford built 18 vehicles per auto employee in North America last year,while GM could only manage 12." In comparison with GM,Ford had a higher

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,what is average total cost at this output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 40 units of labor,how much output does it produce?

In the above figure,what is the AVERAGE total cost of producing 10 units of output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 40 units of labor,what is average total cost at this output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 40 units of labor,what is marginal cost at this level of output?

The following graph shows the marginal and average product curves for labor,the firm's only variable input.The monthly wage for labor is $2,800.Fixed cost is $160,000. When the firm uses 120 units of labor,what is its AVC at this output?

In the above figure,what is the AVERAGE variable cost of producing 5 units of output?