Question 1

Average variable cost is total variable cost:

Accepted Answer

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

Question 2

Refer to the table shown. The average fixed cost of producing eight bicycles is: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Total cast (dollars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer

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

Question 3

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

Accepted Answer

The total cost is $400, and the average variable cost is $3 per unit for 100 units, so total variable cost is $300. Total fixed cost is total cost minus total variable cost, which is $400 - $300 = $100.

Question 4

A factory producing calculators employs four workers. At current levels of operation each worker produces 40 calculators per week. Assuming labor is the only variable input and the weekly wage is $400 per worker:

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the total output. The total variable cost is the total wages paid to workers, which is 4 workers * $400 = $1600. The total output is 4 workers * 40 calculators = 160 calculators. Therefore, the average variable cost is $1600 / 160 = $10 per calculator.

Question 5

Suppose you operate a factory that produces 500 lawn mowers a week. If your weekly variable cost is $40,000 and your weekly total cost is $50,000, the average:

Accepted Answer

The answer of Suppose you operate a factory that produces...

Question 6

If fixed costs are $960, variable costs are $1,440, and output is 12, then average total cost equals:

Accepted Answer

The answer of If fixed costs are $960, variable costs...

Question 7

Average fixed cost:

Accepted Answer

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

Question 8

Refer to the table shown. If the output of bicycles is 4 per week, the average cost of producing each bicycle is: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Total cast (dollars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer

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

Question 9

If your cell phone bill is $40 when you use up to 300 minutes per month or $80 when you use between 300 and 400 minutes per month, the marginal cost of the 301st minute is:

Accepted Answer

The marginal cost is the additional cost incurred when one more unit is consumed. In this case, using the 301st minute increases the bill from $40 to $80, resulting in an additional cost of $40.

Question 10

Refer to the table shown. The average variable cost of producing five bicycles per week is: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Total cast (dollars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer

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

Question 11

You run a small business producing picture frames. This month your total cost is $10,000, your variable cost is $5,000, and your output is 5,000 picture frames. Given this information, your:

Accepted Answer

The answer of You run a small business producing picture...

Question 12

Suppose you operate a factory that produces gadgets. Your current output is 1,000 gadgets. If your fixed cost is $10,000 and your total cost is $50,000, the:

Accepted Answer

The total variable cost is $40,000 ($50,000 total cost - $10,000 fixed cost). The average variable cost is $40 ($40,000 / 1,000 gadgets).

Question 13

If you have already signed up for a plan with your cell phone company that gives you 4,000 free minutes for $39.99 per month with a cost of $0.35 per minute for any time exceeding the limit, your marginal cost curve is:

Accepted Answer

The marginal cost is zero up to 4,000 minutes because those minutes are included in the plan. Beyond 4,000 minutes, the marginal cost is $0.35 per minute.

Question 14

The average total cost of producing electronic calculators in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,000 per week:

Accepted Answer

The answer of The average total cost of producing electronic...

Question 15

Refer to the table shown. Marginal cost: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Total cast (dollars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer

The answer of Refer to the table shown. Marginal cost:...

Question 16

When output is 50, fixed costs are $1,000, and variable costs are $2,000, what is the average total cost?

Accepted Answer

The average total cost is calculated by adding fixed costs and variable costs, then dividing by the output. So, ($1,000 + $2,000) / 50 = $60.

Question 17

In the short run, average variable cost equals:

Accepted Answer

Average variable cost is calculated by subtracting average fixed cost from average total cost.

Question 18

Refer to the table shown. If the output of bicycles is 4 per week, the marginal cost of producing another bicycle per week is: $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Output } \
\text { (bicycles per week) }
\end{array} & \text { Total cast (dollars) } \
\hline 1 & 100 \
\hline 2 & 200 \
\hline 3 & 310 \
\hline 4 & 440 \
\hline 5 & 580 \
\hline 6 & 730 \
\hline 7 & 900 \
\hline 8 & 1,200 \
\hline
\end{array}$$

Accepted Answer