Question 1

The total cost curve is:

Accepted Answer

The total cost curve is positively sloped because as the quantity of output increases, the total cost of production also increases. This is due to the increasing marginal cost of producing additional units of output. The total cost curve is positively sloped, as the total cost of producing a good or service increases as the level of output increases. This is due to the law of diminishing returns, which states that as more units of a variable input are added to fixed inputs, the marginal product of the variable input will eventually decrease, leading to higher costs of production.

Question 2

The fixed cost curve is:

Accepted Answer

The answer of The fixed cost curve is:
...

Question 3

For Heidi, the marginal cost of producing one additional photograph equals the change in ________ divided by the change in the _.

Accepted Answer

The marginal cost is calculated as the change in total cost divided by the change in the quantity of output, which in this case is the number of photographs.

Question 4

As output increases, the total cost curve

Accepted Answer

As output increases, the total cost curve gets steeper because the marginal cost of producing each additional unit increases due to the diminishing returns of inputs. This causes an increase in total cost at a faster rate as output increases.

Question 5

The long run refers to the period for which:

Accepted Answer

The long run is the period during which all inputs are variable and can be adjusted to optimize production. In the long run, a firm can make changes to its production processes, such as expanding or scaling down production facilities, making alterations to the input quantities or types, and so on. Therefore, all inputs are variable in the long run, and this is the best choice.

Question 6

Which of the following cost concepts is correctly defined?

Accepted Answer

ATC (Average Total Cost) is the sum of Average Variable Cost (AVC) and Average Fixed Cost (AFC). Therefore, option C is the correct definition. Option A defines the concept of Marginal Cost (MC). Option B defines the concept of Total Cost (TC), but it is not the average cost. Option D also defines the concept of Total Cost (TC), but it does not differentiate between the fixed and variable components of the cost.

Question 7

The change in total output resulting from a one-unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is:

Accepted Answer

The change in total output resulting from a one-unit increase in the quantity of an input used is the definition of marginal product. It measures the productivity of an additional unit of input, holding other factors constant. Therefore, the correct choice is D - marginal product. The definition given in the question describes marginal product, which is the additional output that results from using one more unit of input. Therefore, choice D (marginal product) is the correct answer. Choice A (average cost) and B (average product) are not relevant to the given definition, and choice C (marginal cost) is also not the best answer because it refers to the additional cost of producing one more unit of output, not the additional output resulting from using one more unit of input.

Question 8

The sum of fixed and variable costs is:

Accepted Answer

The sum of fixed and variable costs is referred to as total cost. This includes all expenses incurred in the production of goods or services, whether they vary with production levels or not. The sum of fixed and variable costs is the total cost, which includes all costs associated with producing and selling a product or service.

Question 9

(Table: Production Function for Soybeans) The table shows a production function for soybeans.Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of
$150 per day.The cost of labor is $100 per worker per day.The variable cost of producing 25 bushels of soybeans is:

Accepted Answer

The answer of (Table: Production Function for Soybeans) The table...

Question 10

Austin's total fixed cost at the bakery is $3,600 a month.Austin employs 20 workers and pays each worker $8 an hour.The marginal product of the twentieth worker is 12 iced cupcakes an hour.What is the marginal cost of the last cupcake produced by the last worker Austin hired?

Accepted Answer

To find the marginal cost of the last cupcake produced by the last worker, we need to use the formula:

Marginal Cost = Change in Total Cost / Change in Quantity

First, let's calculate the total variable cost (TVC) of the 20 workers. 
Each worker is paid $8 an hour, so in one month (assuming 160 hours of work), one worker's wage would be:

$8/hour * 160 hours/month = $1,280 per month.

For 20 workers, the total variable cost is:

$1,280/worker * 20 workers = $25,600 per month.

Now, to find the marginal cost, we need to calculate the change in total cost (TC) and change in quantity (Q).

The marginal product of the 20th worker is given as 12 cupcakes per hour. Assuming an 8-hour workday, the 20th worker produces:

12 cupcakes/hour * 8 hours = 96 cupcakes per day

In a month (assuming 30 days), the 20th worker produces:

96 cupcakes/day * 30 days/month = 2,880 cupcakes

Now, let's assume that all the other workers are producing the same number of cupcakes as the 19th worker, whose marginal product is not given. So, the total quantity of cupcakes produced by 19 workers is:

Q1 = 19 workers * 8 hours/day * 12 cupcakes/hour * 30 days/month = 81,600 cupcakes

And the total quantity of cupcakes produced by 20 workers is:

Q2 = 20 workers * 8 hours/day * 12 cupcakes/hour * 30 days/month = 84,480 cupcakes

The change in quantity (ΔQ) is:

ΔQ = Q2 - Q1 = 84,480 - 81,600 = 2,880 cupcakes

Next, let's calculate the change in total cost (ΔTC). The total variable cost (TVC) is $25,600, as we calculated earlier. We know that each worker produces 12 cupcakes per hour, so the 20th worker produces 96 cupcakes in an 8-hour day. That means the 20th worker produces approximately 3 cupcakes per hour of work. So, to produce an additional 12 cupcakes, the 20th worker would need to work an additional:

12 cupcakes / 3 cupcakes/hour = 4 hours

The change in total variable cost (ΔTVC) is:

ΔTVC = $8/hour * 4 hours = $32

Finally, we can use the formula to find the marginal cost:

Marginal Cost = ΔTC / ΔQ 
Marginal Cost = $32 / 2,880 cupcakes 
Marginal Cost = $0.0111 per cupcake

This is equivalent to $0.66 for a batch of 60 cupcakes (assuming each worker produces 3 cupcakes per hour and works an 8-hour day).

Therefore, the answer is B) $0.66.

Question 11

(Table: Production Function for Soybeans) The table shows a production function for soybeans.Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day.The cost of labor is $100 per worker per day.The variable cost of producing 60 bushels of soybeans is:

Accepted Answer

The answer of   (Table: Production Function for Soybeans)...

Question 12

When a cherry orchard in Oregon adds a worker, the total cost of production increases by $24,000.Adding the worker increases total cherry output by 600 pounds.Therefore, the marginal cost of the last pound of cherries produced is:

Accepted Answer

The answer of When a cherry orchard in Oregon adds...

Question 13

The costs associated with variable inputs are ________ costs and the costs associated with ________ inputs are costs.

Accepted Answer

When quantity of variable input changes, variable costs change proportionally. The costs associated with fixed inputs remain constant, hence they are fixed costs.

Question 14

The total cost curve gets steeper as output increases because of

Accepted Answer

The total cost curve gets steeper as output increases because of decreasing returns to the variable input. This means that as the level of output increases, the marginal cost of producing an additional unit of output also increases, leading to a steepening of the total cost curve. This is due to factors such as diminishing marginal productivity of labor and increasing costs of materials as production levels increase. The total cost curve gets steeper as output increases because of decreasing returns to the variable input. This means that as a firm produces more, they will need to hire more variable factors of production (e.g. labor), but they will become less efficient as more are hired, leading to a higher cost per unit of output produced. This causes the total cost curve to increase at a faster rate as output increases, creating a steeper curve.

Question 15

Accepted Answer

The answer of ...

Question 16

The total cost curve for a snowmobile dealership shows how cost depends on the quantity of ________.

Accepted Answer

The total cost curve shows how the total cost of producing a certain quantity of output varies. It is not related to fixed inputs or average costs, and marginal costs are not depicted by the total cost curve. Therefore, choice C is the correct answer.

Question 17

Marginal cost can be calculated as:

Accepted Answer

Marginal cost can be calculated using any of the methods mentioned: as the change in total cost divided by the change in output (∆TC/∆Q), as the change in variable cost divided by the change in output (∆VC/∆Q), and as the slope of the total cost curve. All these methods reflect the additional cost of producing one more unit of output.

Question 18

A fixed cost:

Accepted Answer

A fixed cost is a cost that does not vary with the level of output. It is incurred even if the firm does not produce any output in the short run. Therefore, option C is correct. The other options are incorrect as they suggest that fixed costs depend on output or vary with the level of production. Fixed cost is a cost that does not vary with the level of output, meaning that it exists even if the firm does not produce any output in the short run. A fixed cost is not affected by the point of diminishing returns, as it is not related to the level of output. Therefore, option C is the correct answer. A is incorrect as fixed costs can exist in both the short and long run. B is incorrect as fixed costs do not depend on the level of output. D is incorrect as fixed costs do not decrease with increasing output.

Question 19

(Table: Total Cost Data) Look at the table Total Cost Data.The table shows cost data for a bicycle firm operating in the short run.What is the total variable cost for this firm when the firm produces five bicycles?

Accepted Answer

Total variable cost (TVC) is calculated by subtracting total fixed cost (TFC) from total cost (TC). If the total cost for producing five bicycles is $240 and the fixed cost is $50, then TVC = $240 - $50 = $190.

Question 20

(Table: Production Function for Soybeans) The table shows a production function for soybeans.Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of
$150 per day.The cost of labor is $100 per worker per day.The variable cost of producing 45 bushels of soybeans is:

Accepted Answer

The variable cost is the cost of labor needed to produce 45 bushels. If 2 workers are needed, the cost is 2 workers x $100 = $200.

Quiz 11: Behind the Supply Curve: Inputs and Costs