Question 1

Total cost divided by the quantity of output produced is:
A)always increasing.
B)always decreasing.
C)average total cost.
D)marginal cost.

Accepted Answer

Total cost divided by the quantity of output produced is the formula for calculating average total cost. Total cost divided by the quantity of output produced is the definition of average total cost.

Question 2

Average total cost is:
A)the change in cost divided by the change in output.
B)total cost divided by output.
C)the change in output divided by the change in
D)costs.total cost times output.

Accepted Answer

Average total cost is calculated as total cost divided by output. This gives the average cost per unit of output.

Question 3

Which of the following curves is not affected by the existence of diminishing returns?
A)the average fixed cost curve
B)the average variable cost curve
C)the average total cost curve
D)the marginal cost curve

Accepted Answer

The average fixed cost curve is not affected by the existence of diminishing returns because it represents the fixed costs of production that do not vary with changes in output. Diminishing returns only affect variable costs and thus impact the shape of the other curves.

Question 4

Average variable cost is the ratio of:
A)total cost to the marginal cost.
B)total cost to the amount of variable input.
C)variable cost to the quantity of output.
D)marginal cost to the quantity of output.

Accepted Answer

Average variable cost is calculated by dividing total variable cost by the quantity of output. Therefore, the correct choice is C, which states "variable cost to the quantity of output." Average variable cost is calculated by dividing total variable cost by the quantity of output, therefore choice C is the correct option.

Question 5

If an eyeglass business produces 10 pairs of eyeglasses and incurs $35 in average total cost and $5 in average fixed cost, then average variable cost is:
A)$30.
B)$35.
C)$50.
D)$300.

Accepted Answer

Using the formula for average total cost, we have:
ATC = Total Cost / Quantity = (Average Fixed Cost + Average Variable Cost) / Quantity
$35 = $5 + AVC / 10
AVC = $30. Therefore, the answer is (A) $30.

Question 6

For every restaurant in Cleveland, the average total cost curve ________ at levels of output, then ________ at levels.
A)falls; low; rises; higher
B)rises; low; falls; higher
C)rises; higher; rises; low
D)falls; higher; falls; low

Accepted Answer

The average total cost curve typically falls at low levels of output due to economies of scale and then rises at higher levels of output due to diseconomies of scale.

Question 7

The curve continually declines as more output is produced in the short run.
A)marginal cost
B)average variable cost
C)average fixed cost
D)average total cost

Accepted Answer

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

Question 8

If an eyeglass business produces 10 pairs of eyeglasses and incurs $30 in average variable cost and $5 in average fixed cost, then average total cost is:
A)$30.
B)$35.
C)$50.
D)$300.

Accepted Answer

Average total cost (ATC) is the sum of average variable cost (AVC) and average fixed cost (AFC):

ATC = AVC + AFC

Given that AFC is $5 and AVC is $30,

ATC = $30 + $5 = $35.

Therefore, the average total cost for producing 10 pairs of eyeglasses is $35. Therefore, the correct answer is B.

Question 9

Average variable cost is the ratio of:
A)total cost to the marginal cost.
B)variable to fixed inputs.
C)variable cost to the quantity of output.
D)fixed costs to variable cost.

Accepted Answer

Average variable cost is calculated by dividing variable cost by the quantity of output. This gives us an idea of how much it costs to produce each unit of output, and helps us determine at what level of output a firm can break even or achieve profits.

Question 10

Figure: The Average Total Cost Curve
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing five pairs of boots is approximately:
A)$408.
B)$82.
C)$108.
D)$17.

Accepted Answer

The average total cost (ATC) is the total cost divided by the quantity produced. If the ATC for five pairs of boots is $82, then the total cost is 5 pairs * $82/pair = $410. However, since the closest option is $408, it is likely an approximation.

Question 11

In the short run, the average total cost curve slopes upward because of:
A)economies of scale.
B)diseconomies of scale.
C)increasing returns.
D)diminishing returns.

Accepted Answer

In the short run, the average total cost curve slopes upward primarily due to diminishing returns. As more units of a variable input (like labor) are added to a fixed amount of other inputs (like capital), the additional output produced by each additional unit of the variable input eventually decreases. This leads to an increase in the average total cost of production.

Question 12

Average variable cost is:
A)the firm's variable cost per unit multiplied by the output.
B)total variable cost divided by output.
C)the difference between average total cost and total variable cost.
D)the difference between total cost and total variable cost.

Accepted Answer

Average variable cost is calculated by dividing the total variable cost by the output.

Question 13

Figure: The Average Total Cost Curve
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing 10 pairs of boots is approximately:
A)$13.
B)$54.
C)$131.
D)$1,308.

Accepted Answer

The answer of Figure: The Average Total Cost Curve
(Figure: The...

Question 14

Total cost divided by the quantity of output produced is:
A)average total cost.
B)average fixed cost.
C)average product.
D)marginal cost.

Accepted Answer

The formula for average total cost is total cost divided by the quantity of output produced. Therefore, the correct choice is A. Average fixed cost is simply fixed cost divided by quantity of output, and average product refers to the amount of output produced per unit of input (such as labor or capital). Marginal cost is the additional cost incurred to produce each additional unit of output. Total cost divided by the quantity of output produced gives the average cost per unit, which is known as average total cost.

Question 15

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week.If fixed cost is $1,200 per week:
A)average fixed cost is $20.
B)total cost is $3,200.
C)variable cost is $2,000.
D)average variable cost is $8.

Accepted Answer

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

Question 16

You run a business producing picture frames.This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames.It follows that:
A)average variable cost is $2.
B)average total cost is $3.
C)average total cost is $1.
D)average fixed cost is $1.

Accepted Answer

The answer of You run a business producing picture frames.This...

Question 17

Figure: The Average Total Cost Curve
(Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing three pairs of boots is approximately:
A)$24.
B)$72.
C)$75.
D)$216.

Accepted Answer

The answer of Figure: The Average Total Cost Curve
(Figure: The...

Question 18

Average total cost is the ratio of:
A)total cost to the marginal cost.
B)total cost to the quantity of output.
C)total cost to the amount of variable input.
D)marginal cost to the amount of variable input.

Accepted Answer

Average total cost is the total cost (fixed and variable) divided by the quantity of output. Average total cost is calculated by dividing total cost (which is the sum of fixed and variable costs) by the quantity of output produced. Therefore, the correct choice is B - total cost to quantity of output.

Question 19

Average variable cost is:
A)the firm's variable cost per unit multiplied by the quantity.
B)total variable cost divided by quantity.
C)the difference between average total cost and total cost.
D)the difference between total cost and total fixed cost.

Accepted Answer

Average variable cost is calculated by dividing total variable cost by the quantity.

Question 20

Average variable cost equals all of the following except:
A)variable cost divided by output.
B)(total cost - fixed cost) divided by output.
C)average total cost minus average fixed cost.
D)variable cost times output.

Accepted Answer

Average variable cost is calculated by dividing variable cost by output, not multiplying them together. Therefore, choice D is the incorrect statement. Choices A, B, and C correctly represent the calculation of average variable cost.

Quiz 11: Behind the Supply Curve: Inputs and Costs

Total cost divided by the quantity of output produced is:

Average total cost is:

Which of the following curves is not affected by the existence of diminishing returns?

Average variable cost is the ratio of:

If an eyeglass business produces 10 pairs of eyeglasses and incurs $35 in average total cost and $5 in average fixed cost, then average variable cost is:

For every restaurant in Cleveland, the average total cost curve at levels of output, then at levels.

The curve continually declines as more output is produced in the short run.

If an eyeglass business produces 10 pairs of eyeglasses and incurs $30 in average variable cost and $5 in average fixed cost, then average total cost is:

Average variable cost is the ratio of:

Figure: The Average Total Cost Curve (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing five pairs of boots is approximately:

In the short run, the average total cost curve slopes upward because of:

Average variable cost is:

Figure: The Average Total Cost Curve (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing 10 pairs of boots is approximately:

Total cost divided by the quantity of output produced is:

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week.If fixed cost is $1,200 per week:

You run a business producing picture frames.This month your total cost of production is $10,000, your variable cost of production is $6,000, and you produce 3,000 picture frames.It follows that:

Figure: The Average Total Cost Curve (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve.In the figure, the total cost of producing three pairs of boots is approximately:

Average total cost is the ratio of:

Average variable cost is:

Average variable cost equals all of the following except: