Question 1

Use the following to answer questions 11-16:
 
-If the firm hires 5 workers,the total amount of fixed costs equals
A)$250
B)$50
C)$200
D)$1200

Accepted Answer

The answer of Use the following to answer questions 11-16:
...

Question 2

Marginal cost is the ____________ cost of producing one additional unit and marginal revenue is the_____________ revenue of selling an additional unit.
A)Incremental,Incremental
B)Total,Incremental
C)Incremental,Total
D)Total,Total

Accepted Answer

Marginal cost refers to the additional cost incurred in producing one extra unit, i.e., the incremental cost of that unit. Similarly, marginal revenue refers to the additional revenue earned by selling one extra unit, i.e., the incremental revenue of that unit. Therefore, the best choice is A, where both are described as incremental costs and revenues, respectively.

Question 3

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $12,
A)the MR of hiring the worker is $1500
B)The MC of hiring the worker is $1200
C)The firm should not hire the worker since MB<MC
D)All the above

Accepted Answer

To calculate the marginal benefit (MB) of hiring the worker, we need to find the additional revenue generated by the 100 extra units produced:

MB = 100 units x $12 per unit = $1200 per week

Since the cost of hiring the worker (MC) is $1500 per week, the firm would incur a net loss of $300 per week if they hired the worker. Therefore, the firm should not hire the worker since the marginal benefit is less than the marginal cost.

Question 4

Use the following to answer questions 11-16:
 
-If hiring the 7th worker increases total product by 5 units and the price of each unit is $2,
A)the firm should not hire the 7th worker as MB<MC
B)marginal revenue equals $2
C)the firm should hire the 7th worker as MB>MC
D)the firm should not hire the 7th worker as MB<TC

Accepted Answer

The answer of Use the following to answer questions 11-16:
...

Question 5

Use the following table to answer questions 38 - 41:
 
-What is the marginal cost of producing the third unit?
A)60
B)70
C)90
D)110

Accepted Answer

The best choice is to produce 3 units because the marginal cost of producing the third unit is lower than the price. At the fourth unit, the marginal cost is higher than the price, so it wouldn't be profitable.

Question 6

Marginal revenue
A)Is the additional revenue incurred by selling one more unit
B)Is the total revenue incurred by selling one more unit
C)Is the total revenue incurred by selling all the firm's output
D)Is the difference between total revenue and total costs

Accepted Answer

Marginal revenue is the addition to total revenue that a firm earns when it sells an additional unit of output.

Question 7

Use the following to answer questions 11-16:
 
-If the firm hires 5 workers,the average cost equals
A)$250
B)$50
C)$5
D)Need more information

Accepted Answer

The answer of Use the following to answer questions 11-16:
...

Question 8

Which is not a fixed cost?
A)monthly rent of $1,000 with a 12 month lease
B)an insurance premium of $50 per year,paid last month
C)Tax accountant's salary
D)labor costs paid per hour

Accepted Answer

Labor costs paid per hour are not a fixed cost because they vary depending on how many hours of labor are needed. Fixed costs, on the other hand, remain the same regardless of the level of production or sales. Choices A and B are examples of fixed costs because they have a set amount and time period for payment. Choice C could be a fixed cost if the accountant's salary is a set amount regardless of business activity.

Question 9

When economists speak of "marginal",they mean
A)Opportunity
B)Scarcity
C)Incremental
D)Unimportant

Accepted Answer

When economists use the term "marginal", they are referring to incremental or additional changes in a given situation, such as the cost or benefit of producing one more unit of a good. It is different from opportunity, which is a potential benefit that could be gained by choosing one alternative over another, and scarcity, which refers to the limited availability of resources. It is also not equivalent to being unimportant, as marginal changes can have significant effects on the overall outcome.

Question 10

Use the following to answer questions 11-16:
 
-If the firms hires 5 workers,the average variable costs equals
A)$200
B)$50
C)$80
D)$40

Accepted Answer

The answer of Use the following to answer questions 11-16:
...

Question 11

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $20,
A)the MR of hiring the worker is $2000
B)The MC of hiring the worker is $1500
C)The firm should hire the worker since MB>MC
D)All the above

Accepted Answer

The marginal revenue (MR) from hiring the worker is 100 units * $20 = $2000. The marginal cost (MC) of hiring the worker is $1500. Since MR ($2000) > MC ($1500), the firm should hire the worker.

Question 12

Use the following table to answer questions 38 - 41:
 
-What is the marginal revenue of producing the fourth unit?
A)90
B)40
C)20
D)180

Accepted Answer

Producing up to the fourth unit will give a positive marginal revenue, but producing the fifth unit will result in a negative marginal revenue. Therefore, the best choice is to produce four units.

Question 13

Use the following table to answer questions 38 - 41:
 
-How many units should the firm produce? In other words,at what level of output does marginal cost equal marginal revenue?
A)1
B)2
C)3
D)4

Accepted Answer

Marginal cost equals marginal revenue at an output level of 3 units.

Question 14

Average cost is
A)Total variable cost divided by total units produced
B)Total fixed cost divided by total units produced
C)Total cost divided by total units produced
D)Equal to marginal cost

Accepted Answer

Average cost is the total cost divided by the total units produced, which includes both fixed and variable costs. Marginal cost is the additional cost of producing one more unit, and is not synonymous with average cost.

Question 15

Use the following to answer questions 11-16:
 
-If hiring the 6th worker increases total product by 7 units and the price of each unit is $2,
A)the firm should not hire the 6th worker as MB<MC
B)marginal revenue equals $2
C)the firm should hire the 6th worker as MB>MC
D)the firm should not hire the 6th worker as MB<TC

Accepted Answer

Since the total product increases by 7 units with the hiring of the 6th worker, the marginal benefit (MB) is 7 units. The marginal cost (MC) is the cost of hiring the 6th worker, which is the additional wage paid to the worker. We do not have information on the wage, so we cannot calculate MC directly. However, if the wage is less than $14 (7 units x $2), then MB>MC and the firm should hire the 6th worker. If the wage is more than $14, then MB<MC and the firm should not hire the 6th worker. Without information on the wage, we cannot definitively say whether the firm should hire the 6th worker, but we can say that the firm should hire the 6th worker if the wage is less than $14, since MB>MC in that case.

Question 16

If you know that with 8 units of output,average fixed cost is $40 and average variable cost is $25,then total cost at this output level is:
A)$320
B)$200
C)$520
D)$1000

Accepted Answer

Total cost at this output level can be calculated as follows:
Total cost = (Average fixed cost + Average variable cost) * Quantity
Total cost = ($40 + $25) * 8
Total cost = $520

Therefore, the best choice is C.

Question 17

Use the following to answer questions 11-16:
 
-The marginal cost of hiring the 4th worker is
A)$40
B)$100
C)$20
D)$0

Accepted Answer

The marginal cost of hiring the 4th worker is the additional cost incurred by hiring that worker, which is not provided in the question. However, based on common economic principles, the marginal cost would be associated with the additional expenses directly tied to hiring that worker, such as salary, benefits, and any training costs. Without specific data, one cannot determine the exact figure, but option A) $40 is chosen as a placeholder for the correct answer format. Please provide more context or data for a precise calculation.

Question 18

Marginal cost
A)Is the additional cost incurred by producing and selling one more unit
B)Is the total cost incurred by producing and selling one more unit
C)Is the additional fixed cost incurred by producing and selling one more unit
D)None of the above

Accepted Answer

Marginal cost is the additional cost incurred by producing and selling one more unit. It takes into account only the variable costs that increase with each additional unit produced, such as the cost of raw materials or labor. Fixed costs, such as rent or salaries, are not included in the calculation of marginal cost.

Question 19

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production.The manager would compare
A)The total benefits gained from the two factories to the total costs of running the two factories.
B)The incremental benefit expected from the second factory to the total costs of running the two factories.
C)The incremental benefit expected from the second factory to the cost of the second factory
D)The total benefits gained from the two factories to the incremental costs of running the two factories.

Accepted Answer

The manager should compare the incremental benefit expected from the second factory to the cost of the second factory to determine if the additional factory is a worthwhile investment.

Question 20

With fixed costs of $200,a firm has average total costs of $5 and average variable costs of $3.Its output is:
A)100 units.
B)40 units.
C)66.67 units.
D)Need more information

Accepted Answer

Average total cost (ATC) is the sum of average fixed cost (AFC) and average variable cost (AVC). Given ATC = $5 and AVC = $3, AFC = $2. Fixed costs are $200, so output = Fixed Costs / AFC = $200 / $2 = 100 units.

Quiz 4: Extent How Muchdecisions

Use the following to answer questions 11-16: -If the firm hires 5 workers,the total amount of fixed costs equals

Marginal cost is the cost of producing one additional unit and marginal revenue is the_ revenue of selling an additional unit.

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $12,

Use the following to answer questions 11-16: -If hiring the 7th worker increases total product by 5 units and the price of each unit is $2,

Use the following table to answer questions 38 - 41: -What is the marginal cost of producing the third unit?

Marginal revenue

Use the following to answer questions 11-16: -If the firm hires 5 workers,the average cost equals

Which is not a fixed cost?

When economists speak of "marginal",they mean

Use the following to answer questions 11-16: -If the firms hires 5 workers,the average variable costs equals

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $20,

Use the following table to answer questions 38 - 41: -What is the marginal revenue of producing the fourth unit?

Use the following table to answer questions 38 - 41: -How many units should the firm produce? In other words,at what level of output does marginal cost equal marginal revenue?

Average cost is

Use the following to answer questions 11-16: -If hiring the 6th worker increases total product by 7 units and the price of each unit is $2,

If you know that with 8 units of output,average fixed cost is $40 and average variable cost is $25,then total cost at this output level is:

Use the following to answer questions 11-16: -The marginal cost of hiring the 4th worker is

Marginal cost

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production.The manager would compare

With fixed costs of $200,a firm has average total costs of $5 and average variable costs of $3.Its output is: