Question 1

When a firm is able to put idle equipment to use by hiring another worker,

Accepted Answer

Variable costs will rise because hiring another worker increases the costs associated with labor, which is a variable cost.

Question 2

The cost of producing the typical unit of output is the firm's

Accepted Answer

The answer of The cost of producing the typical unit...

Question 3

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Accepted Answer

To find the average total cost per pretzel, we divide the total cost by the number of pretzels. 
Average total cost per pretzel = total cost/number of pretzels
= $16.50/15
= $1.10. 
Therefore, the answer is A, Larry's average total cost per pretzel is $1.10.

Question 4

Which of the following expressions is correct?

Accepted Answer

Option A is incorrect because marginal cost is the change in total cost divided by the change in quantity of output, not the other way around.
Option C is incorrect because total cost is the sum of both variable and fixed costs, not the sum of variable cost and marginal cost.
Option D is incorrect because average variable cost is equal to total variable cost divided by the quantity of output, not the other way around.
Option B is correct because average total cost is the total cost divided by the quantity of output.

Question 5

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that when the firm hires 4 workers,the firm produces 50 units of output.If the fixed cost of production is $4,the variable cost per unit of labor is $20,and the marginal product of labor for the fifth unit of labor is 2,what is the average total cost of production when the firm hires 5 workers?

Accepted Answer

The answer of Suppose that for a particular firm the...

Question 6

Charles's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes).The firm's total cost is

Accepted Answer

Total cost is calculated by adding total variable costs and total fixed costs. Total variable costs are average variable costs multiplied by the quantity of output ($2 * 100 = $200). Total fixed costs are average fixed costs multiplied by the quantity of output ($3 * 100 = $300). Therefore, total cost is $200 + $300 = $500.

Question 7

Tom's Tent Company has total fixed costs of $300,000 per year.The firm's average variable cost is $80 for 10,000 tents.At that level of output,the firm's average total costs equal

Accepted Answer

The answer of Tom's Tent Company has total fixed costs...

Question 8

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Accepted Answer

The answer of At Bert's Bootery,the total cost of producing...

Question 9

Average total cost (ATC)is calculated as follows:

Accepted Answer

Average total cost is calculated by dividing the total cost by the quantity of output. Therefore, option C is the correct choice. Options A and B are not correct because they involve calculating the change in cost, which is not the same as the average cost. Option D is also incorrect because it involves dividing the total cost by the quantity of input, which is not the correct formula for ATC.

Question 10

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Accepted Answer

Variable costs are costs that vary with the level of production or sales. The cost of steel used in producing automobiles is directly related to the number of automobiles produced and sold, making it a variable cost. The $20 million payment for accounting services and the rent paid for office space are not directly related to production and sales, so they would be considered fixed costs.

Question 11

Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Accepted Answer

Using the given information, we can calculate the total costs of producing 500 units of output:

Total Costs = Average Total Costs x Quantity
Total Costs = $3 x 500
Total Costs = $1,500

We can then use the formula for total costs to calculate the total fixed costs:

Total Costs = Total Fixed Costs + Total Variable Costs
$1,500 = Total Fixed Costs + ($1 x 500)
$1,500 = Total Fixed Costs + $500
Total Fixed Costs = $1,500 - $500
Total Fixed Costs = $1,000

Therefore, the answer is C: $1,000.

Question 12

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

Accepted Answer

Average total cost is the total cost divided by the quantity of output produced. It includes both fixed and variable costs, and provides a measure of how much each unit produced is costing the firm on average.

Question 13

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Accepted Answer

We can find the total cost of producing 10,000 widgets using the average variable cost:
Variable cost per widget = $5
Number of widgets produced = 10,000
Total variable cost = $5 x 10,000 = $50,000

To find the average total cost, we need to add the fixed cost to the variable cost and divide by the number of widgets produced:
Average total cost = (Total fixed cost + Total variable cost) / Number of widgets produced
Average total cost = ($100,000 + $50,000) / 10,000
Average total cost = $150/ widget

Therefore, the answer is B, $15.

Question 14

Average total cost is equal to

Accepted Answer

Average total cost is the total cost divided by the total quantity of output, which is represented mathematically as total cost/output. Therefore, option D is the correct choice.

Question 15

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Accepted Answer

The answer of For a large firm that produces and...

Question 16

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that the average total cost when 5 units of output are produced is $30,and the marginal cost of the sixth unit of output is $60.What is the average total cost when six units are produced?

Accepted Answer

The answer of Suppose that for a particular firm the...

Question 17

Average total cost tells us the

Accepted Answer

Average total cost is the total cost of producing all units of output divided by the total number of units produced. Therefore, it gives us the cost of a typical unit of output if total cost is divided evenly over all the units produced.

Question 18

Average total cost equals

Accepted Answer

Average total cost is the total cost per unit of output. It is calculated by dividing the total cost (fixed costs plus variable costs) by the quantity produced. Therefore, choice C is the best answer.

Question 19

Which of the following is the best example of a variable cost?

Accepted Answer

Monthly wage payments for hired labor are an example of a variable cost, as the cost varies depending on the amount of labor needed for that month. In contrast, options B-D are all examples of fixed costs, as they remain the same regardless of monthly labor needs.

Question 20

Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero when no workers are hired.In addition,suppose that marginal cost of the third worker hired is $40,and the average total cost when three workers are hired is $50.What is the total cost of production when three workers are hired?

Accepted Answer

The answer of Suppose that for a particular firm the...

Quiz 13: The Costs of Production

When a firm is able to put idle equipment to use by hiring another worker,

The cost of producing the typical unit of output is the firm's

Larry's Lunchcart is a small street vendor business.If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50,his average total cost per pretzel is

Which of the following expressions is correct?

Charles's Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes) .The firm's total cost is

Tom's Tent Company has total fixed costs of $300,000 per year.The firm's average variable cost is $80 for 10,000 tents.At that level of output,the firm's average total costs equal

At Bert's Bootery,the total cost of producing twenty pairs of boots is $400.The marginal cost of producing the twenty-first pair of boots is $83.We can conclude that the

Average total cost (ATC) is calculated as follows:

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output.The firm's total fixed costs equal

Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"

The Wacky Widget company has total fixed costs of $100,000 per year.The firm's average variable cost is $5 for 10,000 widgets.At that level of output,the firm's average total costs equal

Average total cost is equal to

For a large firm that produces and sells automobiles,which of the following costs would be a variable cost?

Average total cost tells us the

Average total cost equals

Which of the following is the best example of a variable cost?