Question 1

-The table above gives the cost schedule for The X Firm.The data show that The X Firm's ________ curve is ________.

Accepted Answer

The ATC (Average Total Cost) curve is typically U-shaped in the short run due to the spreading out of fixed costs over larger amounts of output (which decreases ATC initially) and the eventual onset of decreasing marginal returns (which increases ATC after a certain point).

Question 2

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total variable cost of producing 60 bikes?

Accepted Answer

The answer of 
-The table above gives costs at Jan's...

Question 3

As a typical firm increases its output,its marginal cost

Accepted Answer

Marginal cost tends to decrease at first due to economies of scale and then increases as output rises due to diseconomies of scale.

Question 4

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her marginal cost of producing the fifth pizza is

Accepted Answer

Marginal cost is the change in total cost divided by the change in quantity. The marginal cost of producing the fifth pizza is (14-6)/5 = $8.

Question 5

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,the marginal cost of producing the fourth gallon of ice cream is

Accepted Answer

Marginal cost is the change in total cost that arises when the quantity produced changes by one unit. To find the marginal cost of producing the fourth gallon, subtract the total cost of producing three gallons from the total cost of producing four gallons. The difference is the marginal cost of the fourth gallon.

Question 6

-In the above figure,curve A is the ________ curve and curve C is the ________ curve.

Accepted Answer

Curve A represents the total cost, which includes both variable and fixed costs. Curve C represents the total fixed cost, which remains constant regardless of the level of output.

Question 7

-In the above figure,curve A is the ________ curve and curve B is the ________ curve.

Accepted Answer

Curve A represents the total cost, which includes both fixed and variable costs. Curve B, starting from the origin, represents the total variable cost, which varies with the level of output. Total fixed cost would be a horizontal line, not depicted here.

Question 8

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total fixed cost of producing 64 bikes?

Accepted Answer

Total fixed cost = $200 (Rent + Utilities)

Question 9

Average variable cost equals

Accepted Answer

Average variable cost is the total variable cost divided by the output. It represents the variable cost per unit of output.

Question 10

Average total cost is equal to

Accepted Answer

Average total cost is indeed the sum of average fixed cost and average variable cost (A), and it is also calculated by dividing the total cost by the quantity (B).

Question 11

If total fixed cost increases,which of the following will NOT change?

Accepted Answer

Marginal cost is determined by the change in total cost as a result of a one-unit increase in output, and since total fixed cost does not impact this, marginal cost will not change. All other costs (total cost, average fixed cost, and average total cost) will increase when total fixed cost increases, so option E is incorrect.

Question 12

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total cost of producing 50 bikes?

Accepted Answer

The answer of 
-The table above gives costs at Jan's...

Question 13

Which of the following always decreases when output increases?

Accepted Answer

Average fixed cost (AFC) will always decrease as output increases because fixed costs are spread over a larger quantity of output. The formula for AFC is AFC = TFC/Q, where TFC is Total Fixed Cost and Q is the quantity of output. As Q increases, AFC decreases. None of the other choices always decrease as output increases.

Question 14

Average total cost equals

Accepted Answer

Average total cost (ATC) is the total cost per unit of output, and it is equal to the sum of average fixed cost (AFC) and average variable cost (AVC) at each level of output. This can be represented as ATC = AFC + AVC. Therefore, the correct answer is C, average fixed cost plus average variable cost.

Question 15

The average fixed cost curve

Accepted Answer

The average fixed cost (AFC) curve is always negatively sloped because as output increases, the same fixed cost is spread over more units, causing the average fixed cost per unit to decrease.

Question 16

Scott owns a law-enforcement training operation in Boise,Idaho.He employs three trainers.The last trainer Scott hired increased Scott's total cost by $466 per week even though the trainer brought in only one new client.Hence Scott's

Accepted Answer

The marginal cost is the increase in total cost due to the addition of one unit (in this case, one client). The last trainer hired increased the total cost by $466, so the marginal cost of the last client is also $466. Choices A, C, D, and E are incorrect because they do not accurately reflect the relationship between the new trainer and the marginal cost of the last client.

Question 17

When marginal cost is positive,total cost is ________ as output increases.

Accepted Answer

When marginal cost is positive, it means that the cost of producing each additional unit of output is increasing. Therefore, as output increases, the total cost will also increase.

Question 18

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her total variable cost of producing four pizzas per hour is

Accepted Answer

The total variable cost is calculated by subtracting the total fixed cost from the total cost. If the total cost for four pizzas is $71 and the fixed cost is $20, then the variable cost is $71 - $20 = $51.

Question 19

-Paulette owns a pizza parlor.Her total cost schedule is in the above table.Her total fixed cost is equal to

Accepted Answer

Total fixed cost is the cost that does not change with the level of output. In this case, the total fixed cost is $20.

Question 20

-The Jerry-Berry Ice Cream Shoppe's total cost schedule is in the above table.Based on the table,which of the following is correct?

Accepted Answer

The total fixed cost remains constant regardless of the output level, which is indicated by the cost that does not change when production is zero. The average fixed cost for any quantity is the total fixed cost divided by the number of units produced, which decreases as production increases. The average variable cost is the total variable cost divided by the quantity produced, which can be calculated for any given level of output.

Quiz 14: Production and Cost

-The table above gives the cost schedule for The X Firm.The data show that The X Firm's curve is .