Question 1

Figure 5.1
-Refer to Figure 5.1, which shows a family of average cost curves. The average total cost at a given level of output is represented by

Accepted Answer

A)   the vertical distance between Curve 1 and Curve 2 at a given level of output.
B)   the vertical sum of Curve 1 and Curve 2 at a given level of output.
C)   the vertical sum of Curve 2 and Curve 3 at a given level of output.
D)   the vertical distance between Curve 2 and Curve 3 at a given level of output.E) A) and B)
F) A) and C)

Question 2

When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is ________ and the firm is experiencing ________.

Accepted Answer

A)   horizontal; constant returns to scale
B)   downward sloping; constant returns to scale
C)   upward sloping; diseconomies of scale
D)   downward sloping; economies of scaleE) B) and C)
F) A) and B)

Question 3

The short-run average total cost curve is U-shaped because average fixed costs ________ and average variable costs ________ eventually as quantity produced increases.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; increase
D)   decrease; decreaseE) All of the above
F) B) and D)

Question 4

The marginal cost curve always intersects the average total cost curve at the minimum of average total cost.

Accepted Answer

A) True 
 B)False

Question 5

Figure 5.4
-One can tell that Figure 5.4 shows short run costs because

Accepted Answer

A)   the slope of total costs and variable costs are the same.
B)   costs are rising.
C)   total costs are positive when output is zero implying fixed costs.
D)   all of the above.E) All of the above
F) B) and C)

Question 6

Which of the following are included in calculating economic costs?

Accepted Answer

A)   implicit costs
B)   explicit costs
C)   accounting costs
D)   All of the above are correct.E) None of the above
F) All of the above

Question 7

The long-run marginal cost is the additional cost incurred by the firm when producing one more unit of output, holding the amount of capital constant.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is TRUE?

Accepted Answer

A)   ATC = AVC - AFC
B)   TVC/Q = TC/Q + TFC/Q
C)   ΔTC/ΔQ = ΔAVC/ΔQ
D)   ΔTC/ΔQ = MCE) A) and C)
F) None of the above

Question 9

Table 5.4
-Table 5.4 presents the cost schedule for David's Figs. If David produces two figs, David's average variable costs are

Accepted Answer

A)   $80.
B)   $85.
C)   $90.
D)   $170.E) A) and B)
F) A) and C)

Question 10

Fixed costs are the same in the short run as they are in the long run.

Accepted Answer

A) True 
 B)False

Question 11

When the firm increases output and the costs rise proportionately, then the long-run average cost curve is ________ and the firm is experiencing ________.

Accepted Answer

A)   horizontal; constant returns to scale
B)   downward sloping; constant returns to scale
C)   upward sloping; diseconomies of scale
D)   downward sloping; economies of scaleE) None of the above
F) A) and B)

Exam 5: Production Technology and Cost

Figure 5.1 -Refer to Figure 5.1, which shows a family of average cost curves. The average total cost at a given level of output is represented by

Correct Answer
verified

Table 5.4 -Table 5.4 presents the cost schedule for David's Figs. If David produces two figs, David's average variable costs are

Correct Answer
verified

The marginal cost curve always intersects the average total cost curve at the minimum of average total cost.

Correct Answer
verified

Which of the following is TRUE?

Correct Answer
verified

The long-run marginal cost is the additional cost incurred by the firm when producing one more unit of output, holding the amount of capital constant.

Correct Answer
verified

Which of the following are included in calculating economic costs?

Correct Answer
verified

The short-run average total cost curve is U-shaped because average fixed costs and average variable costs eventually as quantity produced increases.

Correct Answer
verified

When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is and the firm is experiencing .

Correct Answer
verified

Fixed costs are the same in the short run as they are in the long run.

Correct Answer
verified

Figure 5.4 -One can tell that Figure 5.4 shows short run costs because

Correct Answer
verified

When the firm increases output and the costs rise proportionately, then the long-run average cost curve is and the firm is experiencing .

Correct Answer
verified

Exam 5: Production Technology and Cost

Figure 5.1 -Refer to Figure 5.1, which shows a family of average cost curves. The average total cost at a given level of output is represented by

Correct AnswerverifiedShow Answer

Table 5.4 -Table 5.4 presents the cost schedule for David's Figs. If David produces two figs, David's average variable costs are

Correct AnswerverifiedShow Answer

The marginal cost curve always intersects the average total cost curve at the minimum of average total cost.

Correct AnswerverifiedShow Answer

Which of the following is TRUE?

Correct AnswerverifiedShow Answer

The long-run marginal cost is the additional cost incurred by the firm when producing one more unit of output, holding the amount of capital constant.

Correct AnswerverifiedShow Answer

Which of the following are included in calculating economic costs?

Correct AnswerverifiedShow Answer

The short-run average total cost curve is U-shaped because average fixed costs ________ and average variable costs ________ eventually as quantity produced increases.

Correct AnswerverifiedShow Answer

When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is ________ and the firm is experiencing ________.

Correct AnswerverifiedShow Answer

Fixed costs are the same in the short run as they are in the long run.

Correct AnswerverifiedShow Answer

Figure 5.4 -One can tell that Figure 5.4 shows short run costs because

Correct AnswerverifiedShow Answer

When the firm increases output and the costs rise proportionately, then the long-run average cost curve is ________ and the firm is experiencing ________.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

The short-run average total cost curve is U-shaped because average fixed costs and average variable costs eventually as quantity produced increases.

Correct Answer
verified

When the firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is and the firm is experiencing .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When the firm increases output and the costs rise proportionately, then the long-run average cost curve is and the firm is experiencing .

Correct Answer
verified