Question 1

Which statement is true?

Accepted Answer

A)  Shutting down is a long run option.
B)  Going out of business is a short run option.
C)  Continuing to operate is a short run option.

Question 2

Use the following Table to answer the question :
-Fill in the table. Assume the fixed cost is $600.

Accepted Answer

The answer of Use the following Table to answer the...

Question 3

At an output of zero, total cost = _______________.

Accepted Answer

The answer of At an output of zero, total cost...

Question 4

Use the following figure to answer the question : 
-The AVC curve is curve

Accepted Answer

A)  J.
B)  K.
C)  L.
D)  M.

Question 5

If the marginal cost of printing the textbook you are using for this course is just $3, then what is the most reasonable conclusion you can reach?

Accepted Answer

A)  The publisher is making a profit of at least 1000 percent.
B)  The publisher needs to print and sell thousands of copies in order to take advantage of economies of scale.
C)  The publisher has very low fixed costs.
D)  The publisher has very high variable costs.

Question 6

Which statement is true?

Accepted Answer

A)  The marginal cost curve intersects both the average variable cost curve and the average total cost curve at their minimum points.
B)  The marginal cost curve intersects neither the average variable cost curve nor the average total cost curve at their minimum points.
C)  The marginal cost curve intersects the average variable cost curve at its minimum point, but it does not intersect the average total cost curve at its minimum point.
D)  The marginal cost curve intersects the average total cost curve at its minimum point, but it does not intersect the average variable cost curve at its minimum point.

Question 7

Use the following Table to answer the question :
-Fill in the Marginal Output column.

Accepted Answer

The answer of Use the following Table to answer the...

Question 8

If a firm cannot cover its variable costs, it will

Accepted Answer

A)  operate in the short run and stay in business in the long run.
B)  operate in the short run and go out of business in the long run.
C)  shut down in the short run and stay in business in the long run.
D)  shut down in the short run and go out of business in the long run.

Question 9

As output rises, the difference between AVC and ATC gets _____.

Accepted Answer

The answer of As output rises, the difference between AVC...

Question 10

Varying plant sizes are shown graphically by

Accepted Answer

A)  economies of scale.
B)  diseconomies of scale.
C)  the long-run average costs curve.
D)  diminishing returns.
E)  negative returns.

Question 11

Economies of scale are most closely associated with a firm's

Accepted Answer

A)  ATC curve.
B)  AVC curve.
C)  MC curve.
D)  Demand curve.

Question 12

Statement I: In the short run a firm has two options: stay in business or go out of business. Statement II: In the short run there are no fixed costs.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Question 13

Use the above table and assume a fixed cost of $200.
-At an output of 4, AFC is

Accepted Answer

A)  $50.
B)  $100.
C)  $200.
D)  $400.
E)  cannot be found.

Question 14

We know that diminishing returns has set in when ______ declines.

Accepted Answer

The answer of We know that diminishing returns has set...

Question 15

Statement I: Variable costs vary with output. Statement II: Fixed costs don't vary with output.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Question 16

Which of the following is an example of a fixed cost?

Accepted Answer

A)  Rent
B)  Insurance premiums
C)  Contract salaries
D)  Interest payments
E)  All of these choices are fixed costs.

Question 17

If the U-shaped ATC curve is flattened out at its lowest point(s) , we would have

Accepted Answer

A)  diminishing returns.
B)  increasing returns.
C)  negative returns.
D)  proportional returns to scale.

Question 18

Fuel and shipping costs are examples of __________ costs.

Accepted Answer

The answer of Fuel and shipping costs are examples of...

Question 19

If fixed cost is $8,000, variable cost is $5,000 at an output of 2 and $9,000 at an output of 3, how much is marginal cost at an output of 3?

Accepted Answer

A)  $3,000
B)  $4,000
C)  $5,000
D)  $8,000
E)  There is not enough information to determine marginal cost at an output of 3.

Question 20

If ATC is rising, MC

Accepted Answer

A)  must be below ATC.
B)  may be below ATC.
C)  must be above ATC.

Exam 8: Cost

Statement I: In the short run a firm has two options: stay in business or go out of business. Statement II: In the short run there are no fixed costs.

Correct AnswerverifiedShow Answer

Use the above table and assume a fixed cost of $200. -At an output of 4, AFC is

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

Statement I: Variable costs vary with output. Statement II: Fixed costs don't vary with output.

Correct AnswerverifiedShow Answer

If a firm cannot cover its variable costs, it will

Correct AnswerverifiedShow Answer

If the U-shaped ATC curve is flattened out at its lowest point(s) , we would have

Correct AnswerverifiedShow Answer

Use the following Table to answer the question : -Fill in the Marginal Output column.

Correct AnswerverifiedShow Answer

At an output of zero, total cost = _______________.

Correct AnswerverifiedShow Answer

As output rises, the difference between AVC and ATC gets _____.

Correct AnswerverifiedShow Answer

Use the following Table to answer the question : -Fill in the table. Assume the fixed cost is $600.

Correct AnswerverifiedShow Answer

If fixed cost is $8,000, variable cost is $5,000 at an output of 2 and $9,000 at an output of 3, how much is marginal cost at an output of 3?

Correct AnswerverifiedShow Answer

Fuel and shipping costs are examples of __________ costs.

Correct AnswerverifiedShow Answer

We know that diminishing returns has set in when ______ declines.

Correct AnswerverifiedShow Answer

If ATC is rising, MC

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If the marginal cost of printing the textbook you are using for this course is just $3, then what is the most reasonable conclusion you can reach?

Correct AnswerverifiedShow Answer

Varying plant sizes are shown graphically by

Correct AnswerverifiedShow Answer

Economies of scale are most closely associated with a firm's

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -The AVC curve is curve

Correct AnswerverifiedShow Answer

Which of the following is an example of a fixed cost?

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

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