Question 1

If the total cost of 100 units is $560 and the marginal cost of the 101st unit is $6

Accepted Answer

A)   total cost will fall.
B)   total fixed cost will rise.
C)   total variable cost will fall.
D)   average total cost will rise.
E)   average variable cost will fall.F) A) and E)
G) A) and C)

Question 2

As output increases,average variable cost first declines but eventually rises because

Accepted Answer

A)   average variable cost is derived by dividing a constant, the total variable cost, by the output rate.
B)   of the effect of the law of diminishing returns.
C)   it represents the addition to total cost resulting from the last unit of output.
D)   at higher output rates, fixed costs per unit are relatively large.
E)   if output is increased, total variable costs decline, then rise.F) B) and E)
G) B) and D)

Question 3

A possible reason for the existence of increasing returns to scale is

Accepted Answer

A)   the inability of a firm to increase all inputs proportionately.
B)   the problems of coordination and control.
C)   higher input prices.
D)   larger fixed costs with a larger plant size.
E)   greater specialization.F) A) and D)
G) C) and E)

Question 4

The next question is based on the following schedule:
 
-From the schedule,it is possible to calculate

Accepted Answer

A)   marginal cost.
B)   average variable cost.
C)   average fixed cost.
D)   total variable cost.
E)   profit.F) A) and B)
G) C) and D)

Question 5

In addition to preferences,a consumer's choice is further constrained by

Accepted Answer

A)   nothing.
B)   a rising marginal utility curve.
C)   income and commodity prices.
D)   an equilibrium market where utility is minimized.
E)   the fact that the optimal market basket is rarely the equilibrium market basket.F) All of the above
G) B) and D)

Question 6

The addition to total cost resulting from the addition of the last unit of output is the ________ cost.

Accepted Answer

A)   total variable
B)   average variable
C)   fixed
D)   implicit
E)   marginalF) A) and E)
G) A) and D)

Question 7

Approximately what percentage of their income do U.S.households save?

Accepted Answer

A)   4 percent
B)   10 percent
C)   15 percent
D)   20 percent
E)   32 percentF) A) and E)
G) A) and D)

Question 8

In the short run,the greater the level of output,the

Accepted Answer

A)   greater the average fixed cost.
B)   lower the total fixed cost.
C)   greater the total fixed cost.
D)   lower the total variable cost.
E)   greater the total variable cost.F) A) and D)
G) A) and B)

Question 9

Opportunity cost is

Accepted Answer

A)   the variable cost a firm incurs by increasing output 1 unit.
B)   the value of the best alternative use of a firm's resources.
C)   the output opportunities a firm gains when average fixed costs decline.
D)   another name for explicit costs.
E)   the difference between fixed cost and variable cost.F) B) and D)
G) None of the above

Question 10

In the short run,when output is zero,________ costs are zero.

Accepted Answer

A)   total variable
B)   total fixed
C)   total
D)   opportunity
E)   market entryF) A) and B)
G) C) and E)

Question 11

A consumer is in equilibrium when

Accepted Answer

A)   total utility can be increased only by reallocating his or her money income.
B)   the marginal utility for each commodity consumed is equal.
C)   all of his or her income has been spent on goods and services.
D)   any other allocation of his or her income among the commodities consumed leads only to a reduction in total utility.
E)   the total utility received from all commodities is the same.F) D) and E)
G) C) and D)

Question 12

Short-run costs that increase and decrease as an output increases or decreases are called ________ costs.

Accepted Answer

A)   variable
B)   secondary
C)   derived
D)   partial
E)   potentialF) B) and C)
G) C) and D)

Question 13

The Easy Rider Surfboard Company produces 11,000 surfboards annually at a total cost of $484,000.Its total fixed costs are $198,000.The average variable cost of a surfboard must be

Accepted Answer

A)   $18.
B)   $26.
C)   $44.
D)   $62.
E)   $70.F) C) and E)
G) All of the above

Question 14

In a market economy,consumer purchases depend on their

Accepted Answer

A)   costs and what they can charge.
B)   production decisions.
C)   income, tastes, and market prices.
D)   expenses, supply, and levels of activity.
E)   past outlook and state of technology.F) A) and B)
G) A) and D)

Question 15

As output increases,average total cost eventually rises because

Accepted Answer

A)   average fixed cost increases at a faster rate than average variable cost.
B)   average variable cost will eventually increase at a faster rate than that at which average fixed cost declines.
C)   marginal cost is offset by fixed cost.
D)   of a declining rate of increase in total cost.
E)   increases in average total cost offset increases in average variable cost.F) None of the above
G) All of the above

Question 16

Average fixed cost equals

Accepted Answer

A)   total cost divided by output.
B)   total cost minus total variable cost.
C)   average total cost plus average variable cost.
D)   total fixed cost minus total variable cost.
E)   total fixed cost divided by output.F) A) and C)
G) A) and E)

Question 17

Another name for opportunity cost is ________ cost.

Accepted Answer

A)   out-of-the pocket
B)   irrelevant
C)   manageable
D)   alternative
E)   historicalF) C) and D)
G) A) and D)

Question 18

The following question are based on the following table:
 
-The average variable cost of producing 2 units is

Accepted Answer

A)   $13.
B)   $23.
C)   $26.
D)   $33.
E)   $66.F) A) and E)
G) A) and D)

Question 19

If average total cost is $0.75 when output is 100 units and total fixed cost is $10,average variable cost is

Accepted Answer

A)   $0.65.
B)   $9.25.
C)   $10.75.
D)   $65.
E)   $75.F) A) and D)
G) B) and C)

Question 20

According to economist Richard Gill in the video presentation,the experience of Marin County residents during the drought of the 1970s shows that

Accepted Answer

A)   scarcity is not as much of a factor in determining price as economists once thought.
B)   people tend to be very careful in their use of scarce resources.
C)   price has more impact on total utility than on marginal utility.
D)   when there is no substitute for a resource its demand is high.
E)   the total utility of water rises as it becomes less available.F) A) and B)
G) C) and E)

Exam 4: Getting Behind the Demand and Supply Curves

If the total cost of 100 units is $560 and the marginal cost of the 101st unit is $6

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As output increases,average variable cost first declines but eventually rises because

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A consumer is in equilibrium when

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Average fixed cost equals

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In addition to preferences,a consumer's choice is further constrained by

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Opportunity cost is

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Short-run costs that increase and decrease as an output increases or decreases are called ________ costs.

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In a market economy,consumer purchases depend on their

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Approximately what percentage of their income do U.S.households save?

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Another name for opportunity cost is ________ cost.

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A possible reason for the existence of increasing returns to scale is

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In the short run,when output is zero,________ costs are zero.

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If average total cost is $0.75 when output is 100 units and total fixed cost is $10,average variable cost is

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The addition to total cost resulting from the addition of the last unit of output is the ________ cost.

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The Easy Rider Surfboard Company produces 11,000 surfboards annually at a total cost of $484,000.Its total fixed costs are $198,000.The average variable cost of a surfboard must be

Correct AnswerverifiedShow Answer

As output increases,average total cost eventually rises because

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The next question is based on the following schedule: -From the schedule,it is possible to calculate

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In the short run,the greater the level of output,the

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The following question are based on the following table: -The average variable cost of producing 2 units is

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According to economist Richard Gill in the video presentation,the experience of Marin County residents during the drought of the 1970s shows that

Correct AnswerverifiedShow Answer

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