79.
Other things equal, if the prices of a firm’s variable inputs were to fall,
A.
one could not predict how unit costs of production would be affected.
80.
Other things equal, if the fixed costs of a firm were to increase by $100,000 per year, which
of the following would happen?
A.
Marginal costs and average variable costs would both rise.
81.
If a firm decides to produce no output in the short run, its costs will be
A.
its marginal costs.
9-42
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficu lty: 02 Medium
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
82.
Answer the question on the basis of the following cost data.
Output
Total Cost
0
$24
1
33
2
41
3
48
4
54
5
61
6
69
The total variable cost of producing 5 units is
A. $61.
83.
Answer the question on the basis of the following cost data.
Output
Total Cost
0
$24
1
33
9-43
2
41
3
48
4
54
5
61
6
69
The average total cost of producing 3 units of output is
A. $14.
B. $12.
84.
Answer the question on the basis of the following cost data.
Output
Total Cost
0
$24
1
33
2
41
3
48
4
54
5
61
6
69
The average fixed cost of producing 3 units of output is
D. $6.
AACSB: Knowledge Application
9-44
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Difficu lty: 02 Medium
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
Type: Table
85.
Answer the question on the basis of the following cost data.
Output
Total Cost
0
$24
1
33
2
41
3
48
4
54
5
61
6
69
The marginal cost of producing the sixth unit of output is
A. $24.
86.
Answer the question on the basis of the following cost data.
Output
Total Cost
9-45
0
$24
1
33
2
41
3
48
4
54
5
61
6
69
The profit-maximizing output for this firm
A. is 3.
87.
In comparing the changes in TVC and TC associated with an additional unit of output, we
find that
A.
no generalization about the changes in TC and TVC can be made.
88.
Answer the question on the basis of the following information.
TFC = Total Fixed Cost Q = Quantity of Output
MC = Marginal Cost P = Product Price
TVC = Total Variable Cost
Average fixed cost is _.
A.
B.
89.
Answer the question on the basis of the following information.
TFC = Total Fixed Cost Q = Quantity of Output
MC = Marginal Cost P = Product Price
TVC = Total Variable Cost
Average total cost is .
9-47
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficu lty: 02 Medium
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
90.
Answer the question on the basis of the following information.
TFC = Total Fixed Cost Q = Quantity of Output
MC = Marginal Cost P = Product Price
TVC = Total Variable Cost
Marginal cost is .
91.
Refer to the diagram, where variable inputs of labor are being added to a constant amount of
property resources. The total output of this firm will cease to expand
92.
Refer to the diagram, where variable inputs of labor are being added to a constant amount of
property resources. Marginal cost will be at a minimum for this firm when it is hiring
9-50
93.
Refer to the diagram, where variable inputs of labor are being added to a constant amount
of property resources. Average variable cost will be at a minimum when the firm is hiring
A. Q3 workers.
94.
In the figure, curves 1, 2, 3, and 4 represent the
95.
If a technological advance reduces the amount of variable resources needed to produce any
level of output, then the
9-52
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Difficu lty: 02 Medium
Learning Objective: 09–02 Relate the law of diminishing returns to a firms short-run
production costs.
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
Topic: Short-Run Production Relationships
Type: Graph
96.
In the short run, which of the following statements is correct?
A. The marginal cost curve intersects the average variable and average fixed cost curves at
their minimum points.
97.
Total fixed cost (TFC)
A.
falls as the firm expands output from zero, but eventually rises.
98.
Fixed costs are associated with
A.
highly adjustable inputs such as labor.
99.
In the diagram, curves 1, 2, and 3 represent
A.
average fixed cost, average variable cost, and average total cost respectively.
9-54
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
Difficu lty: 02 Medium
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
Type: Graph
100. Which of the following is correct?
A. There is no relationship between MP and MC.
101.
If a firm wanted to know how much it would save by producing one less unit of output, it
would look to
D.
AFC.
102. Which of the following holds true?
A. There is no relationship between AP and AVC.
B.
When MP is rising, AVC is falling, and when MP is falling, AVC is rising.
103.
In the short run it is impossible for an expansion of output to increase
A. average total cost.
104. Average fixed costs for a given level of output can be determined graphically by
A.
summing the marginal costs of any number of units of output and dividing the sum by that
output.
9-56
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Understand
Difficu lty: 02 Medium
Learning Objective: 09–03 Describe the distinctions between fixed and variable costs and
among total, average, and marginal costs.
Test Bank: I
To pi c : Short-Run Production Costs
105.
The vertical distance between the total cost and the total variable cost curves differs by an
amount that
A. initially increases, but then decreases, as output increases.
106. The vertical distance between a firm’s ATC and AVC curves represents
A. AFC, which increases as output increases.
9-57
107.
Refer to the short-run production and cost data. In Figure A curve (1) is
A.
total product and curve (2) is average product.
9-58
108.
Refer to the short-run production and cost data. In Figure B curve (3) is
109.
Refer to the short-run production and cost data. The curves of Figures A and B suggest that
110. In the short run,
9-60
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
a diminishing rate.
C.
TVC will increase by the same absolute amount for each additional unit of output
produced.
D.
one cannot generalize concerning the behavior of TVC as output increases.
111. As output increases, total variable cost
112.
In the short run, the Sure-Screen T-Shirt Company is producing 500 units of output. Its
average variable costs are $2.00 and its average fixed costs are $.50. The firm’s total costs