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a.
upward sloping
b.
downward sloping
c.
U-shaped
d.
constant
Scenario 13-19
Doreen’s Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In
producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
127. Refer to Scenario 13-19. The firm's fixed cost was
a.
$2,000.
b.
$12,000.
c.
$28,000.
d.
$42,000.
128. Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average fixed cost was
a.
$0.29.
b.
$1.71.
c.
$2,00.
d.
$6.00.
129. Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average variable cost was
a.
$1.71.
b.
$4.00.
c.
$5.71.
d.
$6.00.
130. Refer to Scenario 13-19. In producing the 7,000 pounds of cheese, the firm's average total cost was
a.
$1.71.
b.
$4.00.
c.
$5.71.
d.
$6.00.
131. Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The
firm's accounting profit for the year was
a.
-$26,000.
b.
-$23,000.
c.
$2,000.
d.
$14,000.
132. Refer to Scenario 13-19. Suppose the owner of the business had an offer to work for another firm for $25,000. The
firm's economic profit for the year was
a.
-$26,000.
b.
-$23,000.
c.
$2,000.
d.
$14,000.
133. Marginal cost is equal to
a.
TC/Q.
b.
ΔATC/Q.
c.
ΔTC/ΔQ.
d.
ΔQ/ΔTC.
134. The amount by which total cost rises when the firm produces one additional unit of output is called
a.
average cost.
b.
marginal cost.
c.
fixed cost.
d.
variable cost.
135. The cost of producing an additional unit of output is the firm's
a.
marginal cost.
b.
productivity offset.
c.
variable cost.
d.
average variable cost.
136. Marginal cost equals
(i)
change in total cost divided by change in quantity produced.
(ii)
change in variable cost divided by change in quantity produced.
(iii)
the average fixed cost of the current unit.
a.
(i) and (ii) only
b.
(ii) and (iii) only
c.
(i) only
d.
(i), (ii), and (iii)
137. Marginal cost equals
a.
total cost divided by quantity of output produced.
b.
total output divided by the change in total cost.
c.
the slope of the total cost curve.
d.
the slope of the line drawn from the origin to the total cost curve.
138. Marginal cost tells us the
a.
value of all resources used in a production process.
b.
marginal increment to profitability when price is constant.
c.
amount by which total cost rises when output is increased by one unit.
d.
amount by which output rises when labor is increased by one unit.
139. Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit
of production?"
a.
variable cost
b.
average variable cost
c.
average total cost
d.
marginal cost
140. A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total
costs are $3,500. When it produces 101 units of output, its total costs are $3,750. What is the marginal cost of producing
the 101st unit of output?
a.
$250
b.
$275
c.
$340.91
d.
$350
141. A firm has a fixed cost of $500 in its first year of operation. When the firm produces 100 units of output, its total
costs are $4,500. The marginal cost of producing the 101st unit of output is $300. What is the total cost of producing 101
units?
a.
$46.53
b.
$800
c.
$4,800
d.
$5,300
142. A firm has a fixed cost of $700 in its first year of operation. When the firm produces 99 units of output, its total costs
are $4,000. The marginal cost of producing the 100th unit of output is $200. What is the total cost of producing 100 units?
a.
$42
b.
$900
c.
$4,200
d.
$4,900
143. A firm has a fixed cost of $200 in its first year of operation. When the firm produces 99 units of output, its total costs
are $4,000. The marginal cost of producing the 100th unit of output is $700. What is the total cost of producing 100 units?
a.
$900
b.
$4,200
c.
$4,700
d.
$4,900
144. Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade
she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,
a.
the marginal cost of an extra worker is large.
b.
the marginal cost of one more glass of lemonade is smaller than if output were high.
c.
the marginal product of an extra worker is small.
d.
her lemonade stand is likely to be crowded with workers.
145. Randy is a minor-league baseball player. His current cumulative batting average is 0.270. Randy believes that if he
can raise his cumulative batting average to 0.300, he will have a chance to play in the major leagues. Which of the
following statements is correct?
a.
If Randy gets between 27 and 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting
average to 0.300.
b.
If Randy gets 30 hits out of his next 100 at bats, he will be able to raise his cumulative batting average to
0.300.
c.
Randy must get more than 30 hits out of his next 100 at bats in order to raise his cumulative batting average to
0.300.
d.
Either b or c could be correct.
146. Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA
will fall even further next semester if he performs worse than
(i)
his cumulative GPA.
(ii)
he ever performed before.
(iii)
he did last semester.
a.
(i) and (ii) only
b.
(i) and (iii) only
c.
(ii) and (iii) only
d.
(i), (ii), and (iii)
147. Johnny is a sophomore in college and has a 1.5 cumulative grade point average (GPA). Johnny's cumulative GPA
will be better next semester if he
(i)
performs better than he did last semester.
(ii)
performs better than his cumulative GPA.
(iii)
gives an average performance.
a.
(ii) only
b.
(iii) only
c.
(i) and (ii)
d.
(ii) and (iii)
148. Jennifer is a junior in college. Her current cumulative grade point average (GPA) is 3.5 out of a 4.0 scale. Jennifer is
hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7. Which of the following statements is
correct?
a.
If Jennifer earns between a 3.5 and a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA
to a 3.7.
b.
If Jennifer earns a 3.7 GPA in her senior year, she will be able to raise her cumulative GPA to a 3.7.
c.
Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7.
d.
Either b or c could be correct.
149. If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of
making 499 pizzas is $3.30, then
a.
average total costs are rising at Q = 500.
b.
average total costs are falling at Q = 500.
c.
total costs are falling at Q = 500.
d.
average variable costs must be falling.
150. Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm
hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of
labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the marginal cost of
production when the firm hires the 7th worker?
a.
$1.50
b.
$2.50
c.
$5
d.
$10
Figure 13-4
151. Refer to Figure 13-4. Which of the above marginal cost curves reflects diminishing marginal product?
a.
A
b.
B
c.
C
d.
D
152. Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm
hires 6 workers the firm produces 90 units of output. Fixed costs of production are $6 and the variable cost per unit of
labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the average variable
cost of production when the firm hires 7 workers?
a.
$12.67
b.
$11
c.
81 cents
d.
75 cents
153. Marginal cost increases as the quantity of output increases. This reflects the property of
a.
increasing total cost.
b.
diminishing total cost.
c.
increasing marginal product.
d.
diminishing marginal product.
154. If marginal cost is rising,
a.
average variable cost must be falling.
b.
average fixed cost must be rising.
c.
marginal product must be falling.
d.
marginal product must be rising.
155. Diminishing marginal product suggests that the marginal
a.
cost of an extra worker is unchanged.
b.
cost of an extra worker is less than the previous worker's marginal cost.
c.
product of an extra worker is less than the previous worker's marginal product.
d.
product of an extra worker is greater than the previous worker's marginal product.
156. Diminishing marginal product suggests that
a.
additional units of output become less costly as more output is produced.
b.
marginal cost is upward sloping.
c.
the firm is at full capacity.
d.
adding additional workers will lower total cost.
157. The fundamental reason that marginal cost eventually rises as output increases is because of
a.
economies of scale.
b.
diseconomies of scale.
c.
diminishing marginal product.
d.
rising average fixed cost.
158. The average-fixed-cost curve
a.
is constant.
b.
is always decreasing.
c.
intersects marginal cost at the minimum of average fixed cost.
d.
intersects marginal cost at the minimum of marginal cost.
159. Consider the following information about bread production at Beth's Bakery:
Worker
Marginal Product
1
5
2
7
3
10
4
11
5
8
6
6
7
4
Beth pays all her workers the same wage, and labor is her only variable cost. From this information we can conclude that
Beth's marginal cost
a.
declines as output increases from 0 to 33, but increases after that.
b.
declines as output increases from 0 to 11, but increases after that.
c.
increases as output increases from 0 to 11, but declines after that.
d.
is constant.
160. The average-total-cost curve intersects
a.
average fixed cost at the minimum of average total cost.
b.
average variable cost at the minimum of average total cost.
c.
marginal cost at the minimum of average total cost.
d.
marginal cost at the minimum of marginal cost.
Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of
the current output level.
161. Refer to Scenario 13-20. Average total cost will be
a.
rising at all points.
b.
falling at all points.
c.
constant.
d.
U-shaped.
162. Refer to Scenario 13-20. Average fixed cost will be
a.
rising at all points.
b.
falling at all points.
c.
U-shaped.
d.
constant.
163. Refer to Scenario 13-20. Average variable cost will be
a.
rising at all points.
b.
falling at all points.
c.
U-shaped.
d.
constant.
164. Refer to Scenario 13-20. Marginal cost will be
a.
rising at all points.
b.
falling at all points.
c.
U-shaped.
d.
constant.
Figure 13-5
165. Refer to Figure 13-5. Curve A represents which type of cost curve?
a.
marginal cost
b.
average total cost
c.
average variable cost
d.
average fixed cost
166. Refer to Figure 13-5. Which of the curves is most likely to represent average fixed cost?
a.
A
b.
B
c.
C
d.
D
167. Refer to Figure 13-5. Curve C represents which type of cost curve?
a.
marginal cost
b.
average total cost
c.
average variable cost
d.
average fixed cost
168. Refer to Figure 13-5. Which curve is most likely to represent average total cost?
a.
A
b.
B
c.
C
d.
D
169. Refer to Figure 13-5. Curve D represents which type of cost curve?
a.
marginal cost
b.
average total cost
c.
average variable cost
d.
average fixed cost
170. Refer to Figure 13-5. Which curve is most likely to represent marginal cost?
a.
A
b.
B
c.
C
d.
D
