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07 Practice MC
1.
2.
3.
4.
5.
6.
Refer to the above data. Creamy Crisp's total economic costs are:
A. $286,000.
B. $150,000.
C. $94,000.
D. $156,000.
7.
8.
9.
24. Refer to the above diagram. At output level Q total cost is:
A. 0BEQ.
B. BCDE.
C. 0BEQ plus BCDE.
D. 0AFQ plus BCDE.
25. 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.
B. Average fixed costs and average variable costs would rise.
C. Average fixed costs and average total costs would rise.
D. Average fixed costs would rise, but marginal costs would fall.
Answer the question on the basis of the following information:
30. Because the marginal product of a variable resource at first increases and then decreases as the output of
the firm is increased:
A. total cost at first increases at a decreasing rate and then increases at an increasing rate.
B. total variable cost at first increases at an increasing rate and then increases at a decreasing rate.
C. average total cost at first increases and then diminishes.
D. average fixed cost will rise beyond the point of diminishing returns.
31. In comparing the changes in TC and TVC associated with an additional unit of output, we find that:
A. the change in TVC is equal to MC, while the change in TC is equal to TFC.
B. the change in TC exceeds the change in TVC.
C. the change in TVC exceeds the change in TC.
D. both are equal to MC.
following question(s).
34. Refer to the above information. The average fixed cost of 3 units of output is:
A. $13.33.
B. $12.50.
C. $40.
D. $18.50.
35. Refer to the above diagram. If labor is the only variable input, the average product of labor is at a:
A. minimum at point b.
B. maximum at point b.
C. maximum at point a.
D. maximum at point c.
Answer the question on the basis of the accompanying table that shows average total costs (ATC) for a
37. As the firm in the above diagram expands from plant size #3 to plant size #5, it experiences:
A. increasing returns.
B. economies of scale.
C. diseconomies of scale.
D. constant costs.
38. Which of the following is not a source of economies of scale?
A. learning-by-doing.
B. labor specialization.
C. use of larger machines.
D. inelastic resource supply curves.
39. If a firm doubles its output in the long run and its unit costs of production decline, we can conclude
that:
A. technological progress has occurred.
B. economies of scale are being realized.
C. the firm is encountering diminishing returns.
D. diseconomies of scale are being encountered.
40. Refer to the above diagram. For output level Q, per unit costs of C are:
A. unattainable and imply the inefficient use of resources.
B. unattainable, given resource prices and the current state of technology.
C. attainable, but imply the inefficient use of resources.
D. attainable and imply that resources are being combined efficiently.
41. Refer to the above diagram. For output level Q, per unit costs of B are:
A. unattainable and imply the inefficient use of resources.
B. unattainable, given resource prices and the current state of technology.
C. attainable, but imply the inefficient use of resources.
D. attainable and imply least-cost production of this level of output.
42. If an industry's long-run average total cost curve has an extended range of constant returns to scale, this
implies that:
A. technology precludes both economies and diseconomies of scale.
B. the industry will be a natural monopoly.
C. both relatively small and relatively large firms can be viable in the industry.
D. the industry will be comprised of a very large number of small firms.
aircraft production
automobile manufacturing
concrete mixing
newspaper printing
48. Daily newspapers have been rising in price in recent years because:
A. wages in the newspaper industry have risen dramatically.
B. the overhead costs have recently been spread over a shrinking number of buyers.
C. capital has replaced virtually all labor used to produce a newspaper.
D. long-standing government subsidizes have been removed in most major cities.
49. (Consider This) In order to apply the concept of diminishing returns to study time:
A. the amount of study time available must be held constant.
B. study time must be considered a long-run production process.
C. all inputs to the learning process must be allowed to vary.
D. all inputs to the learning process except for study time must be assumed to be fixed.
50. (Last Word) A cost that cannot be partly or fully recovered through any subsequent action is known as
a:
A. variable cost.
B. fixed cost.
C. marginal cost.
D. sunk cost.
37. C
38. D
39. B
40. C
41. D
42. C
43. B
44. B
45. C
46. D
47. C
48. B
49. D
50. D
# of Questions
23
27
8
19
23
8
42
9
14
16
11
62
5
5
11
4
5
18
7
7
6