69451707 posted a question
1. Which of the following relationships is correct? (Points : 2)
When marginal product starts to decrease, marginal cost starts to decrease.
When marginal cost starts to increase, average cost starts to increase.
When marginal cost starts to increase, average variable cost starts to increase.
When marginal product starts to decrease, marginal cost starts to increase

2. The law of diminishing returns begins first to affect a firm's short-run cost structure when (Points : 2)
average variable cost begins to increase
marginal cost begins to increase.
average cost begins to increase
average fixed cost begins to decrease.

3. Which of the following statements best represents a difference between short-run and long-run cost? (Points : 2)
Less than one year is considered the short run; more than one year the long run.
There are no fixed costs in the long run.
In the short-run labor must always be considered the variable input and capital the fixed input.
In the short run, all inputs could be variable.
All of the above are true.

4. When a firm increased its output by one unit, its AFC decreased. This is an indication that (Points : 2)
the law of diminishing returns has taken effect.
MC < AFC.
AVC < AFC.
the firm is spreading out its total fixed cost.
MC = AFC.

5. When a firm increased its output by one unit, its AC rose from \$80 to \$100. This implies that MC is (Points : 2)
\$20
between \$80 and \$100
greater than \$100
Cannot be determined from the above information
\$100

6. Diseconomies of scale can be caused by (Points : 2)
the law of diminishing returns.
bureaucratic inefficiencies.
All of the above.

7. If total cost equals \$2000 and quantity produced is 100 units, (Points : 2)
then fixed cost is \$200 and average variable cost is \$18.
then fixed cost is \$600 and average variable cost is \$14.
then fixed cost is \$500 and marginal cost is \$15.
then either A or B can be correct.

8. The main factor that explains the difference between accounting cost and economic cost is (Points : 2)
opportunity cost.
fixed cost.
variable cost.
All of the above help explain the difference.

9. In economic theory, if an additional worker adds less to the total output than the previous workers hired, it is because (Points : 2)
there may be less that this person can do, given the fixed capacity of the firm.
he/she is less skilled than the previously hired workers.
everyone is getting in each other's way.
the firm is experiencing diminishing returns to scale.

10. Which of the following relationships implies that a firm's short-run cost function is linear? (Points : 2)
MC = AC
MC = AVC
AC = AFC + AVC
MC > AC

11. When a firm's MC curve shifts to the right, it implies htat (Points : 2)
new firms are entering the market.
labor productivity is decreasing.
labor productivity is increasing.
the firm's overhead costs are decreasing.
labor productivity is constant.

12. If a firm's rent increases, it will affect its cost structure in the following way: (Points : 2)
AVC will increase.
MC will increase.
TFC will increase.
All of the above will increase.

13. When a firm experiences increasing returns to scale (Points : 2)
its AFC will decrease.
its AFC will increase.
its AC will increase.
its AC will decrease.

14. Learning by doing (Points : 2)
is really not different from a marginal cost curve.
calculates average cost at a particular point in time.
shows the decrease in unit cost as more of the same product is produced over time.
None of the above.

15.
Trisha believes the production of a dress requires 4 labor hours and 2 machine hours to produce. If Trisha decides to operate in the short run, she must spend \$500 to lease her business space. Also, a labor hour costs \$15 and a machine hours costs \$35. What is Trisha's cost of production as a function of dresses produced?

(Points : 2)

16.
Given the output and Total Cost Data in the Table below, Complete the following columns: Variable cost , Fixed Costs, marginal Cost, Average Total Cost columns. Then on a graph, plot the marginal and average costs data. (Plot them on the same graph, not on two separate graphs). Then from the graph identify the level of output at which Marginal Cost equals Average Cost.

Total

Output

Cost

0

50

1

60

2

75

3

100

4

150

5

225

6

400

**Please record the answer(s) here in the answer box and post the graph in DOC SHARING (access for INSTRUCTOR ONLY). Thanks.
(Points : 8)

17. Use the following two statements to answer this question:

I. The average cost curve and the average variable cost curve reach their minima at the same level of output.

II. The average cost curve and the marginal cost curve reach their minima at the same level of output.
(Points : 2)
Both I and II are true.
I is true, and II is false.
I is false, and II is true.
Both I and II are false.

18. Consider the following statements when answering this question

I. A firms marginal cost curve does not depend on the level of fixed costs.

II. As output increases the difference between a firm's average total cost and average variable cost curves cannot rise.
(Points : 2)
I is true, and II is false.
I is false, and II is true.
I and II are both true.
I and II are both false.

19. Two small airlines provide shuttle service between Las Vegas and Reno. The services are alike in every respect except that Fly Right bought its airplane for \$500,000, while Fly by Night rents its plane for \$30,000 a year. If Fly Right were to go out of business, it would be able to rent its plane to another airline for \$30,000. Which airline has the lower costs? (Points : 2)
Fly Right.
Fly by Night.
Neither, the costs are identical.
Neither, Fly by Night has lower costs at small output levels and Fly Right has lower costs at high output levels

20. Which of the following statements correctly uses the concept of opportunity cost in decision making?

I. "Because my secretary's time has already been paid for, my cost of taking on an additional project is lower than it otherwise would be."

II "Since The Space Administration Department is running under budget this year, the cost of another space shuttle launch is lower than it otherwise would be."
(Points : 2)
I is true, and II is false.
I is false, and II is true.
I and II are both true.
I and II are both false.

21. Consider the following statements when answering this question.

I. "Investment in new technology generates learning by doing."

II. Economies of scale cannot shift the long-run average cost curve down, whereas learning by doing can.
(Points : 2)
I is true, and II is false.
I is false, and II is true.
Both I and II are true.
Both I and II are false.

22. The total cost (TC) of producing computer software diskettes (Q) is given as TC = 200 + 5Q. What is the variable cost? (Points : 2)
200
5Q
5
5 + (200/Q)
none of the above