{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Practice_Ch8_ - Chapter 8 Practice Test The Costs of...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 8 Practice Test The Costs of Production 1. The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table. Output TVC 1 $ 0 2 70 3 110 4 160 5 220 Refer to the table. The average total cost of 4 units of output is: a. $27.50 b. $40.00 c. $52.50 d. $210.00 Answer: c Feedback: The total cost of 4 units of output is $210 = $50 (fixed cost) + $160 (total variable cost.) To find average total cost, divide this by the number of units of output: $210 / 4 = $52.50 per unit. 2. Answer the next question based on the cost data in the following table: Output Average fixed cost Average variable cost 1 $120 $40 2 60 30 3 40 25 4 30 30 5 24 40 6 20 55 Refer to the data. The total cost of producing 5 units of output is:
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
3. It is often unnecessary to graph the firm’s average fixed cost because it can always be found as: 4. Use the following graph to answer the next question: The diagram shows the short-run average total cost curves for five different plant sizes for a firm. The firm experiences economies of scale over the range of plant sizes: 5. Explicit costs and implicit costs: a. are alike in that both represent opportunity costs b. are alike in that both reflect an outlay of cash c. are alike in that both are deducted from revenue to find accounting profit d. differ in that only explicit costs are deducted from revenue to find economic profit Answer: a Feedback: Economic profit is equal to revenue minus the opportunity cost of the firm’s resources, where these costs may be either explicit or implicit.
Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern