Question

8.) Suppose output = 100 units, fixed cost = $300, total cost = $800, and marginal cost = $60. What is the firm’s total variable cost?

$360 $500 $6000

9. ) Which of the following always increases when output increases?

Average fixed costs Variable costs Marginal costs

10. ) At levels of output where the firm’s short-run average total cost curve is rising,

the marginal cost curve is above the short-run average total cost curve

the marginal cost curve is below the short-run average total cost curve

the marginal cost curve is below the short-run average variable cost curve

4.) If you do not spend your entire budget in a given month, your consumption will appear:

as a point on your budget line

as a point above your budget line

as a point below your budget line

11.) Using the utility maximization rule, Jenn’s marginal utility of the last candy bar consumed is 8 and her marginal utility of the last smoothie consumed is 20. If candy bars cost $2 and smoothies cost $4, which of the following is true?

Jenn is maximizing her utility

Jenn must consume more smoothies and less candy bars to maximize utility

Jenn must consume less of both candy bars and smoothies to maximize utility

12.) Assume you allocate your time between attending classes (which take 2 hours) and working out (which take 1 hour). To maximize your total utility, you will choose a bundle where:

the total utility per hour from each activity is equal

the total utility from each activity is equal

the marginal utility per hour from each activity is equal

Answer 1

Ans8) total variable cost = total cost - total fixed cost

= 800 - 300 = 500

Ans9) variable costs is the correct option it always increase when output increases because variable costs vary with the output and it is proportional to output meaning if output increases variable cost increases.

Ans10) the marginal cost curve is above the short-run average total cost curve is the correct option. The marginal cost intersects average total cost when average total cost is at its minimum point.

Ans)as a point below your budget line is the correct option. If the whole budget is spent, consumption is on budget line. If the whole budget is not spent the consumption is below the budget line and the point above the budget line are not affordable.