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.

11. A dehydrated person has two glasses of water. Compared with
the person's first glass of water, total utility after the second
glass will:
a)
increase and marginal utility will
decrease.
b)
decrease and marginal utility will
decrease.
c)
increase and marginal utility will
increase.
d)
decrease and marginal utility will increase.
14. 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...

The vertical distance between the average total cost and the
average variable cost curves is:
a.
constant with respect to output.
b.
decreasing with respect to output.
c.
increasing with respect to output.
d.
equal to total fixed costs.
e.
none of the above.
1 points
QUESTION 11
The point at which the SRAC curve is tangent to the LRAC
curve:
a.
represents the most efficient wa to use a given plant.
b.
is always the output where MC=AC....

1a. Joy, who has an income of $40, can spend her income on 2
different goods, smoothies and energy bars. Energy bars cost $2
each, and smoothies cost $4 each. Draw her budget line.
1b. Can she buy 10 energy bars and 5 smoothies? Why or why
not?
1c. The following table shows her
utilities from smoothies and energy bars. 2
Quantity of
smoothies
Utility from
smoothies
Marginal
utility
MU / Price of
smoothies
Quantity of energy bars
Utility from...

Assume diminishing marginal product at some point.
Draw the fixed cost, average fixed cost, marginal cost, average
variable cost and average total cost curves for a firm.
Indicate the quantity associated with efficient scale. What two
curves intersect at this point?
Is this a short run or long run cost analysis?

The shutdown point in the long run is
___________________.
Minimum Marginal Cost
Minimum Average Fixed Cost
Minimum Average Variable Cost
Minimum Average Total Cost
The shutdown point in the short run is
___________________.
Minimum Marginal Cost
Minimum Average Fixed Cost
Minimum Average Variable Cost
Minimum Average Total Cost

T/F - The area under the marginal cost curve measures total
variable costs.
Why is the short run average cost curve tangent to the long run
average cost curve at a level of output?
Why does the supply curve of a firm must be in the positively
sloped part of the MC curve and not in the negatively sloped
part?
In the long run, why is the long run industry supply curve flat
at min(AC)?

Assume that marginal revenue equals rising marginal cost at 100
units of output. At this output level, a firm's total fixed cost is
$500 and its total variable cost is $600. If the price of the
product were $3 per unit and the firm follows its optimal strategy,
the firm will earn an economic profit equal to?
a. -$600
b. -$500
c. $300
d. -$1,100
e. -$400

Use the table below to answer the following questions.
Output
Fixed Cost
Variable Cost
Total Cost
Average Fixed Cost
Average Variable Cost
Average Total Cost
Marginal Cost
0
10
1
20
7
2
20
32
6
3
20
41
6.67
13.67
4
20
40
5
20
75
6
20
132
3.33
25.33
7
237
2.86
31
33.86
8
20
356
9
20
515
2.22
57.22
10
20
700
2
A) What is the firm’s minimum efficient scale?
B) How much...

In the short run, supposed average total cost is a straight line
and marginal cost is positive and constant. Then, we know that
fixed costs must:
A. be declining with output
B. be positive
C. equal zero
D. We do not have enough information to answer this question

Short run cost curves:
a. Explain why the marginal cost curve intersects the average
total and variable cost curve at their respective minimum
values:
b. At what point on the ATC will a perfectly competitive firm
always produce in the long run:
c. The supply curve for a perfectly competitive firm is the same
as one of the cost curves based on a specific criterion. State both
the curve and the criterion:

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