Question

# Which of the following is most likely to be a variable cost for a manufacturer?     A....

Which of the following is most likely to be a variable cost for a manufacturer?
A. energy costs.                                                                  C. rental payments on computer equipment.
B. interest payments on business loans.                             D. real estate taxes.

3. If a firm’s accounting profit is positive,

A. its economic profit will also be positive.

B. its economic profit will be positive if the accounting profit exceeds implicit costs.

C. its revenues cover both explicit and implicit costs.

4. Economic profit can be best defined as:
A. total revenue minus accounting profit.                          C. total revenue minus explicit costs, only.
B. accounting profit minus implicit costs.                          D. explicit plus implicit costs.

5. Which of the following is an implicit cost of production?
A. wages paid to workers.
B. owner’s foregone interest arising from her investment in the firm.
D. each of the above is an implicit cost.

6. Assume that a firm’s total fixed cost at 10 units of output is \$100.  The firm’s fixed costs for 20 units of
output would then be:
A. \$10.                                B. \$5.                                      C. \$200.                      D. \$100.

7. Each of the following is a consequence of diminishing marginal product except one, which one?
A. output increases at a decreasing rate as units of the variable input are added.
B. marginal cost increases as the firm increases production.
C. the firm’s total cost increases at an increasing rate as the firm increases production.
D. output falls as units of the variable input are added.

8. The effect of spreading out the fixed costs over greater and greater units of output is illustrated by the
________ average fixed cost curve ________.

A. short-run; increasing                                                      C. short-run; decreasing

B. long-run; increasing                                                       D. long-run; decreasing

9. True/False. There are no fixed costs in the long run.
A. True                                B. False

Question 1 - variable cost for a manufacturer

Answer - Option A - Energy costs

Because variable cost means the cost that vary directly with the level of output. It means if output is zero, a variable cost will be zero. when the output can be increased by adding variable factors such as employing more workers or using more energy.

So when a manufacturer uses more energy power, the machinery works more and the production also increases. So the increase in energy costs also increases the production of the company.

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