Question

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21) The relationship Q = f(K, L) is an example of a

A) cost function.

B) production function.

C) demand equation.

D) profit equation.

28) After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as

A) the long run.

B) the law of diminishing marginal product.

C) marginal physical product.

D) short run average cost.

33) Suppose that a firm is currently producing 1,000 units of output. At this level of output, AVC is $1 per

unit, and TFC is $500. What is the firm's TC?

A) $1,500

B) $1,000

C) $501

D) $499

34) Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC?

A) $2

B) $5

C) $7

D) $10

35) Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $700. What is the firm's marginal cost?

A) $5

B) $7

C) $20

D) $200

Answer 1

21) the equation where output is a function of labor and capital is a production function.

The correct option is B

28) after a certain point, successive increase in variabe input given fixed input, additional increase in output is by a lesser amount explains law of diminishing marginal productivity.

The correct option is B

33) AVC= TVC/Q hence TVC = 1000 and FC=500 and total cost = TVC + TFC = 1500

The correct option is A

34) TC = TVC + TFC = 3500 and ATC = TC/Q = 3500/500= 7

The correct option is C

35) marginal cost = dTVC/ dQ

MC= 700-500/(110-100)

MC= 200/10 = 20

The correct option is C