Question

1. How are marginal and average product related graphically to marginal and average variable cost?

a. They are mirror images of each other.

b. The maximums of the product curves are the minimum of the cost curves.

c. As marginal and average product increase the respective cost curves decrease.

d. All of the above.

2 How can long-run total cost be calculated?

a. Multiplying average costs by output.

b. Adding positive total fixed costs to total variable costs.

c. Multiplying average fixed costs by output.

d. None of the above.

3.When do we have economies of scale?

a. When increasing all inputs leads to a larger proportional increase in output and long-run average costs are decreasing.

b. When increasing all inputs leads to a smaller proportional increase in output and long-run average costs are increasing.

c. When increasing all inputs leads to a constant proportional increase in output and long-run average costs are constant.

d. None of the above.

4. What is the optimal firm size from a cost perspective?

a. Where the long-run average cost curve is flat.

b. Where the firm is experiencing economies of scale.

c. It will not depend on the industry.

d. None of the above.

5. How do firms maximize profit?

a. By setting the quantity where market demand equals the sum of marginal cost curves.

b. Always set quantity where marginal revenue is equal to marginal cost regardless of price.

c. Set quantity where marginal revenue is equal to marginal cost if price is above average variable cost.

d. The firm will always produce a positive amount.

Answer #1

1> d. All of the above.

Reason

As the average product increase, the cost associated with it decreases, thus it can be thought of as mirror image of each other,

2> b. Adding positive total fixed costs to total variable costs.

Reason

In the long run, the most efficient method of production is used.

3> a. When increasing all inputs leads to a larger proportional increase in output and long-run average costs are decreasing.

This is true by definition

4> a. Where the long-run average cost curve is flat.

Reason

Where this happens, one can not increase or decrease outcome to increase efficiency.

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....

Average variable cost
A.
decreases when its value is greater than marginal cost, and
increases when its value is less than marginal cost.
B.
decreases when its value is less than marginal cost, and
increases when its value is greater than marginal cost.
C.
is perpetually increasing, sometimes initially at increasing
rates but eventually at decreasing ones.
D.
perpetually decreases.
Average fixed costs
A.
are perpetually decreasing as output increases, but at a
decreasing rate.
B.
are perpetually decreasing as...

If marginal cost exceeds average variable cost,
average variable cost is decreasing
average variable cost is negative
average variable cost is increasing
marginal cost is greater than average total cost
average fixed cost is increasing
If marginal cost exceeds average variable cost,
average variable cost is decreasing
average variable cost is negative
average variable cost is increasing
marginal cost is greater than average total cost
average fixed cost is increasing
Which of the following is true of marginal product?
When...

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?

Total cost is calculated as _____.
Select one:
a.
average fixed cost plus average variable cost
b.
fixed cost plus variable cost
c.
the additional cost of the last unit produced
d.
marginal cost plus variable cost
e.
marginal cost plus fixed cost
--------------------------------------------------------------------------------------
The law of diminishing marginal returns states that:
Select one:
a.
long-run average cost declines as output increases.
b.
if the marginal product is above the average product, the
average will rise.
c.
as units of...

19. To maximize profits, a single-price monopolist will produce
where Marginal costs = Marginal revenue: establishing a price that
is greater than their marginal cost.
True
False
20. As a consequence of the perfectly competitive firm producing
the quantity of output at which: price equals marginal revenue and
marginal cost, it will achieve "allocative efficiency" in the
deployment of societies scarce resources.
True
False
21. In the "long-run," the perfect competitive achieves
technical efficiency and the firm will produce at:...

Which of the following is true in constructing the long-run
average cost curve?
a.
Short-run average total cost curves are used.
b.
Marginal costs curves are summed at each output level.
c.
Short-run average variable cost curves are summed at each
output level.
d.
Short-run average fixed cost curves are summed at each output
level.
There are _____ different areas identified by the textbook in
moving along a long-run average cost curve.
a.
two
b.
three
c.
five
d.
four...

If the marginal value of some variables is above the average
value of the variable: *
1 point
a. the marginal value must be
rising.
b. the marginal value must be
falling.
c. the average value must be
rising.
d. the average value must be
falling.
The fixed costs of a firm are costs that stay the same
regardless of *
1 point
a. the amount of output produced.
b. the price of the fixed input.
c. the amount of...

1.
In the long run, economies of scale is a stage where
Long-run ATC goes down as quantity increases.
Long-run ATC remains constant as quantity increases.
Long-run ATC rises as quantity increases.
2.
If AFC=60 and ATC=120 when output is 100, then total variable
cost must be:
60
40
6,000
8,000
3.
If AFC=60 and ATC=120 when output is 100, then total fixed cost
must be: (fill in the blank with a number)
4.
Which of the following is true?...

1.The marginal revenue product of labor is equal to the product
of: a.the wage rate and the marginal product of labor. b.the
marginal product of labor and the quantity of labor employed.
c.marginal product of labor and total revenue of the firm. d.the
wage rate and marginal revenue per unit of output. e.the marginal
revenue per unit of output and the marginal product of labor.
2 A profit-maximizing firm will hire the variable input, labor,
until the point where: a.marginal...

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