Question

30.

Tom owns and operates a classy bistro restaurant, Tom's Bistro, and gathers the following information to make a decision on whether to stay open for business or to shut down permanently:
Future operating revenues = $12 million
Future operating costs = $10 million
Sunk costs = $4 million

Tom should:

	A.	shut down because the operating revenues are insufficient to cover the operating costs and sunk costs.
	B.	continue to operate because the operating revenues exceed the operating costs.
	C.	continue to operate to help pay off the sunk costs.
	D.	shut down because the sunk costs are greater than zero.

33.

Which of the following is (are) true?

I.	If TC = $50,000 and FC = $18,000, then VC = $68,000.
II.	The fixed cost curve is a vertical line because fixed costs do not vary with output (assuming output is on x-axis and cost is on y-axis).
III.	The total cost and variable cost curves always have the same shape and slope.
IV.	TC = FC if output equals zero.

	A.	I, II, and III
	B.	III and IV
	C.	III
	D.	II, III, and IV

36.

A firm is producing 4 units of output at an average total cost of $10. When the firm produces 5 units of output, average total cost rises to $15. What is the marginal cost of the fifth unit of output?

	A.	$1
	B.	$20
	C.	$5
	D.	$35

37.

Suppose a firm's total cost is given by TC = 50 + 8 Q + Q ². Which of the following statements is (are) TRUE?

I.	AVC = 8 Q + Q 2
II.	AFC = 50/ Q
III.	ATC = 50/ Q + 8 + Q
IV.	FC = 50 + 8 Q

	A.	III
	B.	I and IV
	C.	II and III
	D.	I and II

Answer 1

30):-B is right option

Shutdown point is defined a point of operations where a firm experiences no benefit for continuing operations or from shutting down temporarily in the short run by leaving the industry

33) :-B is right option

Total Costs is defined as the amount of money spent by a firm on producing a given level of output. Total costs are made up of fixed costs (FC) and variable costs (VC).

Sorry for question number 37