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Exam 5: Production Technology and Cost

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Question 111

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Figure 5.2 -Figure 5.2 presents a firmʹs marginal, average total, average fixed, and average variable cost curves. The firm minimizes average total costs by producing _______ units.

A) 50
B) 100
C) 150
D) 200

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Question 112

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$\begin{array}{|c|c|c|c|c|c|c|}\hline \text { Number of Figs } & V C & M C & A V C & F C & T C & A T C \\\hline 0 & & & & 100 & & \\\hline 1 & 90 & 90 & & & & \\\hline 2 & & & & & & 135 \\\hline 3 & & & 80 & & & \\\hline 4 & & & & & 400 & \\\hline\end{array}$ Table 5.4 -Table 5.4 presents the cost schedule for Davidʹs Figs. If David produces two figs, Davidʹs average variable costs are:

A) $80.
B) $85.
C) $90.
D) $170.

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Question 113

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Recall the Application about the production cost of mobile phones to answer the following question(s). -Recall the Application. The rechargeable battery is the largest cost associated with producing mobile phones.

Suppose that in 2010 ABC Corp. produced 500 million units of a good at an average cost of $2, and in 2011 ABC Corp. expanded its plant capacity and produced 600 million units at an average cost of $1.80. In this range, one can conclude that ABC Corp. is experiencing:

Figure 5.1 -Refer to Figure 5.1, which shows a family of average cost curves. The average total cost at a given level of output is represented by:

Which of the following are included in calculating economic costs?

In the short run, at least one factor of production is fixed. This implies that beyond some level of output a firm will:

What are indivisible inputs and what are their implications for economies of scale?

Suppose that your firmʹs marginal cost of producing a pencil is 5 cents and the average cost of producing a pencil is 3 cents. If your firm is interested in minimizing average total costs, what should your firm do?