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Exam 7: The Costs of Production

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Question 1

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The long-run average total cost curve is constructed from the

A) Minimum points of the short-run marginal cost curves.
B) Minimum points of the short-run average variable cost curves.
C) Lowest average total cost for producing each level of output.
D) Minimum points of the long-run marginal cost curves.

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Question 2

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Total cost refers to the market value of all resources used in producing a good or service.

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Question 3

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$\begin{array}{l}\begin{array} { | c | c | } \hline \begin{array} { c } \text { Output } \\\text { (Units per Day) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (Dollars per Day) }\end{array} \\\hline 0 & 16 \\\hline 1 & 30 \\\hline 2 & 42 \\\hline 3 & 58 \\\hline 4 & 78 \\\hline\end{array}\\\text { Table 21.4 }\end{array}$ For the output levels in Table 21.4, the minimum of the average variable cost curve occurs at a production rate of

Refer to Figure 21.3.The best estimate of where diminishing marginal returns begin is at an output level of

If choosing a larger plant will reduce minimum average costs, there are economies of scale.

Refer to Figure 21.5.Economies of scale occur in the following range of factory sizes

Ceteris paribus, the law of diminishing returns states that beyond some point, the

In the short run, when a firm produces zero output, total cost equals

$\begin{array}{l}\begin{array} { | l | r | r | r | r | } \hline \text { Output (units per day) } & 0 & 10 & 20 & 30 \\\hline \text { Total cost (dollars per day) } & \$ 40 & \$ 54 & \$ 62 & \$ 80 \\\hline\end{array}\\\text { Table } 21.2\end{array}$ At 30 units of output in Table 21.2, the total variable cost is

Which of the following is most likely a fixed cost?

Which of the following would cause a firm's production function to shift upward?

A production function shows the

$\begin{array}{l}\begin{array} { | c | c | } \hline \begin{array} { c } \text { Output } \\\text { (Units per Day) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (Dollars per Day) }\end{array} \\\hline 0 & 16 \\\hline 1 & 30 \\\hline 2 & 42 \\\hline 3 & 58 \\\hline 4 & 78 \\\hline\end{array}\\\text { Table 21.4 }\end{array}$ The marginal cost of the fourth unit of output in Table 21.4 is

The productivity of any input is independent and is not affected by the other resources that are used.

Marginal physical product is the change in total output associated with one additional unit of input.

Complete Table 21.5: $\begin{array}{l}\begin{array} { l ll l l l } Q&TFC&TVC&TC&AVC&MC\\0&\_\_\_\_\_&\_\_\_\_\_&15&--&--\\1&\_\_\_\_\_&\_\_\_\_\_&23&\_\_\_\_\_&\_\_\_\_\_\\2&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_&4\\3&\_\_\_\_\_&15&\_\_\_\_\_&\_\_\_\_\_&\_\_\_\_\_\end{array}\end{array}$ $\text { Table } 21.5$ The average variable cost of the second unit of output in Table 21.5 is

Assuming labor is a variable input, an increase in labor productivity will result in

Short-run choices imply that at least one factor of production is fixed.

The period in which there are no fixed costs is the

What is the total cost of 120 units in Figure 21.2?