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| 1 | |
The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table.
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Refer to the table. The average total cost of 4 units of output is: |
| | A) | $27.50. |
| | B) | $40.00. |
| | C) | $52.50. |
| | D) | $210.00. |
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| 2 | |
Use the following graph to answer the next question:
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The diagram shows the short-run average total cost curves for five different plant sizes for a firm. The firm experiences economies of scale over the range of plant sizes: |
| | A) | 1 through 2 only. |
| | B) | 1 through 3 only. |
| | C) | 1 through 5. |
| | D) | 3 through 5 only. |
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| 3 | |
Explicit costs and implicit costs: |
| | A) | are alike in that both represent opportunity costs. |
| | B) | are alike in that both reflect an outlay of cash. |
| | C) | are alike in that both are deducted from revenue to find accounting profit. |
| | D) | differ in that only explicit costs are deducted from revenue to find economic profit. |
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| 4 | |
Suppose that a business incurred implicit costs of $300,000 and explicit costs of $1,300,000 over the past year. If the firm earned $1,400,000 in revenue, its: |
| | A) | accounting profits were $400,000 and its economic profits were $100,000. |
| | B) | accounting losses were $200,000 and its economic profits were $100,000. |
| | C) | accounting profits were $100,000 and its economic profits were zero. |
| | D) | accounting profits were $100,000 and its economic losses were $200,000. |
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| 5 | |
Which one of the following short-run cost curves would not be affected by an increase in the wage paid to a firm's labor? |
| | A) | Average variable cost |
| | B) | Average fixed cost |
| | C) | Average total cost |
| | D) | Marginal cost |
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| 6 | |
If marginal product is positive but falling: |
| | A) | marginal cost must also be falling. |
| | B) | average product must be falling. |
| | C) | total product is increasing at a decreasing rate. |
| | D) | total product is falling. |
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| 7 | |
The distinguishing feature of the short run is that: |
| | A) | at least one input is fixed. |
| | B) | output is fixed. |
| | C) | input prices are variable. |
| | D) | technology is variable. |
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| 8 | |
The WXY Corporation has fixed costs of $30. Its total variable costs (TVC) vary with output as shown in the following table.
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Refer to the table. The marginal cost of the fourth unit of output is: |
| | A) | $30. |
| | B) | $40. |
| | C) | $50. |
| | D) | $60. |
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| 9 | |
Use the following average total cost data to answer the next question. The letters A, B, and C designate three successively larger plant sizes.
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Refer to the data. In the long run, the firm should use plant size "A" for: |
| | A) | all possible levels of output. |
| | B) | 100 to 200 units of output. |
| | C) | 300 to 600 units of output. |
| | D) | 600 or more units of output. |
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| 10 | |
Suppose a particular firm exhibits constant returns to scale as it increases its output over any reasonable range. If it increases all its inputs by 10%, its: |
| | A) | total cost will increase by less than 10%. |
| | B) | average total cost will increase by 10%. |
| | C) | output will increase by 10%. |
| | D) | long run average cost curve will shift to the right by 10%. |
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