ECON 260 S. By definition the total cost of production is the sum of fixed and v
ID: 1119313 • Letter: E
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ECON 260 S. By definition the total cost of production is the sum of fixed and variable costs. The total cost curve gets steeper as output increa due to diminishing marginal product, and it suggests that a. adding additional workers will lower total cost b. marginal cost is upward sloping d. additional units of output become less costly as more output is produced c. the firm is at full capacity. 9. Base on the derivation of marginal costs, why does the marginal cost exhibit a U-shape? a. diminishing marginal product c. the fact that increasing marginal product follows decreasing marginal product derived from an S-shape production function. d. the fact that decreasing marginal product follows increasing marginal product derived from an S-shape production function. b. increasing marginal product. 10. By definition the efficient scale of a producer is at the production point at which average total cost is minimized. Alternatively the producer producing its output operating at efficient scale, if its a. the slope of total cost is the smallest. b. the marginal cost curve intersects at the minimum point of AFC curve. c. the marginal cost curve intersects at the minimum point of AVC curve d. the marginal cost curve intersects at the minimum point of ATC curve. 11. If marginal cost is below the average total cost, then average total cost a. is constant b. is rising. c. is falling. d. may rise or fall depending on the size of fixed costs. 12. The total cost to the firm of producing zero units of output is a. its fixed cost in the short run and zero in the long run. b. its fixed cost in both the short run and the long run. c. its variable cost in both the short run and the long run. d. zero in both the short run and the long run. Table#1: Illustrate various costs of Jimmy's Gigaplot Factory Do fill up Table#1 below before answeringquestions (5 bonus points for correctly completion) FC TC S28 $70 $64 110 S108 $133 $185 13. Refer to TableI. What is the average variable cost at 5 units of the output at Jimmy's Gigaplot factory respectively? a. 16. c. 18.6. d. 18. 14. Refer to TablellI. What is the average total cost at 7 units of the output at Jimmy's Gigaplot factory respectively? a 23.13. b. 22.57 c. 22 d. 21.4. 15. Refer to Tablel. What is the average fixed cost at 8 units of the output at Jimmy's Gigaplot factory respectively? a. 2.13. b. 4.50. c. 5.67 d. 8.50. 16. Refer to Tableft. What is the marginal cost in producing between 3 and 4 units of the output at Jimmy's Gigaplot factory b. 19. c. 21 d. 23. a. short-run average total cost with long-run average total cost at a given level of output, 17. When comparing a short-run average total cost is typically below long-run average total cost b. short-run average total cost is typically above long-run average total cost c short-run average total cost is typically the same as long-run average total cost d the relationship between short-run and long-run average total cost follows no patters. RMUNNICHAExplanation / Answer
8) b) Marginal cost is upward sloping. For every unit of Q increases,the cost increases.
9)a) diminising marginal product.
Initially, MC is falling because of increasing marginal returns and a downward-sloping MC curve. Eventually, diminishing marginal returns bring rising MC and an upward-sloping MC curve. The MC curve reaches a minimum when these two influences offset each other.
10 ) d) the marginal cost curve intersects at the minimum point of ATC curve.
11) c) is falling.
When MC is below (above) ATC, ATC falls (rises) as output increases.
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