Econ 112 Take-Home Quiz 3 Chapter 11 Questions 1. A fixed cost: A) will exist on

Question

Econ 112 Take-Home Quiz 3 Chapter 11 Questions 1. A fixed cost: A) will exist only in the long run. B) depends on the level of output. C) can be positive, even if the firm doesn't produce any output in the short run decreases until the point of diminishing returns is reached. D) 2. Marginal cost is the: A) increase in total cost when one more unit of output is produced B) reduction in cost from economies of scale. C) ratio of average total cost to total cost. D) increase in output from the addition of one unit of labor Use the following to answer question 10: Figure: The Average Total Cost Curve Average total cost of pair of boots Average total cost, ATC $140 120 100 60 - 60 40 20 0 1 2345678 9 10 Quantity of boots (pairs) 3. (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. In the figure, the total cost of producing three pairs of boots is approximately a. $24. b. $72. c. $75. d. $216. 4. Average total cost is: a the change in variable cost divided by the change in quantity. b total cost divided by quantity c the change in quantity divided by the change in labor costs. d total cost times quantity

Explanation / Answer

Question 1). Answer :- Option c). can be positive, even if the firm does not produce any output in short run.

Question 2). Answer :- Option a). increase in total cost when one more unit of output is produced.

Explanation :- Marginal cost (MC) is the addition to total cost due to the addition of one unit of output. For example, total cost of producing 5 units of a commodity is $ 135 and if 6 units are produced, total cost goes upto $ 180. Therefore, the marginal cost of sixth unit will be ($ 180 - $ 135) = $ 45.

Question 3). Answer :- Option d). $ 216.

Explanation :- Total cost of producing three pairs of boots = Average total cost * Quantity.

= 72 * 3

= $ 216. (Option d).

Question 4). Answer :- Option b). Total cost divided by quantity.

Explanation :- Cost per unit of output is called average total cost (ATC) in the economics.

Symbolically, Average total cost = Total cost / Quantity.

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