Econ 112 Take-Home Quiz 3 1. A fixed cost: A) will exist only in the long run B)
ID: 1121594 • Letter: E
Question
Econ 112 Take-Home Quiz 3 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 B) C) D) produced reduction in cost from economies of scale. ratio of average total cost to total cost. 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 120 100 80 F 60 20 0 12 3456789 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 quantityExplanation / Answer
1.
A fixed cost can be defined as a cost which is done at the beginning of the firm and it does not change with the production of goods. for example machine plant.
Hence option c is the correct answer which says that it can be positive if the firm doesn't produce any output in the short-run.
Hence option c is the correct answer.
2.
MC is can be defined as the change in the total cost when one more unit of output is produced.
Hence option A is the correct answer which says that an increase in the total cost when one more unit of output is produced.
3.
As it can be seen in the graph that ATC cost of producing 3 pairs of boots is approximately $72.
ATC of 3 unit of pair of boot=72
TC of 3 units of pairs of boots are= ATC*Q
=72*3
=216
Hence option D is the correct answer.
4.
Average total cost = total cost/number of quantity.
Hence option b is the correct answer which says that total cost divided by quantity.
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