1) Which of the following costs always declines as output increases? A) Average
ID: 1173519 • Letter: 1
Question
1) Which of the following costs always declines as output increases? A) Average total cost B) Marginal cost C) Fixed cost D) Average fixed cost E) Average variable cost 2) The total cost (TC) of producing computer software diskettes (Q) is given as: TC-200+5Q. Wh the marginal cost? A) 200 B) 5Q C) 5 D) 5 + (200/Q) E) none of the above 3) In a short-run production process, the marginal cost is rising and the average variable cost is fallin output is increased. Thus, A) average fixed cost is constant. B) marginal cost is above average variable cost. C) marginal cost is below average fixed cost D) marginal cost is below average variable cost. 4) An iso-cost line reveals the A) costs of inputs needed to produce along an isoquant. B) costs of inputs needed to produce along an expansion path. C) input combinations that can be purchased with a given outlay of funds. D) output combinations that can be produced with a given outlay of funds. 5) Suppose that the price of labor (P) is S10 and the price of capital (P) is S20. What is the equation of the iso-cost line corresponding to a total cost of $100? A) PL + 20P B) 100 10L+20K C) 100 30(L+K) D)I00 + 30 (P. +Pr) E) none of the above wage rate of labor is w S10 and th 0 units of output. What is the most efficien 6) A firm's production function is given by Q - min (2K, 4LJ. The rental rate of capital is r S20. The firm wants to produce 18 combination of labor and capital (L, K)? A) (45, 0) B) (45, 90) C) (60, 30) D) (0, 90)Explanation / Answer
1)
Right answer is : (D)
Average fixed cost of production keeps on falling as level of output rises. Fixed cost does not change with change in output, hence when output increases, it gets distributed over larger output.
2)
TC = 200 + 5Q
On differentiating:
MC = 5
Right answer is (C)
3)
Right answer is : (D)
Marginal cost starts rising even before AVC, but both are equal at minimum point of AVC.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.