Which of the following cost concepts is correctly defined? A. B. ATC = VC + FC C

Question

Which of the following cost concepts is correctly defined?
A.
B. ATC = VC + FC
C. ATC = AVC + AFC
D. TC = AVC + AFC


2. A cost that does not depend on the quantity of output produced is called a:
A. marginal cost.
B. fixed cost.
C. variable cost.
D. average cost.


5. When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is:
A. $40.
B. $19.
C. $4,000.
D. $24,000.


6. Marginal cost can be calculated as:
A. ?TC/?Q, where TC is total cost and Q is output.
B. ?VC/?Q, where VC is variable cost and Q is output.
C. the slope of the total cost curve.
D. ?TC/?Q, where TC is total cost and Q is output; ?VC/?Q, where VC is variable cost and Q is output; and as the slope of the total cost curve.


10. The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week:
A. average fixed cost is $20.
B. total cost is $3,200.
C. variable cost is $2,000.
D. average variable cost is $8.


11. The ________ curve continually declines as more output is produced in the short run.
A. marginal cost
B. average variable cost
C. average fixed cost
D. average total cost


12. Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases. If we are at an output where marginal cost is decreasing, then:
A. marginal product must be increasing.
B. average variable cost must be decreasing.
C. average total cost must be increasing.
D. marginal product must be increasing and average variable cost must be decreasing.


13. In the short run, as output gets larger and larger:
A. fixed cost gets smaller.
B. the average variable cost curve gets closer and closer to the average total cost curve.
C. marginal cost gets smaller.
D. average total cost decreases after the point of diminishing returns.


14. The long run refers to the period of time for which:
A. a fixed input exists.
B. all inputs are variable.
C. marginal costs are decreasing.
D. diminishing returns causes marginal cost to increase


17. Marginal cost ________ over the range of increasing marginal returns and ________ over the range of diminishing marginal returns.
A. increases; falls
B. falls; increases
C. is constant; rises
D. increases; is constant


18. Average total cost is:
A. the change in cost divided by the change in output.
B. total cost divided by output.
C. the change in output divided by the change in costs.
D. total cost times output.


19. The marginal cost curve intersects the average variable cost curve at:
A. its lowest point.
B. its maximum.
C. its endpoint.
D. no point; the curves don't intersect.

Explanation / Answer

C B D B C D

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