Question 1

in the short run

Accepted Answer

all firms have costs that they must bear regardless of their output

Question 2

which statement is TRUE? Fixed costs

Accepted Answer

do NOT exist in the long run

Question 3

which statement is NOT true? variable costs

Accepted Answer

remain constant as output goes up

Question 4

economists usually assume that ____ is a fixed input in the _____ run

Accepted Answer

capital, short

Question 5

economists usually assume that labor is _____ input in the _____ run

Accepted Answer

a variable, short

Question 6

the formula for total fixed costs is

Accepted Answer

TFC=TC-TVC

Question 7

total cost is calculated as

Accepted Answer

the sum of total fixed cost and total variable cost

Question 8

the lawn ranger, a landscaping company, has total costs of $4000 and total variable costs of $1000. the lawn rangers oral fixed costs are

Accepted Answer

$3000

Question 9

the law ranger, a landscaping company, has total costs of $5000 and total fixed costs of $3000. the law ranger\'s total variable costs are

Accepted Answer

$2000

Question 10

the farley farm, a dairy company, has total costs of $15,000 and total variable costs of $2000. the farley farm\'s total fixed costs are

Accepted Answer

$13,000

Question 11

wilburs widgets, a widget company, produced 100 widgets. its average fixed cost is $5 and its total variable cost is $300. what is the total cost of producing 100 widgets

Accepted Answer

$8--

Question 12

amy spends $5000 on remodeling a storefront that she then opens as a take out deli. the business has not been very successful, and she needs an additional $1000 to keep the deli open. which of the following is true

Accepted Answer

the $5000 amy spend is a fixed cost of her business

Question 13

dana spends $10,000 on remodeling a storefront that she then opens as a shoe store. the business has not been very successful, and she needs an additional $3000 to keep the shoe store open. which of the following is true

Accepted Answer

the $10,000 dana spent on remodeling is a fixed cost of her business

Question 14

firms have ___ over their ____ costs in the short run

Accepted Answer

not control, fixed

Question 15

the formula for average fixed costs is

Accepted Answer

TFC/q

Question 16

average fixed costs associated with producing an additional unit of output

Accepted Answer

fall as output rises

Question 17

as output increases, average fixed costs

Accepted Answer

decrease

Question 18

both kate and john own saltwater taffy factories. kate\'s factory has low fixed costs and high variable costs. john\'s factory has high fixed costs and low variable costs. currently, each factory is producing 1000 boxes of taffy at the same total cost. complete the following statement with the correct answer. if each produces

Accepted Answer

more, the costs of Kate\'s factory will exceed those of john\'s factory

Question 19

short run costs that depend on the level of output are

Accepted Answer

both variable costs and total costs

Question 20

which statement is NOT true regarding the total variable cost curve

Accepted Answer

it is a horizontal line

Question 21

a point on a total variable cost curve shows the ____ variable cost a firm will bear to product a certain output

Accepted Answer

lowest

Question 22

which of the following is most likely to be a variable cost for a firm

Accepted Answer

the payroll taxes that are paid on employee wages

Question 23

______ are likely a fixed cost of a firm

Accepted Answer

lease payments for supplies

Question 24

marginal cost

Accepted Answer

is the increase in total cost resulting from producing one more unit

Question 25

a firm will begin to experience demising return at the point where

Accepted Answer

marginal cost increases

Question 26

diminishing marginal returns implies

Accepted Answer

increasing marginal costs

Question 27

marginal cost is _____ average variable cost when _____

Accepted Answer

equal to; average variable cost is maximized

Question 28

the explanation for why marginal cost is positive and rising in the short run is ______ marginal product of labor in the pro ducting process

Accepted Answer

a diminishing

Question 29

in the short run when the marginal product of labor ____ the marginal cost of an additional unit of output _____

Accepted Answer

rides, falls

Question 30

total variable costs

Accepted Answer

always increase with output

Question 31

the formula for MC is

Accepted Answer

deltaTVC/deltaq

Question 32

in the short run, as output increases

Accepted Answer

the difference between average total cost and average variable cost decreases

Question 33

because marginal cost is always ____ in the short run, total variable cost always _____

Accepted Answer

positive, increases

Question 34

in the short run where total variable cost is _____ at a(n) _____ rate, marginal cost is positive and decreasing

Accepted Answer

increasing, decreasing

Question 35

in the short run where total variable cost is _____ at a(n) _____ rate, marginal cost is positive and increasing

Accepted Answer

increasing, increasing

Question 36

for elliots fog walking service, the only variable input is labor. elliot\'s labor costs are $300 a day and his service walks 30 dogs per day. to walk 31 dogs per day, his labor costs increase to $305 a day. the marginal cost of walking that 31st dog is

Accepted Answer

$5

Question 37

if we know average total cost and the amount of output, thence can always calculate total cost by

Accepted Answer

multiplying average total cost by the amount of output

Question 38

if margin cost is above average variable cost, then

Accepted Answer

average variable cost is increasing

Question 39

the marginal cost curve intersects the _____ at its minimum

Accepted Answer

average variable cost curve  average total cost curve  A and B

Question 40

if the marginal cost curve is below the average variable cost curve, then

Accepted Answer

average variable costs are decreasing

Question 41

if the average variable cost curve is above the marginal cost curve, then

Accepted Answer

marginal costs can be either increasing or decreasing

Question 42

if marginal cost is between average variable cost and average total cost, then

Accepted Answer

average variable cost is increasing and average total cost is decreasing

Question 43

the marginal cost curve intersects the average variable cost curve at the ____ value of the average variable cost curve

Accepted Answer

minimum

Question 44

twenty five students in a class take a test for which the average grade is 75. then a twenty sixth student enters the class, takes the test, and scores an 80. the test average calculated with 26 students will______

Accepted Answer

rise above 75

Question 45

if a firm\'s total costs are $80 when 10 units of output are produces and $90 when 11 units of output are produced, the marginal cost of the 11th unit is

Accepted Answer

$10

Question 46

if a firm\'s total costs are $100 when 10 units of output are produces and $103 when 11 units of output are produced, the marginal cost of the 11th unit is

Accepted Answer

$3

Question 47

if the average variable cost of the fifth hat is $30, then the total variable cost of five hats is

Accepted Answer

$150

Question 48

a short run total cost schedule is a _____ cost schedule shifted upward by the amount of ____ cost

Accepted Answer

total variable, total fixed

Question 49

in the short run, ____ costs exceed ____ costs

Accepted Answer

average total, average variable

Question 50

total cost refers to

Accepted Answer

the full economic costs of production

Question 51

average total cost

Accepted Answer

is the average cost of producing each unit of output

Question 52

the framing gallery frames posters. the framing gallery has total fixed costs of $500. the framing gallery\'s average variable cost is $20 and its average total cost is $25. the framing gallery is currently framing

Accepted Answer

100 posters

Question 53

the average variable cost of producing ice cream sundaes are minimized when 100 sundaes are produces. the total cost of producing 100 sundaes is $500. if fixed cost of pro ducting is $200, what is the marginal cost of producing the 100th sundae

Accepted Answer

$3

Question 54

average variable cost and average total costs get closer together as output increases because

Accepted Answer

average fixed costs decrease as output increases

Question 55

if marginal cost is below average total cost, average total cost will

Accepted Answer

be decreasing

Question 56

if marginal cost equals average total cost, average total cost will

Accepted Answer

be minimized

Question 57

the short run average total cost curve eventually begins to increase at an increasing rate because of

Accepted Answer

diminishing returns

Question 58

the law of diminishing marginal returns

Accepted Answer

results in average variable cost (AVC) average total cost (ATC) and marginal cost (MC) curves eventually increasing at and increasing rate

Question 59

in the short run a dorm\'s lowest cost level of ouput is the minimum point on it _____ cost curve

Accepted Answer

average total

Question 60

a firm is producing output less than the output associated with the minimum point on the firm\'s short run average variable cost curve. at this level of output the firm uses its fixed capital input ____ and its variable labor input _______

Accepted Answer

at a level higher than the lowest average cost, at a lever higher than the lowest average cost

Question 61

consider an output beyond the minimum point of a firm\'s short run average total cost curve. at this level of output the firm can use its _____ input at a lower average cost but only by using its ______ input at a higher average cost

Accepted Answer

fixed capital, variable labor

Question 62

when considering expanding its student body a college should

Accepted Answer

compare the marginal cost of education an additional student to the tuition that student pays

Question 63

the main decision for a profit maximizing perfectly competitive firm is not what _____ but what _____

Accepted Answer

price to charge, level of output to produce

Question 64

if an individual perfectly competitive firm charges a price above the industry equilibrium price, it will

Accepted Answer

not sell any of what is produces

Econ Chapter 8 Test Questions – Flashcards

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