Question 1

Refer to the short-run information provided in Figure 8.5 below to answer the question(s)  that follow

Figure 8.5
-Refer to Figure 8.5. If two drones are produced, average fixed costs are

Accepted Answer

A)   $10.
B)   $20.
C)   $25.
D)   $50.E) All of the above
F) None of the above

Question 2

A dairy company, Farley Farm, has total costs of $10,000 and total variable costs of $3,000. Farley Farm's total fixed costs are

Accepted Answer

A)   $0.
B)   $7,000.
C)   $13,000.
D)   indeterminate because the firmʹs output level is not known.E) All of the above
F) A) and B)

Question 3

Refer to the information provided in Figure 8.10 below to answer the question(s)  that follow.   Figure 8.10
-Refer to Figure 8.10. Panel ________ represents the demand curve facing a perfectly competitive producer of wheat.

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and B)
F) A) and C)

Question 4

Refer to the information provided in Figure 8.10 below to answer the question(s)  that follow.   Figure 8.10
-Refer to Figure 8.10. Panel ________ represents the industry demand curve for the perfectly competitive wheat industry.

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and B)
F) C) and D)

Question 5

Refer to the short-run information provided in Figure 8.5 below to answer the question(s)  that follow

Figure 8.5
-Refer to Figure 8.5. If seven drones are produced, average fixed costs are

Accepted Answer

A)   $7.14.
B)   $14.29.
C)   $20.
D)   $21.43.E) A) and B)
F) C) and D)

Question 6

The upward-sloping portion of the perfectly competitive firm's average total cost curve is the firm's short-run supply curve.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the short-run information provided in Figure 8.5 below to answer the question(s)  that follow

Figure 8.5
-Refer to Figure 8.4. Micro Oven's average fixed costs of producing two units of output are

Accepted Answer

A)   $150.
B)   $300.
C)   $450.
D)   indeterminate from this information.E) A) and B)
F) A) and C)

Question 8

If marginal cost equals average variable cost, average variable cost will

Accepted Answer

A)   be maximized.
B)   decrease.
C)   increase.
D)   be minimized.E) C) and D)
F) A) and C)

Question 9

Refer to the short-run information provided in Figure 8.5 below to answer the question(s)  that follow

Figure 8.5
-Refer to Figure 8.5. If one drone is produced, average fixed costs are

Accepted Answer

A)   $0.
B)   $50.
C)   $80.
D)   indeterminate from this information.E) B) and C)
F) C) and D)

Question 10

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

Accepted Answer

A)   be maximized.
B)   be decreasing.
C)   be increasing.
D)   remain constant.E) C) and D)
F) A) and B)

Question 11

If marginal cost is above average variable cost, then

Accepted Answer

A)   average variable cost is increasing.
B)   marginal cost must be decreasing.
C)   average variable cost is constant.
D)   average variable cost is decreasing.E) None of the above
F) A) and B)

Question 12

An individual wheat farmer produces wheat in a perfectly competitive market. A decrease in the market demand for wheat will cause the farmer's marginal revenue to ________ and his profit-maximizing level of output to ________.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; increase
D)   decrease; decreaseE) All of the above
F) C) and D)

Question 13

Average total cost is

Accepted Answer

A)   AFC - AVC.
B)   AFC/AVC.
C)   AFC + AVC.
D)   TFC + TVC.E) B) and D)
F) C) and D)

Question 14

Refer to the information provided in Table 8.1 below to answer the question(s)  that follow.
Table 8.1   Produce  Using  Techniques  Units of Variable  K  Inputs  L  1 unit of output  A 88 B 412 2 units of output  A 1412 B 8203 units of output  A 1612 B 1222\begin{array} { l c c c } 	ext { Produce } & \begin{array} { c } 	ext { Using } \	ext { Techniques }\end{array} & \begin{array} { c } 	ext { Units of Variable } \	ext { K }\end{array} & \begin{array} { c } 	ext { Inputs } \	ext { L }\end{array} \\hline 	ext { 1 unit of output } & & & \& 	ext { A } & 8 & 8 \& 	ext { B } & 4 & 12 \	ext { 2 units of output } & & & \& 	ext { A } & 14 & 12 \& 	ext { B } & 8 & 20 \3 	ext { units of output } & & & \& 	ext { A } & 16 & 12 \& 	ext { B } & 12 & 22 \\hline\end{array} Produce  1 unit of output  2 units of output 3 units of output ​ Using  Techniques ​ A  B  A  B  A  B ​ Units of Variable  K ​841481612​ Inputs  L ​81212201222​​ 
-Refer to Table 8.1. Assuming the price of labor (L)  is $5 per unit and the price of capital (K)  is $10 per unit, what production technique should this firm use to produce 2 units of output?

Accepted Answer

A)   production technique A
B)   production technique B
C)   The firm is indifferent between production technique A and production technique B.
D)   It is impossible to determine if the firm should select production technique A or B because total fixed costs are not given. E) C) and D)
F) B) and D)

Question 15

Refer to the information provided in Table 8.1 below to answer the question(s)  that follow.
Table 8.1   Produce  Using  Techniques  Units of Variable  K  Inputs  L  1 unit of output  A 88 B 412 2 units of output  A 1412 B 8203 units of output  A 1612 B 1222\begin{array} { l c c c } 	ext { Produce } & \begin{array} { c } 	ext { Using } \	ext { Techniques }\end{array} & \begin{array} { c } 	ext { Units of Variable } \	ext { K }\end{array} & \begin{array} { c } 	ext { Inputs } \	ext { L }\end{array} \\hline 	ext { 1 unit of output } & & & \& 	ext { A } & 8 & 8 \& 	ext { B } & 4 & 12 \	ext { 2 units of output } & & & \& 	ext { A } & 14 & 12 \& 	ext { B } & 8 & 20 \3 	ext { units of output } & & & \& 	ext { A } & 16 & 12 \& 	ext { B } & 12 & 22 \\hline\end{array} Produce  1 unit of output  2 units of output 3 units of output ​ Using  Techniques ​ A  B  A  B  A  B ​ Units of Variable  K ​841481612​ Inputs  L ​81212201222​​ 
-Refer to Table 8.1. Assume that the relevant time period is the short run. Assuming the price of labor (L)  is $5 per unit and the price of capital (K)  is $10 per unit, the average variable cost of producing two units of output is

Accepted Answer

A)   $20.
B)   $40.
C)   $90.
D)   $100. E) B) and C)
F) None of the above

Question 16

ATC is

Accepted Answer

A)   TC/q.
B)   q/TC.
C)   AFC - AVC.
D)   ΔTC - Δq.E) B) and C)
F) A) and D)

Question 17

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

Accepted Answer

A)   average variable cost is increasing.
B)   average variable cost is decreasing.
C)   average variable cost is constant.
D)   marginal cost is increasing.E) None of the above
F) All of the above

Question 18

As output increases, average fixed costs

Accepted Answer

A)   decrease.
B)   initially decrease and then increase.
C)   remain constant.
D)   increase.E) B) and D)
F) B) and C)

Question 19

A firm will begin to experience diminishing returns at the point where

Accepted Answer

A)   marginal cost increases.
B)   marginal cost decreases.
C)   marginal product increases.
D)   Both B and C are correct.E) A) and C)
F) A) and B)

Question 20

Refer to the information provided in Figure 8.9 below to answer the question(s)  that follow.  Figure 8.9
-Refer to Figure 8.9. If this farmer is producing the profit-maximizing level of output, her profit is

Accepted Answer

A)   $0.
B)   $1,000.
C)   $2,000.
D)   $3,000.E) B) and D)
F) B) and C)

Exam 8: Short-Run Costs and Output Decisions

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If two drones are produced, average fixed costs are

Correct Answer
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Average total cost is

Correct Answer
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Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.4. Micro Oven's average fixed costs of producing two units of output are

Correct Answer
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If marginal cost is below average total cost, average total cost will

Correct Answer
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A dairy company, Farley Farm, has total costs of $10,000 and total variable costs of $3,000. Farley Farm's total fixed costs are

Correct Answer
verified

Refer to the information provided in Figure 8.10 below to answer the question(s) that follow. Figure 8.10 -Refer to Figure 8.10. Panel ________ represents the demand curve facing a perfectly competitive producer of wheat.

Correct Answer
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The upward-sloping portion of the perfectly competitive firm's average total cost curve is the firm's short-run supply curve.

Correct Answer
verified

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

Correct Answer
verified

An individual wheat farmer produces wheat in a perfectly competitive market. A decrease in the market demand for wheat will cause the farmer's marginal revenue to and his profit-maximizing level of output to .

Correct Answer
verified

If marginal cost equals average variable cost, average variable cost will

Correct Answer
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Correct Answer
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A firm will begin to experience diminishing returns at the point where

Correct Answer
verified

Refer to the information provided in Figure 8.10 below to answer the question(s) that follow. Figure 8.10 -Refer to Figure 8.10. Panel ________ represents the industry demand curve for the perfectly competitive wheat industry.

Correct Answer
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Refer to the information provided in Figure 8.9 below to answer the question(s) that follow. Figure 8.9 -Refer to Figure 8.9. If this farmer is producing the profit-maximizing level of output, her profit is

Correct Answer
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Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If one drone is produced, average fixed costs are

Correct Answer
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If marginal cost is above average variable cost, then

Correct Answer
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As output increases, average fixed costs

Correct Answer
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ATC is

Correct Answer
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Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If seven drones are produced, average fixed costs are

Correct Answer
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Exam 8: Short-Run Costs and Output Decisions

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If two drones are produced, average fixed costs are

Correct AnswerverifiedShow Answer

Average total cost is

Correct AnswerverifiedShow Answer

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.4. Micro Oven's average fixed costs of producing two units of output are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A dairy company, Farley Farm, has total costs of $10,000 and total variable costs of $3,000. Farley Farm's total fixed costs are

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 8.10 below to answer the question(s) that follow. Figure 8.10 -Refer to Figure 8.10. Panel ________ represents the demand curve facing a perfectly competitive producer of wheat.

Correct AnswerverifiedShow Answer

The upward-sloping portion of the perfectly competitive firm's average total cost curve is the firm's short-run supply curve.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An individual wheat farmer produces wheat in a perfectly competitive market. A decrease in the market demand for wheat will cause the farmer's marginal revenue to ________ and his profit-maximizing level of output to ________.

Correct AnswerverifiedShow Answer

If marginal cost equals average variable cost, average variable cost will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm will begin to experience diminishing returns at the point where

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 8.10 below to answer the question(s) that follow. Figure 8.10 -Refer to Figure 8.10. Panel ________ represents the industry demand curve for the perfectly competitive wheat industry.

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Refer to the information provided in Figure 8.9 below to answer the question(s) that follow. Figure 8.9 -Refer to Figure 8.9. If this farmer is producing the profit-maximizing level of output, her profit is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If one drone is produced, average fixed costs are

Correct AnswerverifiedShow Answer

If marginal cost is above average variable cost, then

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As output increases, average fixed costs

Correct AnswerverifiedShow Answer

ATC is

Correct AnswerverifiedShow Answer

Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow Figure 8.5 -Refer to Figure 8.5. If seven drones are produced, average fixed costs are

Correct AnswerverifiedShow Answer

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An individual wheat farmer produces wheat in a perfectly competitive market. A decrease in the market demand for wheat will cause the farmer's marginal revenue to and his profit-maximizing level of output to .

Correct Answer
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