Econ 112 Take-Home Quiz 3 1

Chapter 11 Questions

- 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.

D) decreases until the point of diminishing returns is reached.

- Marginal cost is the:

A) increase in total cost when one more unit of output is produced.

B) reduction in cost from economies of scale.

C) ratio of average total cost to total cost.

D) increase in output from the addition of one unit of labor.

Use the following to answer question 10:

Figure: The Average Total Cost Curve

- (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.

- 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 quantity.

Econ 112 Take-Home Quiz 3 2

- In the short run:

A. all inputs are fixed.

B. all inputs are variable.

C. some inputs are fixed and some inputs are variable.

D. all costs are variable.

- Diminishing marginal returns occur when:

A. each additional unit of a variable factor adds more to total output than the previous unit.

B. an additional variable factor adds less to total output than the previous unit.

C. the marginal product of a variable factor is increasing but at a decreasing rate.

D. total product decreases.

- Which of the following cost concepts is correctly defined?

A. MC = ΔTC / ΔFC

B. ATC = VC + FC

C. ATC = AVC + AFC

D. TC = AVC + AFC

Use the following to answer question 15:

- (Table: Production Function for Soybeans) The table shows a production function for soybeans. Assume that the fixed input,

Econ 112 Take-Home Quiz 3 3

capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day.

The total cost of producing 25 bushels of soybeans is:

A) $50

B) $100

C) $150

D) $250

- When a cherry orchard in Oregon adds a 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. $19.

B. $4,000.

C. $24,000.

D. $40