1. If AVC=$5 and AFC=15, then AC=
a. $15
b. $5
c. $20
d. $10
ANSWER: c
TOPICS: Section 1: Background: Average and Marginal
... [Show More] Costs
2. Total cost divided by the number of units produced is called:
a. total cost
b. average cost
c. marginal cost
d. variable cost
ANSWER: b
TOPICS: Section 1: Background: Average and Marginal Costs
Use the following to answer questions 3-8:
Number of Workers Total Cost
0 1000
1 2200
2 3200
3 4000
4 4600
5 5000
6 5200
7 5600
8 6200
9 7000
10 8000
3. The marginal cost of hiring the 7th worker is
a. $0
b. $1,000
c. $400
d. $200
ANSWER: c
TOPICS: Section 1: Background: Average and Marginal Costs
4. If the firm hires 8 workers, the total fixed costs is
a. $600
b. $1,200
c. $1,000
d. $6,200
ANSWER: c
TOPICS: Section 1: Background: Average and Marginal Costs
5. If hiring the 4th worker increases total product by 50 units and the price of each unit is $15,
a. the firm should not hire the 4th worker as MRMC
ANSWER: d
TOPICS: Section 1: Background: Average and Marginal Costs
6. If the firm hires 5 workers, the average cost equals
a. $80
b. $1,000
c. Need more information
d. $10
ANSWER: b
TOPICS: Section 1: Background: Average and Marginal Costs
7. If the firms hires 5 workers and produces 5 units, the average variable costs equals
a. $100
b. Need more information
c. $800
d. $10
ANSWER: c
TOPICS: Section 1: Background: Average and Marginal Costs
8. What is the average total cost of producing 7 units if you hire 7 workers?
a. $1,200
b. $800
c. $400
d. $1,600
ANSWER: b
TOPICS: Section 1: Background: Average and Marginal Costs
9. A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly and they costs $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. How do the overall costs breakdown?
a. total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250
b. total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250
c. total variable cost is $5,000; total fixed cost is $14,250; total cost is $19.250
d. total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250
ANSWER: a
TOPICS: Section 1: Background: Average and Marginal Costs
10. If AVC=$15 and AFC=$10, then ATC=
a. $25
b. $5
c. $15
d. $10
ANSWER: a
TOPICS: Section 1: Background: Average and Marginal Costs
11. If a firm produces 10 units, TC=$100. When the firm increase its output to 15 units, TC= $150. The firm’s variable costs equal to
a. $50
b. $150
c. $25
d. $100
ANSWER: b
TOPICS: Section 1: Background: Average and Marginal Costs [Show Less]