Econ

Practice questions on theory of cost (Chapter 7)

MCQs. Choose the one alternative that best completes the statement or answers the question. 1) The total cost (TC) of producing sports shoes (Q) is given as: TC = 200 +5Q. What is the variable cost? A) 5Q B) 5 C) 5 + (200/Q) D) 200 E) none of the above 2) The total cost (TC) of producing ports shoes (Q) is given as: TC = 200 +5Q. What is the fixed cost? A) 5 B) 5 + (200/Q) C) 5Q D) 200 E) none of the above 3) Sara knows average total cost and average variable cost for a given level of output. Which of the following costs can she not determine given this information? A) fixed cost B) average fixed cost C) total cost D) variable cost E) Carolyn can determine all of the above costs given the information provided. Scenario 1: The average total cost to produce 100 cookies is $0.25 per cookie. The marginal cost is constant at $0.10 for all cookies produced. 4) Refer to Scenario 1. The total cost to produce 100 cookies is A) $100.00 B) $0.10 C) $0.25 D) $25.00 E) indeterminate 5) Refer to Scenario 1. The total cost to produce 50 cookies is A) $25 B) $20 C) $60 D) $50 E) indeterminate 6) Refer to Scenario 1. Which piece of information would NOT be helpful in calculating the marginal cost of the 75th unit of output? A) The variable cost of 74 units. B) The variable cost of 75 units. C) The firm's fixed cost. 1

D) The total cost of 75 units. E) The total cost of 74 units. 7) 7 Consider the following statements when answering this question; I. A firm's marginal cost curve does not depend on the level of fixed costs. ) II. As output increases the difference between a firm's average total cost and average variable cost curves cannot rise. A) I is false, and II is true. B) I and II are both true. C) I and II are both false. D) I is true, and II is false.

8) The LAC and LMC curves in the diagram below are consistent with a production function that exhibits

A) increasing returns to scale. B) increasing returns to scale...