C6 : SET 4 - PRODUCTION COST

Assume that in the short run, a firm which is produces 10 units of output has an average variable cost of RM22, an average fixed cost of RM5 and a marginal cost is RM30. The firm’s total cost is ___________________.

• RM27

• RM52

• RM180

• RM270

In the short run, a firm which produces 100 units of output has an average total cost of RM200 and average variable cost of RM150. The firm’s total fixed cost is _____________.

• RM5,000

• RM500

• RM50

• RM0.50

Which of the following costs will zero if a firm decides to produce no output in the short run?

• Its total cost.

• Its fixed cost.

• Its average cost.

• Its variable cost.

Which of the following short run cost continues to decrease as output increases?

• Average variable cost.

• Average fixed cost.

• Marginal cost.

• Average cost

The marginal product curve (MP) and the average product curve (AP) intersect ______________.

• at the maximum point of the marginal product curves.

• where the total product is at its maximum.

• where the marginal product equals zero.

• at the maximum point of the average product curves.

The vertical distance between the firm’s average cost and average variable cost curves represents ___________________.

• average fixed cost.

• marginal cost.

• total cost.

• variable cost.

Assume that in the short run, a firm which is producing 20 units of output has average variable cost of RM25, an average fixed cost of RM10 and marginal cost of RM40. The firm’s total cost is ____________________.

• RM800

• RM700

• RM250

• RM200

A firm will experience lower long run average cost when its production increases. This is because __________________.

• Fixed factors are utilized efficiently.

• The firm can prevent other firms from entering the market.

• The firm enjoys the benefits of economics of scale.

• The firm receives financial assistance from the government.

“When one unit of variable input is added to fixed input, it will decrease the production”. This situation can be described as ____________________.

• law of marginal return.

• law of negative marginal return.

• law of increasing marginal return.

• law of decreasing marginal return.

An increase in total production due to an increase of one unit of variable input is known as _____________________.

• marginal cost

• average cost

• marginal production

• average production.