3.2

According to the table above, which shows the costs of production for a firm, the average total cost of producing 3 units of output is

• 5.00

• 11.67

• 13.33

• 15.00

• 20.00

As output of a firm increases, the difference between the firm’s average total cost and its average variable cost gets smaller because the firm’s

• total cost is increasing

• marginal cost is increasing

• average fixed cost is decreasing

• marginal product of labor is decreasing

• long-run average total cost is decreasing

In the short run, which of the following is true of a firm's average total cost of production?

• It is equal to marginal cost plus average variable cost.

• It is equal to marginal cost plus average fixed cost.

• It is equal to average fixed cost plus average variable cost.

• It always increases when a firm increases production.

• It is zero if the firm shuts down.

Which of the following must be true if at the tenth unit of output, marginal cost (MC) is $130 and average total cost (ATC) is $150?

• ATC of producing the ninth unit is higher than $150.

• ATC of producing the ninth unit is less than $150.

• MC of producing the ninth unit is higher than $130.

• The average variable cost of producing the tenth unit is higher than $150.

• The average variable cost of producing the tenth unit is equal to $20.

Which of the following is always true of the relationship between average and marginal costs?

• When marginal cost is above average cost, average cost is rising.

• When marginal cost is below average cost, average cost is rising.

• When marginal cost is equal to average cost, average cost is falling.

• When marginal cost is above average cost, average cost is falling.

• When marginal cost is below average cost, average cost is constant.

Average total costs are increasing when marginal costs are increasing.

• True

• False

Which of the following is true about a firm's average variable cost?

• It will rise if marginal cost is less than average variable cost.

• It will never equal the firm's marginal cost.

• It will decline when the firm's marginal product declines.

• It will be negative if marginal revenue declines.

• It will equal average total cost when fixed costs are zero.

The average fixed cost of producing four units of output is equal to

• $120

• $95

• $75

• $50

• $30

The table above shows the amount of labor inputs necessary to produce given levels of output. If the cost of a unit of labor is $20 and total fixed cost is $100, the average total cost of producing 20 units of output is

• $1

• $2

• $7

• $40

• $120

Assume that total fixed costs are $46, that the average product of labor is 5 units when 10 units of output are produced, and that the wage rate is $12. If labor is the only variable input, what is the average total cost of producing 10 units of output?

• $2

• $5

• $7

• $9

• $12