Cost of Production

Fixed Cost divided by the quantity of output.

• Average Fixed Cost

• Average Variable Cost

• Marginal Cost

• Marginal Fixed Cost

Identity curve number 2

• Fixed cost

• Variable cost

• Total cost

• Marginal cost

Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each.

What are Wanda’s total economic profits?

• $150

• $126

• $96

• $54

Refer to Table. If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output?

• 240 units

• 230 units

• 190 units

• 170 units

Refer to the attached Figure. Which of the following is true of the production function (not pictured) that underlies this total cost function?

• (i) only

• (ii) only

• (i) and (iii) only

• (ii) and (iii) only

• (i), (ii), and (iii)

A total-cost curve shows the relationship between the

• quantity of an input used and the total cost of production.

• quantity of output produced and the total cost of production.

• total cost of production and profit.

• total cost of production and total revenue.

What is the value of P?

• $50

• $140

• $360

• $410

Which of the following is considered a variable cost in the production process?

• Rent for factory space

• Wages for hourly workers

• Insurance premiums

• Property taxes

What is the term for the cost that does not change with the level of output?

• Variable Cost

• Fixed Cost

• Marginal Cost

• Average Cost

If a company wants to calculate the cost per unit of output, which cost should they consider?

• Total Cost

• Fixed Cost

• Variable Cost

• Average Cost