Cost Curves

According to the Profit Maximizing Formula, how many units should this firm produce?

• 2

• 3

• 4

• 5

If a firm's Marginal Costs increase, its output will...

• Increase

• Decrease

• Stay the Same

• Shut down

The marginal cost curve typically does which of the following?

• Increases at a fixed rate.

• Decreases and eventually increases.

• Decreases at a decreasing rate.

• Increases and eventually decreases.

The image above shows a firm making

• Economic Profit

• Economic loss

• Breaking even

• Shutting down

The above figure shows a perfectly competitive firm. If the market price is $15, the firm

• is incurring an economic loss.

• is making an economic profit.

• is making zero economic profit.

• will immediately shut down.

• might shut down but more information is needed about the AVC.

The above figure shows a perfectly competitive firm. If the market price is more than $20 per unit, the firm

• will definitely shut down to minimize its losses.

• will stay open to produce and will make zero economic profit.

• will stay open to produce and will incur an economic loss.

• will stay open to produce and will make an economic profit.

• might shut down but more information is needed about the fixed cost.

What is the primary purpose of cost curves in economics?

• To determine the price of goods

• To analyze the relationship between cost and output

• To calculate taxes

• To set government budgets

Which of the following is NOT a type of cost curve?

• Average cost curve

• Marginal cost curve

• Total cost curve

• Demand curve

At what point do the marginal cost curve and average total cost curve intersect?

• At the minimum point of the average total cost curve

• At the maximum point of the average total cost curve

• At the minimum point of the marginal cost curve

• At the maximum point of the marginal cost curve

What does the shape of the marginal cost curve typically reflect?

• Constant returns to scale

• Increasing returns to scale

• Decreasing returns to scale

• Diminishing returns