Dolores used to work as a high school teacher for $$40,000 per year but quit in order to start her own catering business. To invest in her factory, she withdrew $$ 20,000 from her savings, which paid 3 percent interest, and borrowed $$30,000 from her uncle, whom she pays 3 percent interest per year. Last year she paid $$ 25,000 for ingredients and had revenue of $60,000. She asked Louis the accountant and Greg the economist to calculate her profit for her.

Louis says her profit is $$34,100, and Greg says she lost $$ 6,500

Louis says her profit is $$25,900, and Greg says her profit is $$ 66,500

Louis says her profit is $$35,000, and Greg says she lost $$ 5,900

Louis says her profit is $$34,100, and Greg says her profit is $$ 34,100

Katherine gives piano lessons for $$15 per hour. She also grows flowers, which she arranges and sells at the local farmer’s market. One day she spends 5 hours planting $$ 50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer’s market. Which of the following statements is correct regarding Katherine’s profits from selling flowers?

Katherine’s accounting profits are $$100, and her economic profits are $$ 25

Katherine’s accounting profits are $$100, and her economic profits are $$ 75

Katherine’s accounting profits are $$25, and her economic profits are $$ 100

Katherine’s accounting profits are $$75, and her economic profits are $$ 125

Which of the following statements is not correct?

Average fixed costs are constant

If marginal cost is equal to average total cost, then

average total cost is minimized

average variable cost is minimized

Which of the following statements is correct?

If average total cost is rising, then marginal cost is greater than average total cost

If marginal cost is rising, then average total cost is rising

If marginal cost is rising, then average variable cost is rising

If average variable cost is rising, then marginal cost is minimized

If Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $$3.50 and that the average total cost of making 499 pizzas is $$ 3.30, then

average total costs are rising at Q = 500

average total costs are falling at Q = 500

total costs are falling at Q = 500

average variable costs must be falling

The average fixed cost curve

always declines with increased levels of output

always rises with increased levels of output

declines as long as it is above marginal cost

declines as long as it is below marginal cost

When marginal cost is less than average total cost,

average variable cost must be falling

Which of the following must always be true as the quantity of output increases?

Average variable cost must rise

The minimum points of the average variable cost and average total cost curves occur where

the marginal cost curve intersects those curves

the marginal cost curve lies below the average variable cost and average total cost curves

the average variable cost and average total cost curves intersect

the slope of total cost is the smallest

Refer to Figure 1. Curve D is increasing because of

the fact that increasing marginal product follows decreasing marginal product

the fact that decreasing marginal product follows increasing marginal product

Refer to Figure 1. Curve A is always declining because of

dividing fixed costs by higher and higher levels of output

the fact that increasing marginal product follows decreasing marginal product

the fact that decreasing marginal product follows increasing marginal product

Refer to Figure 1. Curve D intersects curve C

where the firm maximizes profit

at the minimum of average fixed cost

where fixed costs equal variable costs

If marginal cost is rising,

marginal product must be falling

average variable cost must be falling

average fixed cost must be rising

marginal product must be rising

The cost of production

Authored by Nguyễn Nam

Social Studies

12th Grade

Used 1+ times

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In the short run, if a firm produces nothing, total costs are zero.

TRUE

FALSE

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

TRUE

FALSE

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The marginal cost curve intersects the average total cost curve at the minimum point of the marginal cost curve.

TRUE

FALSE

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Economies of scale often arise because higher production levels allow specialization among workers.

TRUE

FALSE

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If long-run average total cost is rising, then the firm is experiencing economies of scale.

TRUE

FALSE

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

$300

$400

$700

$1,650

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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