Microeconomics Unit 3: Cost of Production Quiz

What is the primary focus of the practice free response in microeconomics unit 3?

• Market structures

• Cost of production

• Consumer behavior

• Demand and supply analysis

Which curve represents the marginal cost in a perfectly competitive industry?

• Curve one

• Curve two

• Curve three

• Curve four

Why does the marginal cost curve initially decrease?

• Because of reduced output

• Due to higher variable costs

• Because of specialization

• Due to increased fixed costs

What causes the marginal cost curve to eventually increase?

• Higher average total cost

• Increased specialization

• Decreased fixed resources

• Law of diminishing marginal returns

What is the vertical distance between the average total cost and average variable cost curves?

• Marginal cost

• Average fixed cost

• Variable cost

• Total cost

Why does the average fixed cost decrease as output increases?

• Total costs decrease

• Variable costs decrease

• Fixed costs increase with output

• Fixed costs are spread over more units

What is the short-run supply curve in a perfectly competitive market?

• Average total cost curve

• Average variable cost curve

• Marginal cost curve above average variable cost

• Total cost curve

Under what condition should a firm not produce any output?

• When price is above average total cost

• When price is below average variable cost

• When marginal cost is decreasing

• When average fixed cost is increasing

What happens to the quantity produced as the price increases in a perfectly competitive market?

• Quantity increases

• Quantity decreases

• Quantity fluctuates

• Quantity remains constant

Which points represent the short-run supply curve on the graph?

• Points C and D

• Points M and N

• Points A and B

• Points K and L