WorksheetsFirm Costs
Total questions: 14
Worksheet time: 42mins
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
the $20 million payment that the firm pays each year for accounting services
the cost of the steel that is used in producing automobiles
the rent that the firm pays for office space in a suburb of St. Louis
All of the above are correct.
Cindy’s Car Wash has average variable costs of $2 and average fixed costs of $3 when it produces 100 units of output (car washes). The firm's total cost is
$100
$200
$300
$500
Which of the following measures of cost is best described as "the cost of a typical unit of output if total cost is divided evenly over all the units produced?"
average fixed cost
average variable cost
average total cost
marginal cost
The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal
$10
$15
$100
$150
Marginal cost equals
total cost divided by quantity of output produced.
total output divided by the change in total cost.
the slope of the total cost curve.
the slope of the line drawn from the origin to the total cost curve.
When marginal cost exceeds average total cost,
average fixed cost must be rising.
average total cost must be rising.
average total cost must be falling.
marginal cost must be falling.
When a firm is operating at an efficient scale,
average variable cost is minimized.
average fixed cost is minimized.
average total cost is minimized.
marginal cost is minimized.
Economies of scale occur when
long-run average total costs rise as output increases.
long-run average total costs fall as output increases.
average fixed costs are falling.
average fixed costs are constant.
In the long run Irene’s Ice Cream Parlor incurs total costs of $2,500 when output is 1,250 units and $4,000 when output is 1,500 units. For this range of output, Irine’s exhibits
economies of scale.
constant returns to scale.
diseconomies of scale.
efficient scale.
A production function is a relationship between inputs and
quantity of output.
revenue.
costs.
profit.
Suppose a certain firm is able to produce 165 units of output per day when 15 workers are hired. The firm is able to produce 176 units of output per day when 16 workers are hired, holding other inputs fixed. The marginal product of the 16th worker is
10 units of output.
11 units of output.
16 units of output.
176 units of output.
A certain firm produces and sells potato chips. Last year it sold 3 million bags of chips at a price of $3 per bag. For last year, the firm's
accounting profit was $9 million.
economic profit was $9 million.
total revenue was $9 million.
explicit costs was $9 million.
Gloria has decided to start her own snow removal business. To purchase the necessary equipment, Gloria withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gloria's annual opportunity cost of the financial capital that has been invested in the business?
$60
$280
$340
$660
A student might describe information about the costs of production as
dry and technical.
boring.
crucial to understanding firms and market structures.
All of the above could be correct.
