American Military University ECON 201 / ECON201 Week 5 Quiz

Question 1 of 20 Average variable cost is: • A. the firm's variable cost per unit multiplied by the quantity. • B. total variable cost divided by quantity. • C. the difference between average total cost and total variable cost. • D. the difference between total cost and total variable cost. Question 2 of 20 Which of the following is (are) correct? • A. Firms are organizations that produce goods and services. • B. Firms seek to maximize profits. • C. Firms seek to utilize factors of production in the most efficient way in order to maximize profits. • D. All of the above are correct. Question 3 of 20 For a restaurant: • A. labor and food would be variable factors of production. • B. a building would be a fixed factor of production in the short run. • C. fire insurance on a building would be a fixed factor of production. • D. A and B are correct. Question 4 of 20 Diminishing marginal returns means that: • A. each additional unit of an input used will decrease output. • B. each additional unit of an input used will increase output, but by smaller and smaller amounts. • C. each additional unit of an input used will increase output by larger and larger amounts. • D. the firm is maximizing profit. Question 5 of 20 When marginal cost is below average variable cost, average variable cost must be: • A. at its minimum. • B. at its maximum. • C. falling. • D. rising. Question 6 of 20 If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, average total cost is: • A. $30. • B. $35. • C. $50. • D. $300. Question 7 of 20 In the long run: • A. all inputs are fixed. • B. inputs are neither variable nor fixed. • C. at least one input is variable and one input is fixed. • D. all inputs are variable. Question 8 of 20 A factor of production whose quantity can be changed during a particular period is a: • A. marginal factor of production. • B. fixed factor of production. • C. incremental factor of production. • D. variable factor of production. Question 9 of 20 Given constant quantities of all other factors of production, when additional units of a variable factor of production add less and less to total output, then the firm is experiencing: • A. constant marginal returns. • B. increasing marginal returns. • C. diminishing marginal returns. • D. negative marginal returns. Question 10 of 20 The sum of fixed and variable costs is: • A. total cost. • B. marginal cost. • C. variable cost. • D. average cost. Part 2 of 3 - Costs of Producing Bagels Question 11 of 20 (Exhibit: Costs of Producing Bagels) The total cost of producing six bagels is: • A. $0.10. • B. $0.20. • C. $0.80. • D. $0.90. Question 12 of 20 (Exhibit: Costs of Producing Bagels) The average total cost of producing six bagels is: • A. $0.10. • B. $0.15. • C. $0.20. • D. $0.80. Question 13 of 20 (Exhibit: Costs of Producing Bagels) The marginal cost of producing the sixth bagel is: • A. $0.10. • B. $0.15. • C. $0.20. • D. $0.80. Question 14 of 20 (Exhibit: Costs of Producing Bagels) The total cost of producing two bagels is: • A. $0.10. • B. $0.20. • C. $0.40. • D. $0.50. Part 3 of 3 - Short-Run Costs 70.0/ 70.0 Points Question 15 of 20 (Exhibit: Short-Run Costs) Curve A is the cost curve. • A. average total • B. average variable • C. marginal • D. total Question 16 of 20 (Exhibit: Short-Run Costs) Curve B is the cost curve. • A. average total • B. average variable • C. marginal • D. total Question 17 of 20 (Exhibit: Short-Run Costs) Curve A crosses the average variable cost curve at: • A. approximately 2.8 units of output. • B. approximately 5.3 units of output. • C. the minimum value of curve B. • D. the level of output where diminishing marginal returns begin. Question 18 of 20 (Exhibit: Short-Run Costs) Curve A crosses the average total cost curve at: • A. the minimum value of Curve B. • B. approximately 4.3 units of output. • C. approximately 2.8 units of output. • D. none of the above points. Question 19 of 20 (Exhibit: Short-Run Costs) Curve A declines from a cost of about $50 and a quantity of 1 to a cost of about $40 and a quantity of 2 (point F) at which time it rises again. The declining segment is due to marginal returns, and the rising segment is due to marginal returns. • A. decreasing; increasing • B. diminishing; increasing • C. increasing; diminishing • D. increasing; constant Question 20 of 20 15.0/ 15.0 Points (Exhibit: Short-Run Costs) At 7 units of output, average fixed cost is approximately , and average variable cost is approximately . • A. $100; $100 • B. $10; $135 • C. $40; $ 100 • D. $140; $140