Question : 8.4   The Relationship between Short-Run Production and Short-Run Cost 1) Marginal : 1245235

8.4   The Relationship between Short-Run Production and Short-Run Cost

1) Marginal cost is equal to the

A) change in total cost divided by the change in output.

B) change in average total costs divided by the change in output.

C) change in total product divided by the change in output.

D) change in average product divided by the change in output.

2) Marginal cost is the

A) change in average cost when an additional unit of output is produced.

B) the additional output when total cost is increased by one dollar.

C) additional cost of producing an additional unit of output.

D) change in the price of inputs if a firm buys more inputs to produce an additional unit of output.

3) In the short run, if marginal product is at its maximum, then

A) average cost is at its minimum.

B) average variable cost is at its minimum.

C) marginal cost is at its minimum.

D) total cost is at its maximum.

4) When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is

A) $41.43.

B)  $134.29.

C) $135.

D) $145.

5) If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

A) Average cost increases as more is produced.

B) Average cost will fall.

C) Average cost could increase or decrease depending on what happens to variable cost.

D) Average cost could increase or decrease depending on what happens to fixed cost.

6) Which of the following costs will not change as output changes?

A) marginal cost

B) total variable cost

C) average variable cost

D) average fixed cost

E) total fixed cost

7) Average fixed costs of production

A) remain constant.

B) will rise at a fixed rate as more is produced.

C) graph as a U-shaped curve.

D) fall as long as output is increased.

8) If fixed costs do not change, then marginal cost

A) also remains constant.

B) equals the change in variable cost divided by the change in output.

C) equals the change in average variable cost divided by the change in output.

D) equals the change in average fixed cost divided by the change in output.

9) In the world oil market, oil is supplied up to the point where

A) the marginal cost of the last barrel is just equal to the price buyers are willing to pay for that last barrel.

B) the marginal cost of the last barrel is zero.

C) the marginal cost of the last barrel is the greatest distance from the price buyers are willing to pay for that last barrel.

D) the marginal cost of the last barrel is at a maximum.

10) The change in a firm’s total cost from producing one more unit of a good or service is the firm’s

A) explicit cost of production.

B) marginal cost of production.

C) average cost of production.

D) implicit cost of production.