101) Suppose a firm is producing 500 units of output, incurring a total cost of $700 000 and total fixed cost of $100 000. It can be concluded that average variable cost is
A) $200.
B) $600.
C) $1200.
D) $1400.
E) $1600.
102) Suppose a firm is producing 250 units of output. At this level of output, average fixed costs are $20 per unit and average variable costs are $80 per unit. It can be concluded that total cost is
A) $100.
B) $0.40 per unit.
C) $40 per unit.
D) $2500.
E) $ 25 000.
103) Suppose a firm is producing 10 000 units of output. At this level of output, average total cost is $200 and average fixed cost is $20. It can be concluded that total variable cost is
A) $180.
B) $1800.
C) $18 000.
D) $ 180 000.
E) $1 800 000.
104) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short-run costs are as follows:
A) Marginal product of the variable factor must be decreasing.
B) Marginal product of the variable factor must be increasing.
C) The point of diminishing average product of the variable factor has not yet been reached.
D) Average product of the variable factor must be increasing.
E) Marginal product of the variable factor is at its minimum point.
105) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short run costs are as follows:
A) The firm is operating with excess capacity.
B) The firm is operating at capacity.
C) The firm is operating above capacity.
D) The firm has no capacity constraints.
E) The firm is producing a level of output where capacity is increasing.
106) Consider the short-run costs of a firm. Suppose the firm's total fixed costs are $100 and average variable costs are constant regardless of output. Which of the following is then true?
A) Marginal cost will equal average total cost.
B) Average total cost will decrease when output is increased.
C) Marginal cost will be less than average variable cost.
D) Average total costs will be constant.
E) Marginal cost will be rising as output rises.
107) Suppose that a firm's capital is fixed and one more unit of labour is hired, thereby increasing the firm's total output. Which of the following statements can be correct?
A) 1 only
B) 2 only
C) 3 only
D) Any of 1, 2, and 3 is possible.
E) None are possible.
108) A firm's capacity is defined as the level of output where
A) the upper limit on what can be produced is reached.
B) average total cost is at its maximum.
C) marginal cost equals average variable cost.
D) average fixed costs are at a minimum.
E) short-run average total cost is at its minimum.
109) When a plant is operating at the level of output where its short-run average total cost is at its minimum,
A) average fixed cost is at a minimum.
B) marginal cost is at a minimum.
C) average variable cost is at a minimum.
D) the plant is operating at its capacity.
E) more of the variable factor of production should be employed.
110) Short-run cost curves for a firm are eventually upward-sloping because of the effects of
A) the increasing price of variable inputs.
B) diminishing marginal product.
C) increasing fixed costs.
D) increasing marginal productivity of the variable inputs.
E) decreasing total product.
