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### 15 Cards in this Set

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 Output Average fixed cost Average variable cost 1 \$120 \$40 2 60 30 3 40 25 4 30 30 5 24 40 6 20 55 Refer to the data. The total cost of producing 5 units of output is: \$320 It is often unnecessary to graph the firm's average fixed cost because it can always be found as: the vertical distance between the average total cost and average variable cost curves Suppose that at its current output level, a firm's average fixed cost is \$20, its average total cost is \$40, its wage is \$10 per hour, and labor's marginal product is 2 units per hour. The firm's marginal cost is: \$5 Which short-run cost curve would not be affected by an increase in the wage paid to a firm's labor? Average Fixed Costs Economies of scale are reflected in the downward-sloping segment of the firm's long-run average cost curve Use the following data to answer the next question. The letters A, B, and C designate three successively larger plant sizes. Output ATC-A ATC-B ATC-C 100 \$10 \$20 \$30 200 8 13 20 300 10 7 12 400 14 4 8 500 20 3 5 600 28 6 4 700 42 12 6 800 58 21 10 900 80 33 16 Refer to the data. In the long run, the firm should use plant size "C" for: A) all possible levels of output B) 100 to 300 units of output C) 400 to 600 units of output D) 600 or more units of output 600 or more units of output "The increase in total output arising from the employment of an additional worker" describes: marginal product What curve must increase if output decreases? Average fixed cost If marginal product is positive but falling: total product is increasing at a decreasing rate At a firm's minimum efficient scale (MES) of operations, the corresponding value on its long-run average cost curve is \$5 per unit. If the firm chooses to produce the output corresponding to MES A) its cost per unit will be less than \$5, but that would imply declining average fixed cost B) its cost per unit may exceed \$5, but that would imply an inefficient use of resources C) its cost per unit may exceed \$5 even if it is employing all its resources efficiently D) it could reduce its cost per unit to less than \$5 by expanding output its cost per unit may exceed \$5, but that would imply an inefficient use of resources The WXY Corporation has fixed costs of \$30. Its total variable costs (TVC) vary with output as shown in the following table. Output TVC 1 \$ 0 2 70 3 110 4 160 5 220 50 Use the following data to answer the next question. The letters A, B, and C designate three successively larger plant sizes. Output ATC-A ATC-B ATC-C 100 \$10 \$20 \$30 200 8 13 20 300 10 7 12 400 14 4 8 500 20 3 5 600 28 6 4 700 42 12 6 800 58 21 10 900 80 33 16 Refer to the data. In the long run, the firm should use plant size "A" for: A) all possible levels of output B) 100 to 200 units of output C) 300 to 600 units of output D) 600 or more units of output 100 to 200 units of output Suppose that when output is 20 units, TC = \$120, TVC = \$100, and MC = \$10. At this output: AFC = \$1 Use the following data to answer the next question. The letters A, B, and C designate three successively larger plant sizes. Output ATC-A ATC-B ATC-C 100 \$10 \$20 \$30 200 8 13 20 300 10 7 12 400 14 4 8 500 20 3 5 600 28 6 4 700 42 12 6 800 58 21 10 900 80 33 16 Refer to the data. If these are the only three plant sizes available, what is the long run average cost of producing 600 units? A) \$4 B) \$6 C) \$28 D) \$38 4 Suppose a particular firm exhibits constant returns to scale as it increases its output over any reasonable range. If it increases all its inputs by 10%, its: total cost will increase by less than 10% B) average total cost will increase by 10% C) output will increase by 10% D) long run average cost curve will shift to the right by 10% average total cost will increase by 10%