Harry’s Hotdogs is a small street vendor business owned by Harry Huggins. If Harry makes 15 hotdogs in his first hour of business and incurs a total cost of $16.50

Harry’s Hotdogs is a small street vendor business owned by Harry Huggins. If Harry makes 15 hotdogs in his first hour of business and incurs a total cost of $16.50

Harry’s Hotdogs is a small street vendor
business owned by Harry Huggins. If Harry makes 15 hotdogs in his first hour of
business and incurs a total cost of $16.50, his average total cost per hotdog
is

a. $1.10.

b. $6.50.

c. $16.50

d. It
is impossible to determine without specific information on variable cost.

162. When a firm is able to put idle equipment to
use by hiring another worker,

a. variable
costs will rise.

b. variable
costs will fall.

c. fixed
costs will fall.

d. fixed
costs and variable costs will rise.

163. Thirsty Thelma owns and operates a small
lemonade stand. When Thelma is producing a small quantity of lemonade she has
few workers and her equipment is not being fully utilized. Because she can
easily put her idle resources to use,

a. the
marginal cost of an extra worker is large.

b. the
marginal cost of one more glass of lemonade is small.

c. the
marginal product of an extra worker is small.

d. her
lemonade stand is likely to be crowded with workers.

164. When a firm is operating at an efficient
scale,

a. average
variable cost is minimized.

b. average
fixed cost is minimized.

c. average
total cost is minimized.

d. None
of the above are correct.

165. Which of the following must always be true as
the quantity of output increases?

a. Marginal
cost must rise.

b. Average
total cost must rise.

c. Average
variable cost must rise.

d. Average
fixed cost must fall.

166. Which of the following statements is false?

a. The marginal
cost of the fifth unit of output equals the total cost of five units minus the
total cost of four units.

b. The total variable cost of seven units
equals the average variable cost of seven units times seven.

c. If
marginal cost is rising, then average variable cost must be rising.

d. The
marginal cost of the fifth unit of output equals the total variable cost of
five units minus the total variable cost of four units.

167. When marginal cost is rising, average variable
cost

a. must
be rising.

b. must
be falling.

c. must
be constant.

d. could
be rising or falling.

168. Consider the following information about bread
production at Beth’s Bakery:

Worker Marginal
Product

1 5

2 7

3 10

4 11

5 8

6 6

7 4

Beth
pays all her workers the same wage and labor is her only variable cost. From
this information we can conclude that Beth’s marginal cost

a. declines
as output increases from 0 to 33, but increases after that.

b. declines
as output increases from 0 to 11, but increases after that.

c. increases
as output increases from 0 to 11, but declines after that.

d. continually
increases as output rises.

169. Consider the following information about
baseball production at Bob’s Baseball Factory:

Worker Marginal
Product

1 3

2 5

3 8

4 10

5 7

6 4

7 2

Bob pays
all his workers the same wage and labor is his only variable cost. From this
information we can conclude that Bob’s average variable cost decreases

a. as
output rises from 0 to 10, but rises after that.

b. as
output rises from 0 to 26, but rises after that.

c. as
output rises from 0 to 33, but increases after that.

d. continually
as output rises.

170. At Bert’s Bootery, the total cost of producing
twenty pairs of boots is $400. The marginal cost of producing the twenty-first
pair of boots is $83. We can conclude that the average

a. variable
cost of 21 pairs of boots is $23.

b. total cost of 21 pairs of boots is $23.

c. total cost of 21 pairs of boots is $15.09

d. total cost of 21 pairs of boots cannot be
calculated from the information given.


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