Which of the following measures of cost is best described as “the increase in total cost that arises from an extra unit of production?

Which of the following measures of cost is best described as “the increase in total cost that arises from an extra unit of production?

121. Average total cost (ATC) is calculated as
follows:

a. ATC
= (change in total cost)/(change in quantity of output).

b. ATC
= (change in total cost)/(change in quantity of input).

c. ATC
= total cost/quantity of output.

d. ATC
= total cost/quantity of input.

122. Implicit costs

a. do
not require an outlay of money by the firm.

b. do
not enter into the economist’s measurement of a firm’s profit.

c. are
also known as variable costs.

d. All
of the above are correct.

123. Which of the following measures of cost is
best described as “the increase in total cost that arises from an extra unit of
production?”

a. variable
cost

b. average
variable cost

c. average
total cost

d. marginal
cost

124. Which of the following measures of cost is
best described as “the cost of a typical unit of output if total cost is
divided evenly over all the units produced?”

a. average
fixed cost

b. average
variable cost

c. average
total cost

d. marginal
cost

125. Marginal cost increases as the quantity of
output increases. This reflects the property of

a. increasing
total cost.

b. diminishing
total cost.

c. increasing
marginal product.

d. diminishing
marginal product.

126. In the short run, a firm incurs fixed costs

a. only
if it incurs variable costs.

b. only
if it produces no output.

c. only
if it produces a positive quantity of output.

d. if
it produces no output or if it produces a positive quantity of output.

Refer to the following information to answer Questions
127 through 131.

A
certain firm produces and sells staplers. Last year, it produced 5,000 staplers
and sold each stapler for $8. In producing the 5,000 staplers, it incurred
variable costs of $30,000 and a total cost of $45,000.

127. The firm’s fixed costs amounted to

a. $15,000.

b. $30,000.

c. $40,000.

d. $50,000.

128. In producing the 5,000 staplers, the firm’s
average fixed cost was

a. $3.

b. $4.

c. $5.

d. $7.

129. In producing the 5,000 staplers, the firm’s
average variable cost was

a. $2.

b. $4.

c. $6.

d. $8.

130. In producing the 5,000 staplers, the firm’s
average total cost was

a. $6.

b. $7.

c. $8.

d. $9.


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