1. Please explain the difference between marginal and average costs. Further, explain how they impact each other.

2. Where can we find fixed costs?

A. In long-run cost curves

B. In short-run cost curves

C. In Both

D. In None of the above

3. Where can we find variable costs?

A. In long-run cost curves

B. In short-run cost curves

C. In Both

D. In None of the above

4. Isocost lines are the equivalent within producer theory of budget lines in consumer theory.

A. True

B. False

5. Which of the examples below to you think can be best described as an implicit cost (or opportunity cost) of production?

A. Wages paid for workers in a factory

B. Taxes paid to the state

C. Foregone rent the company could have received for the offices and machines if it was not using them in production

D. Interest paid for credits taken in the past

6. In the short run, a firm's marginal cost rises because of:

A. the flexibility in input usage.

B. a decline in marginal productivity of inputs.

C. marginal costs are by definition always rising.

D. a decline in output prices.

7. What does every point on the expansion path have in common with all other points on it?

A. All have the same marginal rate of technical substitution.

B. All have the same distance from each other.

C. All are associated with the same total cost.

D. All are price minimizing.

8. In the figure given below, curves F, C, and G denote the total cost, the total variable cost, and the total fixed cost of a firm. Which of the following distances represent the total cost of producing BT units of output?

a). AB

b). AS

c). RT

d). RS

c). ST