13. If output rises from 123 units to 143 units as another worker is hired, and the additional worker receives $15 in wages, it follows that marginal cost is a. $20.00 $1.33 $0.75 $15.00 e. none of the above 14. Which of the following statements is true? The marginal cost curve has an upward-sloping portion to it because of the law of diminishing marginal returns. A decline in marginal cost causes the MPP (of the variable input) to decline. The marginal cost curve cuts the ATC curve at its highest point. When marginal cost is rising, so must average total cost be rising. none of the above Which of the following will not change a firm's cost curves? change in the price of the good the firm produces change in input prices change in taxes change in technology b and d Exhibit 22-3 Marginal Physical Variable Fixed Product of Fixed Variable Marginal Input Input Output Variable Input Cost Cost Cost (units) (units) (units) (units) (dollars) (dollars) (dollars) $500 $500 $200 $500 $400 $500 $600 $500 $800 70 $500 $1000 10. Refer to Exhibit 22-3. a. In the table, fill in the blanks: A through E and H. b. The average fixed cost of producing 25 units of output is c. The average variable cost of producing 10 units of output is _ d. Diminishing marginal returns set in with input unit Exhibit 22-6 Label the cost curres. If Costs A Firm's Cost CurvesTrue or False: " A firm that earns zero accounting profit is earning a normal profit." Answer questions 2 -6 based on the Figure below. DOLLARS PER DAY AVC (sale (aurr) AFC OUTPUT 100 250 PER DAY 2. At 100 units of output per day, average total cost ATC is $ 3. At 250 units of output per day, marginal cost MC is $ (Hint: remember the average- marginal relationships!, 4. At 250 units of output per day, total cost STC is $ 5. Total fixed cost TFC (per day) is $ 6. To produce at the lowest possible ATC (that is, at minimum ATC), output would have to be (choose the best answer): a. Cut below 100 units per day b. Exactly 100 units per day c. Somewhere between 100 and 250 units per day d. Exactly 250 units per day e. Increased beyond 250 units per day f. Can't tell7. Cy recently went into the business of producing and selling cardboard boxes. For this business, which of the following is most likely to be a fixed cost? a. fire insurance b. labor costs paper costs . long-distance telephone costs b, c, and d are equally likely to be fixed costs 8. Costs that do not change with output are called costs. a. marginal average fixed variable 9. The law of diminishing marginal returns is the same as economies of scale. the same as the law of diminishing marginal utility. important for long-run economic analysis. relevant to the production of goods, but not services. none of the above Exhibit 6-1 (1) (2) (3) (4) Variable Fixed Quantity MPP of Input Input of Output Variable Input O - N m + in 10 129 10. Refer to Exhibit 6-1. What number goes in blank D? a. 23.0 b. 4.0 c. 21.5 d. 149.0 11. Which of the following is false? Average fixed cost continually declines as output increases. . Marginal cost is equal to the change in total cost divided by the change in quantity of output The law of diminishing marginal returns states that, in the long run, as ever larger amounts of a variable input are combined with fixed inputs, eventually the marginal physical product of the variable input will decline. The vertical distance between the AVC curve and the ATC curve declines as more output is produced. c and d 12. There is a link between production and cost. We know this because average productivity falls when marginal productivity is below it. there are two periods of production, the short run and the long run. average fixed cost continually declines over output what happens to MPP directs what happens to MC. none of the above