1.According to production theory, a firm's short-run marginal cost

a.at all points of production, it increases as the level of output produced increases

b.is the change in total variable cost as a result of an additional unit of output is produced

c.includes only the cost of hiring inputs, such as labor and raw materials

d.includes the cost of the firm's plant and equipment

2.The shape of the total variable cost curve is best described as?

a.Initially increasing at an increasing rate, then increasing at a decreasing rate

b.Increasing at a constant rate

c.Initially decreasing at an increasing rate, then decreasing at a decreasing rate

d.Initially increasing at a decreasing rate, then increasing at an increasing rate

3.In a situation where the average total cost is falling, then:

a.Marginal cost is rising

b.it can't be determined whether marginal cost is rising or falling

c.Marginal cost is falling

d.Marginal cost is equal to average cost

4.Economists define the short-run period of production as

a.a period where the law of diminishing returns does not hold.

b.having at least one fixed factor of production and firms neither leaving nor entering the industry.

c.a period where all of the factors of production are fixed with no variable inputs.

d.no fixed inputs, where all inputs being variable.

5.In the short-run period, which of the following would generally be regarded as fixed costs?

a.The cost of building security.

b.Weekly wages of hourly workers.

c.The cost of raw materials.

d.Interest collected on a bank loan.

6.A variable cost for a firm would be most likely which of the following?

a.Interest collected on a bank loan.

b.The monthly rent on office space that it leased for a year.

c.The payroll taxes that are paid on employee wages.

d.The cost of insurance on a leased office space.

7.According to production theory, the difference between average total cost and average variable cost:

a.is understood as a representation of the average fixed cost

b.is total fixed cost

c.becomes closer as output decreases

d.is impossible to determine

8.A firm producing 5 units of output has an average total cost of $20 and has to pay $35 to its fixed factors of production whether it produces or not. How much of the average total cost is made up of variable costs?

a.$7

b.$13

c.$ 65

d.$10

9.A firm has a variable cost of $200 at 10 units of output. If fixed costs are $80, what will be the average total cost at 10 units of output?

a.$12

b.$140

c.$60

d.$28

10.The marginal cost for a firm of producing the 8th unit of output is $30. Average cost at the same level of output is $25. Which of the following must be true?

a.It is impossible to tell if either of the curves are rising or falling

b.Marginal cost and average cost are both rising

c.Marginal cost and average cost are both falling

d.Marginal cost is rising and average cost is falling

11.According to production theory, as output increases,

a.Fixed costs increase

b.Average fixed costs fall

c.Total variable costs fall

d.Total costs fall

12.The best definition of the marginal product is

a.None of the above.

b.The difference between the marginal effects of price variations.

c.a product that does not meet industry standards.

d.the extra output or change in total product caused by an additional variable of input.

13.According to production theory, a profit maximizing business will choose to continue to increase production until

a.The difference between marginal revenue and marginal cost is the greatest

b.none of the above.

c.the marginal revenue exceeds marginal cost.

d.the marginal revenue equals marginal cost.

14.The law of diminishing marginal returns is reflects which of the items below:

a.decreasing average fixed costs

b.decreasing marginal costs.

c.decreasing average variable costs.

d.increasing marginal costs.

15.

Refer to the diagram. At output level 5 total variable cost is: ATC MC 10 AVC 15Refer to the diagram. At output level 5 total fixed cost is: ATC MC 10 AVC 15Refer to the diagram. At output level 5 total cost is: ATC MC 10 AVC 15Refer to the diagram. At output level 5 average fixed cost is: ATC MC 10 AVCRefer to the diagram. At output level 5: ATC MC 10 AVC 15In the diagram the range best characterized as diminishing marginal returns is shown as: TP Product AP MP Variable inputIn the diagram, total product will be at a maximum at: TP Product AP MP Variable input