---------multiple choice------

1. For a construction company that builds houses, which of the following costs would be a fixed cost?

a. the RM20 per hour wage paid to a construction foreman

b. the RM30,000 per year salary paid to the company's bookkeeper

c. the RM2 per worker-hour paid to the government for workers

compensation insurance

d. All of the above are correct.

2. If a firm produces nothing, which of the following costs will be zero?

a. total cost

b. fixed cost

c. opportunity cost

d. variable cost

3. Average total cost tells us the

a. total cost of the first unit of output, if total cost is divided evenly over all

the units produced.

b. cost of a typical unit of output, if total cost is divided evenly over all the

units produced.

c. cost of the last unit of output, if total cost does not include a fixed cost

component.

d. variable cost of a firm that is producing at least one unit of output.

4. If a competitive firm is currently producing a level of output at which marginal

cost exceeds marginal revenue, then

a. a one-unit increase in output will increase the firm's profit.

b. a one-unit decrease in output will increase the firm's profit.

c. total revenue exceeds total cost.

d. total cost exceeds total revenue.

5. The intersection of a firm's marginal revenue and marginal cost curves determines

the level of output at which

a. total revenue is equal to variable cost.

b. total revenue is equal to fixed cost.

c. total revenue is equal to total cost.

d. profit is maximized.