Sample Questions On Costs of Production The addition to output from using one more unit of laboris the marginal product of labor. the average product or labor. the total product of labor. the marginal revenue of labor According to the Law of diminishing returns a. the marginal cost curve slopes downward at all output levels. b. the marginal physical product of a variable input will eventually decline as more of the input is used C. the marginal cost of producing output must first rise and then fall as output increases doubling ail inputs less than doubles outputs. 3. If the average total cost curve lies above the marginal cost curve, then we know at this level of output that the average total cost curve must be sloping downward. the marginal cost curve must be sloping upward. the marginal cost curve must be sloping downward. we are producing beyond the minimum average cost level of output 4. If at twenty units of output fixed costs equal $1000, and at forty units of output average total costs are $100, then we can conclude that forty units of output average variable costs must be: S25 SSO $75 Insufficient information available. 5. If at 20 units of output average variable costs are declining, then we know at this level of output that: marginal costs are failing. b. marginal costs lie below average variable costs. c. marginal costs are rising. d. marginal costs lie above average variable costs. Which of the following would equal total costs? AFC + AVC FC + MC QXAFC + QxMC d. QXATC 7 At 100 units of output a firm has fixed costs equal to $10,000 and variable costs equal to $10,000. If this firm shuts down its total costs will be: a 0 b. $500 C. $10,000 d. $50,000 8. Economies of Scale are associated with a: a. rising marginal cost curve. b. horizontal LRAC curve. c. rising LRAC curve. d. declining LRAC curve. 9. If the long-run average cost curve for a firm is given by the equation: LRAC = 0.050, then the firm must have. a economies of scale. b. constant returns to scale c. diseconomies of scaled increasing returns to scale