Question

Question 3 (1 point)

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3. Which of the following statements is CORRECT?

Question 3 options:

	AFC = ATC + AVC
	AVC = AFC - ATC
	ATC = AVC - AFC
	ATC = AFC + AVC

Question 4 (1 point)

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Labor Total product |(workers per day)| (hats per day) 0 0 1 / 4 12 10 3 18 5 25 30

4. The above table shows the total product of producing baseball hats. The marginal product of the 4th worker is equal to

Question 4 options:

	25 baseball hats
	6.25 baseball hats
	21 baseball hats
	7 baseball hats

Question 5 (1 point)

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5. The above table shows the total product of producing baseball hats. The average product of 3 workers is equal to

Question 5 options:

	12.78 baseball hats.
	1.67 baseball hats.
	6.00 baseball hats.
	18.00 baseball hats.

Question 8 (1 point)

8. Total variable cost is the sum of all

Question 8 options:

	costs that rise as output increases.
	costs of the firm's fixed factors of production.
	implicit costs.
	costs associated with the production of goods.

Question 9 (1 point)

9. In the above figure, as output increases, the distance between curves B and C decreases because

Question 9 options:

	total cost decreases as output increases.
	there are diminishing returns to average total cost.
	there are increasing marginal costs as output increases.
	average fixed cost decreases as output increases.

Question 10 (1 point)

10. Dustin's copy shop can utilize four different levels of capital in the long run. The figure above shows the average total cost curves for the shop when the firm uses 1 copy machine (ATC1), 2 copy machines (ATC2), 3 machines (ATC3), and 4 machines (ATC4). When it comes to long-run cost curves, the cost of capital is no longer fixed, but remember that the addition of other inputs like labor and ink jets will also increase costs as output rises. What is Dustin's long-run average cost if the output is 3,000 copies per day, and how many copy machines will he employ?

Question 10 options:

	5.0 cents per copy; 1 copy machine.
	3.7 cents per copy; 2 copy machines.
	More information is needed to determine the long-run average cost.
	8.5 cents per copy; 3 copy machines.

Answer 1

3. ATC = AFC + AVC

Explanation: Total cost has two components - fixed costs and variable costs. So, ATC = AFC + AVC.

4. 7 baseball hats

Explanation: The marginal product of the 4th worker = total product of 4 workers - total product of 3 workers = 25 - 18 = 7 baseball hats.

5. 6.00 baseball hats.

Explanation: Average product = total product/no. of workers = 18/3 = 6.

8. Costs that rise as output increases.

Explanation: Variable costs change with the level of output.