Question 48 Which of the following would be the best starting point on which to focus...
Question 48
Which of the following would be the best starting point on which to focus if an air conditioner manufacturer wants to look at its total costs of production in the short run?
A) Divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be.
B) Divide the total costs of production by the quantity of output.
C) Divide the variable costs of production by the quantity of output.
D) Divide total costs into two categories: fixed costs that can’t be changed in the short run and variable costs that can be.
Question 49
What economic term is used to describe it when the total cost is divided by the quantity of output produced?
A) fixed cost
B) variable cost
C) marginal cost
D) average cost
Question 54
In the figure below, which of the following statements is true regarding elasticity?
A) the upper part (when price is higher) of a demand curve is considered more inelastic.
B) the upper part (when price is higher) of a demand curve is considered unit elastic.
C) the upper part (when price is higher) of a demand curve is considered more elastic.
Homework Answers
Answer : 48) The answer is option D.
Total cost = Variable cost + Fixed cost.
In short run fixed cost is constraint but variable cost can be changed. Hence if a firm want to look it's total cost of production in short run then the firm should look on it's variable cost and fixed cost. Hence except option D other options are not correct. Therefore, option D is the correct answer.
49) The answer is option D.
The formula of average cost is following :
Average cost = Total cost / Quantity.
Hence except option D other options are not correct. Therefore, option D is the correct answer.
50) The answer is option C.
Regarding elasticity the upper part of demand curve is more elastic. Because at upper part of demand curve if price change slightly then the quantity demanded change more than the change in price level. Hence except option C other options are not correct. Therefore, option C is the correct answer.
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Question 48
Which of the following would be the best starting point on which
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