Question 1 of 10
Average variable cost is:
A. the firm's variable cost per unit multiplied by the quantity.
B. total variable cost divided by quantity.
C. the difference between average total cost and total variable cost.
D. the difference between total cost and total variable cost.
Question 2 of 10
Which of the following is (are) correct?
A. Firms are organizations that produce goods and services.
B. Firms seek to maximize profits.
C. Firms seek to utilize factors of production in the most efficient way in order to maximize profits.
D. All of the above are correct.
Question 3 of 10
For a restaurant:
A. labor and food would be variable factors of production.
B. a building would be a fixed factor of production in the short run.
C. fire insurance on a building would be a fixed factor of production.
D. A and B are correct.
Question 4 of 10
Diminishing marginal returns means that:
A. each additional unit of an input used will decrease output.
B. each additional unit of an input used will increase output, but by smaller and smaller amounts.
C. each additional unit of an input used will increase output by larger and larger amounts.
D. the firm is maximizing profit.
Question 5 of 10
When marginal cost is below average variable cost, average variable cost must be:
A. at its minimum.
B. at its maximum.
Question 6 of 10
If a firm produces 10 units of output and incurs $30 in average variable cost and $5 in average fixed cost, average total cost is:
Question 7 of 10
In the long run:
A. all inputs are fixed.
B. inputs are neither variable nor fixed.
C. at least one input is variable and one input is fixed.
D. all inputs are variable.
Question 8 of 10
A factor of production whose quantity can be changed during a particular period is a:
A. marginal factor of production.
B. fixed factor of production.
C. incremental factor of production.
D. variable factor of production.
Question 9 of 10
Given constant quantities of all other factors of production, when additional units of a variable factor of production add less and less to total output, then the firm is experiencing:
A. constant marginal returns.
B. increasing marginal returns.
C. diminishing marginal returns.
D. negative marginal returns.
Question 10 of 10
The sum of fixed and variable costs is:
A. total cost.
B. marginal cost.
C. variable cost.
D. average cost.