Chapter 08 - Cost

Quiz 9
1. ______ is the cost of inputs whose use does not vary as the firm's output changes.
A. Sunk cost
B. Fixed cost
C. Total cost
D. Explicit cost
2. A ______ cost is ______ if the firm doesn't incur the cost if it produces no output.
A. Fixed; sunk
B. Fixed; explicit
C. Variable; sunk
D. Fixed; avoidable
3. A ______ cost is ______ if the firm incurs the cost even if it produces no output.
A. Fixed; sunk
B. Fixed; explicit
C. Variable; sunk
D. Fixed; avoidable
4. If Q represents a firm's level of output, W represents the wage paid to labor (L) and R is
the cost of capital (K), then which of the following represents the firm's cost function?
A. C(Q) = FC + VC(Q)
B. C(Q) = FC(Q) + VC(Q)
C. C(Q) = WL + RK
D. C(Q) = (W+R)Q
5. The cost associated with foregoing the opportunity to employ a resource in its best
alternative use is called
A. An avoidable cost
B. A sunk cost
C. An opportunity cost
D. The user cost of capital
6. Suppose a firm's short-run production function is given by Q = F(L) = 4L. If the wage rate
is $12 and the firm has sunk costs of $300, then the firm's cost function is
A. C(Q) = $12L
B. C(L) = $300 + $3L
C. C(Q) = $300 + $3Q
D. C(Q) = $300 + $12Q

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Chapter 08 - Cost

7. Refer to Figure 8.1. Which graph best represents a variable cost function?
A. A
B. B
C. C
D. D
8. Refer to Figure 8.1. Which graph best represents a total cost function?
A. A
B. B
C. C
D. D

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Chapter 08 - Cost

9. Refer to Figure 8.3. What is the average cost of producing 290 units of output?
A. $9
B. $2500
C. $8.62
D. $7.77
10. Refer to Figure 8.3. What is marginal cost when output is 200 units?
A. $9
B. $2500
C. $8.62
D. $7.77

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