QUIZ 2

1. Suppose that for a particular firm the only variable input into the production process is
labor and that output equals zero when no workers are hired. In addition, suppose that
when the firm hires 4 workers, the firm produces 50 units of output. If the fixed cost of
production is $4, the variable cost per unit of labor is $20, and the marginal product of
labor for the fifth unit of labor is 2, what is the average total cost of production when the
firm hires 5 workers?
a. $2.00
b. $20.00
c. $20.80
d. $22.80
2. Tom’s Tent Company has total fixed costs of $300,000 per year. The firm's average
variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs
equal
a. $80
b. $90
c. $100
d. $110
3. The Wacky Widget company has total fixed costs of $100,000 per year. The firm's
average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average
total costs equal
a. $10
b. $15
c. $100
d. $150
4. Suppose that for a particular firm the only variable input into the production process is
labor and that output equals zero when no workers are hired. In addition, suppose that the
average total cost when 5 units of output are produced is $30, and the marginal cost of the
sixth unit of output is $60. What is the average total cost when six units are produced?
a. $10
b. $25
c. $30
d. $35
5. Charles’s Car Wash has average variable costs of $2 and average fixed costs of $3 when
it produces 100 units of output (car washes). The firm's total cost is
a. $100.
b. $200.
c. $300.
d. $500.
6. Smith Technologies has average variable costs of $1 and average total costs of $3 when it
produces 500 units of output. The firm's total fixed costs equal
a. $2.
b. $4.
c. $1,000.
d. $2,000.
7. Which of the following statements is not correct?
 a. Fixed costs are constant.
b. Variable costs change as output changes.
c. Average fixed costs are constant.
d. Average total costs are typically U-shaped.
8. Suppose that for a particular firm the only variable input into the production process is
labor and that output equals zero when no workers are hired. In addition, suppose that
when four units of output are produced, the total cost is $175, and the average variable
cost is $33.75. What would the average fixed cost be if ten units were produced?
a. $4
b. $10
c. $40
d. $135
9. A firm produces 300 units of output at a total cost of $1,000. If fixed costs are $100,
a. average fixed cost is $10.
b. average variable cost is $3.
c. average total cost is $4.
d. average total cost is $5.
10. Variable cost divided by quantity produced is
a. average total cost.
b. marginal cost.
c. profit.
d. None of the above is correct.
11. Variable cost divided by the change in quantity produced is
a. average variable cost.
b. marginal cost.
c. average total cost.
d. None of the above is correct.
12. Charles’s Car Wash has average variable costs of $2 and average total costs of $3 when
it produces 100 units of output (car washes). The firm's total variable cost is
a. $100.
b. $200.
c. $300.
d. $500.
13. Marginal cost is equal to
a. TC/Q.
b. ATC/Q.
c. TC/Q.
d. Q/TC.
14. The amount by which total cost rises when the firm produces one additional unit of
output is called
a. average cost.
b. marginal cost.
c. fixed cost.
d. variable cost.
Table 12-9 Teacher's Helper is a small company that has a subcontract to produce instructional
materials for disabled children in public school districts. The owner rents several small rooms in
an office building in the suburbs for $600 a month and has leased computer equipment that costs
Output Fixe Variabl Total Average Average Average Margina
(Instructional d e Costs Cost Fixed Variable Total l Cost
Modules per Costs Cost Cost Cost
Month)
0 $1,080 0 1080
1 $1,080 $ 400 $1,480 $1,080 $400 $1,480 $400
2 $1,080 $850 $1,930 $540 $425 $965 $450
3 $1,080 $1,350 $2,430 $360 $450 $810 $500
4 $1,080 $1,900 $2,980 $270 $475 $745 $550
5 $1,080 $2,500 $3,580 $216 $500 $716 $600
6 $1,080 $3,150 $4,280 $180 $525 $713.33 $700
7 $1,080 $4,100 $5,180 $154,29 $585,71 $740 $950
8 $1,080 $5,400 $6,480 $135 $675 $810 $1300
9 $1,080 $7,300 $8,380 $120 $811,11 $931,11 $1900
10 $1,080 $9,800 $10,880 $108 $980 $1,088 $2500
$480 a month.

15. Refer to Table 12-9. What is the marginal cost of creating the tenth instructional module
in a given month?
a. $900
b. $1,250
c. $2,500
d. $3,060
16. Refer to Table 12-9. What is the average variable cost for the month if 6 instructional
modules are produced?
a. $180.00
b. $533.33
c. $700.00
d. $713.33
17. Refer to Table 12-9. What is the average fixed cost for the month if 9 instructional
modules are produced?
a. $108.00
b. $120.00
c. $150.00
d. $811.11
18. Refer to Table 12-9. How many instructional modules are produced when marginal cost
is $1,300?
a. 4
b. 5
c. 7
d. 8
19. Refer to Table 12-9. One month, Teacher's Helper produced 18 instructional modules.
What was the average fixed cost for that month?
a. $60
b. $108
c. $811
d. It can't be determined from the information given.