Lesson test: Costs

1.[3p]
A firm has $C (q) = 500 + 5 q + 0.05 q^{2}$ . At what output is average total cost at its minimum?

CorrectNot quite: 100

2.[2p]
For the same firm, what is marginal cost at $q = 150$ ?

CorrectNot quite: 20

3.[3p]
Why does marginal cost cut average total cost at the minimum of average total cost?

An average falls while the marginal is below it and rises while it is above, so it is stationary where they are equal

Correct

Fixed costs vanish at that output

The answer is: An average falls while the marginal is below it and rises while it is above, so it is stationary where they are equal

It is a drawing convention rather than a result

The answer is: An average falls while the marginal is below it and rises while it is above, so it is stationary where they are equal

Marginal cost is always U-shaped and its minimum coincides with that of the average

The answer is: An average falls while the marginal is below it and rises while it is above, so it is stationary where they are equal

4.[3p]
A shop has revenue of £180,000, pays £90,000 for stock and £30,000 for staff. The owner could earn £45,000 elsewhere and the owned premises would rent for £20,000. What is its economic profit?

Minus £5,000

Correct

£60,000

The answer is: Minus £5,000

£15,000

The answer is: Minus £5,000

£40,000

The answer is: Minus £5,000

5.[1p]
A cost that is fixed in the short run is necessarily sunk.

True

The answer is: False

False

Correct

6.[2p]
A firm's only variable input is labour at £600 a week per worker, and the marginal product of the tenth worker is 300 units. What is marginal cost, in pounds per unit?

CorrectNot quite: 2

7.[3p]
Which statements about the cost curves are correct?

Select all that apply

It is the lower envelope of the short-run average cost curves

Correct

It never lies above short-run average cost at the same output

Correct

Marginal cost contains no fixed component, since fixed cost differentiates to zero

Correct

It touches each short-run curve at that plant's own minimum, whatever its shape

The answer is: It is the lower envelope of the short-run average cost curves, It never lies above short-run average cost at the same output, Marginal cost contains no fixed component, since fixed cost differentiates to zero

8.[2p]
What did Wright's 1936 study of airframe production establish?

Cost per unit fell about 20 per cent with each doubling of cumulative output

Correct

Average cost fell about 20 per cent with each doubling of annual output

The answer is: Cost per unit fell about 20 per cent with each doubling of cumulative output

Airframe production showed constant returns to scale

The answer is: Cost per unit fell about 20 per cent with each doubling of cumulative output

Learning effects disappear once minimum efficient scale is reached

The answer is: Cost per unit fell about 20 per cent with each doubling of cumulative output

9.[3p]
A firm chooses between plants costing $C_{1} = 500 + 0.05 q^{2}$ and $C_{2} = 2000 + 0.0125 q^{2}$ . At what output are the two equally expensive?

CorrectNot quite: 200

1.[3p] A firm has C(q)=500+5q+0.05q2. At what output is average total cost at its minimum?

2.[2p] For the same firm, what is marginal cost at q=150?

3.[3p] Why does marginal cost cut average total cost at the minimum of average total cost?

4.[3p] A shop has revenue of £180,000, pays £90,000 for stock and £30,000 for staff. The owner could earn £45,000 elsewhere and the owned premises would rent for £20,000. What is its economic profit?

5.[1p] A cost that is fixed in the short run is necessarily sunk.

6.[2p] A firm's only variable input is labour at £600 a week per worker, and the marginal product of the tenth worker is 300 units. What is marginal cost, in pounds per unit?

7.[3p] Which statements about the cost curves are correct?

8.[2p] What did Wright's 1936 study of airframe production establish?

9.[3p] A firm chooses between plants costing C1=500+0.05q2 and C2=2000+0.0125q2. At what output are the two equally expensive?

1.[3p]
A firm has $C (q) = 500 + 5 q + 0.05 q^{2}$ . At what output is average total cost at its minimum?

2.[2p]
For the same firm, what is marginal cost at $q = 150$ ?

3.[3p]
Why does marginal cost cut average total cost at the minimum of average total cost?

4.[3p]
A shop has revenue of £180,000, pays £90,000 for stock and £30,000 for staff. The owner could earn £45,000 elsewhere and the owned premises would rent for £20,000. What is its economic profit?

5.[1p]
A cost that is fixed in the short run is necessarily sunk.

6.[2p]
A firm's only variable input is labour at £600 a week per worker, and the marginal product of the tenth worker is 300 units. What is marginal cost, in pounds per unit?

7.[3p]
Which statements about the cost curves are correct?

8.[2p]
What did Wright's 1936 study of airframe production establish?

9.[3p]
A firm chooses between plants costing $C_{1} = 500 + 0.05 q^{2}$ and $C_{2} = 2000 + 0.0125 q^{2}$ . At what output are the two equally expensive?