Production and Costs Sample Questions on Short-Term Costs

1. Production and CostsSample Questions on Short-Term Costs AP Economics Mr. Bordelon

2. For Heidi, the marginal cost of producing one additional photograph equals the change in _____ divided by the change in the _____. • total cost; number of photographs • marginal cost; number of photographs • total cost; marginal product of photographs • average cost; number of photographs • average cost; price of photographs

3. For Heidi, the marginal cost of producing one additional photograph equals the change in _____ divided by the change in the _____. • total cost; number of photographs • marginal cost; number of photographs • total cost; marginal product of photographs • average cost; number of photographs • average cost; price of photographs

4. When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is: • $40. • $19. • $4,000. • $24,000. • $60.

5. When a cherry orchard in Oregon adds an additional worker, the total cost of production increases by $24,000. Adding the worker increases total cherry output by 600 pounds. Therefore, the marginal cost of the last pound of cherries produced is: • $40. • $19. • $4,000. • $24,000. • $60.

6. When a firm produces a small amount of output, the spreading effect: • is stronger than the diminishing returns effect. • is weaker than the diminishing returns effect. • and diminishing returns effect are equal. • will be zero. • contributes to a vertical short-run average total cost curve.

7. When a firm produces a small amount of output, the spreading effect: • is stronger than the diminishing returns effect. • is weaker than the diminishing returns effect. • and diminishing returns effect are equal. • will be zero. • contributes to a vertical short-run average total cost curve.

8. The vertical difference between curve B and curve C at any quantity of output is: • marginal cost. • fixed cost. • average fixed cost. • average variable cost. • profit.

9. The vertical difference between curve B and curve C at any quantity of output is: • marginal cost. • fixed cost. • average fixed cost. • average variable cost. • profit.

10. When marginal cost is below average variable cost, average variable cost must be: • at its minimum. • at its maximum. • falling. • rising. • equal to zero.

11. When marginal cost is below average variable cost, average variable cost must be: • at its minimum. • at its maximum. • falling. • rising. • equal to zero.

12. Suppose Bonnie spends $300 per month to rent the building, $100 per month to pay for insurance for her business, and $100 per worker per month for every worker she hires. Given this information, Bonnie’s fixed costs equal: • $400. • $300. • $500. • $100. • $600.

13. Suppose Bonnie spends $300 per month to rent the building, $100 per month to pay for insurance for her business, and $100 per worker per month for every worker she hires. Given this information, Bonnie’s fixed costs equal: • $400. • $300. • $500. • $100. • $600.

14. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. Lindsey’s variable cost of production: • stay constant. • are equal to 10. • equal zero when she produces zero bushels of produce. • fall as soon as she starts producing. • equal $100 when 3 workers are employed.

15. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. Lindsey’s variable cost of production: • stay constant. • are equal to 10. • equal zero when she produces zero bushels of produce. • fall as soon as she starts producing. • equal $100 when 3 workers are employed.

16. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. When she hires 4 workers, Lindsey’s variable cost of production is: • $50. • $20. • $200. • $250. • $170.

17. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. When she hires 4 workers, Lindsey’s variable cost of production is: • $50. • $20. • $200. • $250. • $170.

18. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. When Lindsay decides to produce 50 units of produce she finds her total cost is equal to: • $150. • $50. • $200. • $350. • $250.

19. The table provides information about the production function for Lindsay’s Farm, which uses labor and land to produce its produce. The price of labor is $50 per worker per week and the price of land is $20 per acre. When Lindsay decides to produce 50 units of produce she finds her total cost is equal to: • $150. • $50. • $200. • $350. • $250.