## ECO 2301

Last update by kendallholekamp on 11/30/2012
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# The range in which there is diminishing marginal productivity starts at the point where: A. marginal product reaches its maximum. B. average product reaches its maximum. C. total product reaches its maximum. D. marginal product begins to decrease at an increasing rate.

A

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The change in total cost resulting from a one-unit increase in production is called:
A. average fixed cost.
B. average variable cost.
C. marginal cost.
D. average opportunity cost.
E. marginal revenue.
C
If Average variable cost (AVC) is subtracted from the Average total cost (ATC), the result is:
A. economic profit.
B. accounting profit.
C. average fixed cost.
D. marginal cost.
E. none of the above.

C

Average variable cost:
A. first decreases then increases as output expands.
B. remains unchanged as output expands.
C. always increases as output increases.
D. always decreases as output expands.
A
Average fixed cost is:
A. total cost divided by the number of units produced over a given period.
B. total fixed cost divided by the number of units produced over a given period.
C. the price of a fixed factor of production.
D. fixed cost divided by the number of units of a fixed input employed over a given period.
B
If average total cost equals \$15 at 20 units of output and average total cost equals \$15 at 21 units of output, then the marginal cost of the 21st unit is ____.
A. zero
B. \$15
C. \$20
D. \$21
B
If total cost increases as output increases, then:
A. marginal cost must be equal to zero.
B. marginal cost must be positive.
C. marginal cost must be negative.
D. marginal cost must be increasing.
E. marginal cost must be decreasing
B
A firm replaces a machine by hiring 3 hourly production workers instead.
A. Both its fixed and variable costs will fall.
B. Both its fixed and variable costs will rise.
C. Its fixed costs will rise and its variable costs will fall.
D. Its fixed costs will fall and its variable costs will rise.
D
Average fixed cost:
A. remains unchanged as output expands.
B. is defined as the change in total cost divided by the change in output.
C. always increases as output increases.
D. always decreases as output expands.
D
The vertical distance between the average total cost curve and the average variable cost curve equals:
A. marginal cost.
B. average fixed cost.
C. total fixed cost.
D. total variable cost.
E. marginal product.
B
As quantity increases, which of the following must be true if average total costs are rising?
A. Marginal cost must be greater than average total cost.
B. Marginal cost must be less than average total cost.
C. Average fixed cost must be increasing.
D. Average fixed cost must be less than average variable cost.
A
When economies of scale exist, an increase in the level of output will lead to:
A. a decrease in cost per unit.
B. an increase in cost per unit.
C. a decrease in total cost.
D. both a. and c. above
A
ECO 2301
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