Production and Cost

Q1 How is profit calculated?

• Revenue – Cost

• Marginal Revenue - marginal Cost

• Revenue – Marginal Cost

• Marginal Revenue - Cost

Q2 What is the optimal production plan?

• MR = ATC

• MR = AVC

• MR = MC

• MC = ATC

Q3 Economic profit differs from accounting profit by

• Variable Cost

• Opportunity Cost

• Marginal Cost

• Average Cost

Q3 Economic profit differs from accounting profit by

• Economic Profit is smaller

• Economic profit is larger

• Both are equal

• Both differ by marginal cost

Q5 Marginal product of an input factor normally

• Is zero at equilibrium

• Is less than zero

• Increases

• Decreases

Q6 Why is total labor cost often increasing over proportionally?

• People are lazy

• Working longer hours becomes harder each extra hour

• The first hour to work is the hardest

• People only work for 8 hours a day

Q7 How is Average Total Cost composed?

• ATC = MC + AVC

• ATC = AVC + AFC

• ATC = AFC - AVC

• ATC + AFC = AVC

Q8 The form of the Average Fixed Cost curve is

• Quadratic

• Linear

• Hyperbolic

• Constant

Q9 Where does the Average Total Cost have its minimum?

• Where the AVC curve intersects it

• Where profit is maximized

• Where the AFC curve intersects it

• Where the MC curve intersects it

Q10 In the long run ATC

• Is larger

• Is smaller

• Has a larger sector of constant return to scale

• Is constant