BAIB1003 Week 3 Seminar 2 Quiz 23/24

Farmer McDonald gives banjo lessons for $20 per hour. One day, he spends 10 hours planting $100 worth of seeds on his farm. What total cost has he incurred?

• $100

• $200

• $300

• $400

Xavier opens up a lemonade stand for two hours. He spends $10 for ingredients and sells $60 worth of lemonade. In the same two hours, he could have mowed his neighbour’s lawn for $40. Xavier earns an accounting profit of _________ and an economic profit of _________.

• $50; $10

• $90; $50

• $10; $50

• $50; $90

Farmer Greene faces diminishing marginal product. If she plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 3 bushels of wheat. If she plants 2 bags, she gets 5 bushels. If she plants 3 bags, she gets

• 6 bushels.

• 7 bushels.

• 8 bushels.

• 9 bushels.

Diminishing marginal product explains why, as a firm’s output increases,

• 1. the production function and total-cost curve both

     get steeper.

• 1. the production function and total-cost curve both

     get flatter.

• 1. the production function gets steeper, while the

     total-cost curve gets flatter.

• 1. the production function gets flatter, while the

     total-cost curve gets steeper.

5. A firm is producing 1,000 units at a total cost of $5,000. When it increases production to 1,001 units, its total cost rises to $5,008. For this firm,

• 5. marginal cost is $5, and average variable cost is $8.

• 5. marginal cost is $8, and average variable cost is $5.

• 5. marginal cost is $5, and average total cost is $8.

• 5. marginal cost is $8, and average total cost is $5.

5. A firm is producing 20 units with an average total cost of $25 and a marginal cost of $15. if it increases production to 21 units, which of the following must occur?

• 5. Marginal cost will decrease.

• 5. Marginal cost will increase.

• 5. Average total cost will decrease.

• 5. Average total cost will increase.

the government imposes a $1,000 per year license fee on all pizza restaurants. As a result, which cost curves shift?

• average total cost and marginal cost

• average total cost and average fixed cost

• average variable cost and marginal cost

• average variable cost and average fixed cost

If a higher level of production allows workers to specialise in particular tasks, a firm will likely exhibit _________ of scale and _________ average total cost.

• economies; falling

• economies; rising

• diseconomies; falling

• diseconomies; rising

If Boeing produces 9 jets per month, its long-run total cost is $9 million per month. If it produces 10 jets per month, its long-run total cost is $11 million per month. Boeing exhibits

• rising marginal cost.

• falling marginal cost.

• economies of scale.

• diseconomies of scale.

A company produces gadgets, and its total cost function is given by TC=1000+5Q+0.1Q^2, where TC is the total cost and Q is the quantity of gadgets produced. What is the firm's average variable cost when producing 50 gadgets?

• $50

• $20

• $10

• $5