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tT
发表于 2011-3-6 16:05 | 只看该作者

Reading 17: Output and Costs-LOS c 习题精选

2011, following, including, average, center
Session 4: Economics: Microeconomic Analysis
Reading 17: Output and Costs

LOS c: Distinguish among total cost (including both fixed cost and variable cost), marginal cost, and average cost, and explain the relations among the various cost curves.

 

 

Which of the following most accurately describes the relationship between marginal cost (MC), average variable cost (AVC), marginal product (MP), and average product (AP)?

A)
 When MP > AP, MC > AVC.
B)
 When MP = AP, MC = AVC.
C)
 When MP = AP, MC > AVC.

 

At some output level Q and corresponding labor input L, MC = AVC and MP = AP. At Q and L, AVC is at its minimum and AP is at its maximum. Hint: draw the curves.

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1215

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2#
发表于 2011-3-6 16:05 | 只看该作者

Which of the following most accurately describes the relationship between the average total cost (ATC) curve and the average variable cost (AVC) curve? The vertical distance between the ATC and AVC curves:

A)
 increases as output increases.
B)
 decreases as output increases.
C)
 increases and then decreases as output increases.

The vertical distance between the ATC curve and AVC cost curve is average fixed cost, which decreases as output increases because more output is averaged over the same cost.

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3#
发表于 2011-3-6 16:06 | 只看该作者

Which of the following statements regarding marginal costs (MC) and average variable costs (AVC) is most accurate?

A)
 MC = AVC when average total cost is at its minimum.
B)
 MC = AVC when AVC is at its minimum.
C)
 MC = Average total cost when AVC is at its minimum.

MC = AVC at minimum average variable cost. MC = ATC at minimum average total cost.

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4#
发表于 2011-3-6 16:06 | 只看该作者

Which of the following most accurately describes the shapes of the average variable cost (AVC) and average total cost (ATC) curves?

A)
 The AVC curve is U-shaped whereas the ATC curve declines initially then flattens.
B)
 The AVC and ATC curves both decrease initially, and then flatten.
C)
 The AVC and ATC curves are both U-shaped.

The AVC curve is U-shaped, declining at first due to efficiency, but eventually increasing due to diminishing returns. The AFC curve decreases as output increases, and eventually flattens out. The ATC is U-shape because it is the sum of the decreasing-to-flat AFC curve plus the U-shaped AVC curve. ATC = AFC + AVC.

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5#
发表于 2011-3-6 16:06 | 只看该作者

Which of the following most accurately describes the shape of the average fixed cost (AFC) curve? The AFC curve:

A)
 is always below the average variable cost curve.
B)
 becomes flatter as output increases.
C)
 intersects the marginal cost curve at the marginal cost curve’s minimum.

The AFC curve declines initially, but as output increases it flattens because a fixed cost is being averaged over more and more units of output.

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6#
发表于 2011-3-6 16:06 | 只看该作者

John Klement is a soybean farmer who harvests 125,000 bushels of soybeans annually. Klement’s fixed costs are $200,000 and his variable costs are $5 per bushel. Soybeans are currently priced at $5.35 per bushel. Based on his estimates, Klement sees soybean prices being relatively stable for the next two years, then increasing to $7.00 per bushel due to increased demand from Japan. What action should Klement take? Klement should:

A)
 cut his production by 50% for the next two years and then resume full production.
B)
 continue operating his business as usual.
C)
 shut down for two years and then restart his business.

Since Klement is selling soybeans, a common commodity, he is a price taker and therefore can not adjust the price. He should continue operating his business as normal as he is currently covering variable costs and part of fixed costs. In two years from now, he will be able to cover both fixed and variable costs and be able to make a substantial profit.

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7#
发表于 2011-3-6 16:06 | 只看该作者

If marginal cost is above the average cost, when you produce your next unit:

A)
 average cost will decline.
B)
 average cost will increase.
C)
 average cost will be flat.

If marginal cost is above the average cost, when you produce your next unit, average cost will increase. Because marginal cost is the cost of producing the next unit, and because this cost is above the firm's average cost per unit, the average cost per unit must increase, if only slightly. Based on the information provided in the question, there is no way to know what will happen to the marginal cost of future units produced.

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luqian55

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8#
发表于 2011-9-29 16:31 | 只看该作者
thanks a lot

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