Tackle the Test: Multiple-Choice Questions

1. Question

   When a firm is producing zero output, total cost equals

   A.

   zero.

   B.

   variable cost.

   C.

   fixed cost.

   D.

   average total cost.

   E.

   marginal cost.

   When a firm is producing zero output, total cost equals

2. Question

   Which of the following statements is true?

   
   

   
   

   1. Marginal cost is the change in total cost generated by one additional unit of output.

      
      
   
   

   2. Marginal cost is the change in variable cost generated by one additional unit of output.

      
      
   
   

   3. The marginal cost curve must cross the minimum of the average total cost curve.

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following statements is true?

3. Question

   Which of the following is correct?

   A.

   AVC is the change in total cost generated by one additional unit of output.

   B.

   MC = TC/Q

   C.

   The average cost curve crosses at the minimum of the marginal cost curve.

   D.

   The AFC curve slopes upward.

   E.

   AVC = ATC – AFC

   Which of the following is correct?

4. Question

   The slope of the total cost curve equals

   A.

   variable cost.

   B.

   average variable cost.

   C.

   average total cost.

   D.

   average fixed cost.

   E.

   marginal cost.

   The slope of the total cost curve equals

5. Question

   
   

   
   

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   Quantity	Variable cost	Total cost
   0	$0	$40
   1	20	60
   2	50	90
   3	90	130
   4	140	180
   5	200	240

   
   

   
   

   On the basis of the data in the table above, what is the marginal cost of the third unit of output?

   A.

   40

   B.

   50

   C.

   60

   D.

   90

   E.

   130