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Free Practice Quiz Question List

3 Production and Cost Online Quiz Questions

Use this free practice quiz with 20 questions to review 3 Production and Cost, test your knowledge, and prepare for your next test or exam.

20 questions
01
True or false
1 point

A firm has a factory lease that is fixed in the short run. The firm still incurs this cost when it produces zero units.

  1. A

    True

  2. B

    False

02
Choose one
1 point

A firm's fixed cost is $40 and its variable cost is $60 at a particular output level. What is its total cost at that output level?

  1. A

    $20

  2. B

    $100

  3. C

    $120

  4. D

    $2,400

03
Fill in the blank
1 point

Average-cost measures at zero output are undefined because calculating them requires division by .

04
Choose one
1 point

A firm has positive fixed cost and produces a positive quantity. Which statement correctly compares its average total cost and average variable cost?

  1. A

    ATC equals AVC because fixed cost does not vary with output.

  2. B

    ATC is above AVC because AFC is positive.

  3. C

    ATC is below AVC because AFC is spread across units.

  4. D

    ATC and AVC cannot be compared without knowing marginal cost.

05
True or false
1 point

When labor is the only variable input and its wage is constant, a higher marginal product of labor tends to lower marginal cost. True or false?

  1. A

    True

  2. B

    False

06
Fill in the blank
1 point

With a constant wage and labor as the only variable input, marginal cost is inversely related to labor's .

07
Choose all
1 point

Which statements correctly describe a total-cost curve? Select all correct answers.

  1. A

    Its vertical intercept is determined by fixed cost.

  2. B

    Its slope between two output levels represents marginal cost.

  3. C

    Variable cost makes total cost rise as production expands.

  4. D

    Its vertical intercept is always zero.

08
Choose one
1 point

A firm's production function stays the same, but the wage it pays rises. Which statement best describes a possible effect?

  1. A

    A cost schedule cannot change unless the production function changes.

  2. B

    A cost schedule can change when an input price changes, even if the production function is unchanged.

  3. C

    Input prices affect output but never affect costs.

  4. D

    Only fixed-input prices can affect a firm's cost schedule.

09
True or false
1 point

Average variable cost and average total cost must be U-shaped for every production technology and output range.

  1. A

    True

  2. B

    False

10
Open ended
1 point

Explain how a firm can use its production information and input prices to derive a cost schedule. Include how fixed and variable inputs contribute to costs and explain how costs could change even if the production function does not.

11
Choose one
1 point

A shop pays the same factory lease whether it produces nothing or operates at full capacity. How should the lease payment be classified in the short run?

  1. A

    Variable cost, because the shop pays it during the production period.

  2. B

    Fixed cost, because it pays for a fixed input and does not change with output in the short run.

  3. C

    Marginal cost, because it is the cost of producing one additional unit.

  4. D

    Average fixed cost, because it is stated as a cost per unit of output.

12
Choose one
1 point

A shop has a fixed equipment cost of $60 and a variable cost of $80 at a particular output level. What is its total cost at that output?

  1. A

    $80

  2. B

    $120

  3. C

    $140

  4. D

    $200

13
Choose one
1 point

A firm uses labor as its only variable input, and the wage stays constant. If labor's marginal product increases, what happens to marginal cost over that interval?

  1. A

    Marginal cost falls because each additional unit of labor produces more output for the same wage.

  2. B

    Marginal cost rises because producing more output always requires a higher wage.

  3. C

    Marginal cost stays constant because fixed cost is unchanged.

  4. D

    Marginal cost becomes zero because marginal product has increased.

14
Choose one
1 point

At a firm's current output, marginal cost is below average variable cost. What does this imply about average variable cost at that point?

  1. A

    AVC must be rising.

  2. B

    AVC must be at its maximum.

  3. C

    AVC must be unchanged.

  4. D

    AVC is falling.

15
Choose one
1 point

On a graph with output on the horizontal axis and total cost on the vertical axis, what cost measure does the slope of the total-cost curve between two output levels represent?

  1. A

    Average fixed cost

  2. B

    Marginal cost

  3. C

    Total fixed cost

  4. D

    Average total cost

16
Written response
1 point

At an output of 42 units, a shop has total cost of $120. What is its average total cost? Give your answer in dollars per unit, rounded to the nearest cent; answers within $0.005 per unit of the rounded value are accepted.

17
Written response
1 point

A shop produces 56 units with four workers and 66 units with five workers. What is the fifth worker's marginal product, in additional output units?

18
Choose all
1 point

A firm is checking the units on its cost report. Select all statements that correctly identify the units of the measure.

  1. A

    Total cost is measured in dollars.

  2. B

    Average fixed cost is measured in dollars per unit of output.

  3. C

    Marginal cost is measured in dollars per unit of output.

  4. D

    Average total cost is measured in total dollars, not dollars per unit.

  5. E

    Variable cost is measured in dollars per unit of output.

19
Written response
1 point

A shop has a fixed cost of 6060 dollars and produces 2424 units. What is its average fixed cost?

20
Written response
1 point

Are average variable cost and average total cost guaranteed to be U-shaped for every production technology and output range?