Timedora
Free Practice Quiz Question List

4 Cost Curves and Scale Online Quiz Questions

Use this free practice quiz with 20 questions to review 4 Cost Curves and Scale, test your knowledge, and prepare for your next test or exam.

20 questions
01
Written response
1 point

A firm pays $900 in fixed costs and produces 300 units. What is its average fixed cost? Enter the value in dollars per unit.

02
Fill in the blank
1 point

Complete the identity: Average total cost equals .

03
True or false
1 point

True or false: If a bakery's rent is fixed, its total cost stays the same when it increases the number of loaves it bakes.

  1. A

    True

  2. B

    False

04
Choose one
1 point

A firm's marginal cost is below its current average variable cost. What happens to average variable cost as the firm produces additional output?

  1. A

    The average variable cost falls.

  2. B

    The average variable cost rises.

  3. C

    The average variable cost cannot change.

05
Written response
1 point

A firm's total cost rises from $500 at 100 units to $560 at 110 units. What is its marginal cost over this interval? Enter the value in dollars per unit.

06
Fill in the blank
1 point

When long-run average cost falls as output rises, the firm experiences .

07
Choose all
1 point

Which factors could contribute to diseconomies of scale as a firm becomes very large? Select all that apply.

  1. A

    Coordination difficulties

  2. B

    More specialized equipment

  3. C

    Communication delays

  4. D

    Additional layers of management

08
True or false
1 point

True or false: A firm can face rising short-run marginal cost while still experiencing long-run economies of scale.

  1. A

    True

  2. B

    False

09
Choose one
1 point

What does the minimum region of a firm's long-run average cost curve identify?

  1. A

    The output range where marginal cost is highest

  2. B

    The output level where fixed cost is zero

  3. C

    The scale or range of scales where average cost is lowest

10
Choose all
1 point

Which statements correctly describe long-run average cost and plant choices? Select all that apply.

  1. A

    LRAC gives the lowest average cost attainable for each output when the firm can choose its scale and inputs.

  2. B

    In the standard textbook diagram, LRAC forms the lower boundary of a family of short-run average cost curves.

  3. C

    A firm committed to one plant in the short run operates on that plant's short-run curve, even if another plant would be cheaper at its current output.

  4. D

    LRAC is the average cost of only the plant the firm currently uses.

11
Open ended
1 point

Explain how a firm can have rising short-run marginal cost and falling long-run average cost at the same time. In your answer, describe the relevant input adjustment in each time frame.

12
Choose one
1 point

Which statement correctly describes the gap between average total cost and average variable cost as output increases?

  1. A

    The gap is AFC, and it narrows as output grows.

  2. B

    The gap is MC, and it widens as output grows.

  3. C

    The gap is AVC, and it stays constant as output grows.

13
Choose one
1 point

A firm has fixed costs of 300300 dollars and variable costs of 500500 dollars at its current output. What is its total cost?

  1. A

    300 dollars

  2. B

    800 dollars

  3. C

    500 dollars

  4. D

    1,500 dollars

14
Choose one
1 point

A bakery can vary its flour and labor use, but its building size cannot be changed during the period under consideration. Which description fits this period?

  1. A

    The firm cannot change its output.

  2. B

    All of the firm's inputs are fixed.

  3. C

    At least one of the firm's inputs is fixed.

  4. D

    The firm can change every input, including factory size.

15
Choose one
1 point

What does the long-run average cost (LRAC) curve show for a firm that can adjust all its inputs?

  1. A

    The lowest average cost attainable at each output when the firm can adjust its scale and inputs.

  2. B

    The additional cost of producing one more unit with a fixed plant.

  3. C

    The average variable cost for a firm that must keep all inputs fixed.

  4. D

    The total cost of producing the firm's maximum possible output.

16
Choose one
1 point

A manufacturer finds that its LRAC falls from 1818 dollars per unit at 400400 units to 1515 dollars per unit at 700700 units. What does this indicate over that range?

  1. A

    Diseconomies of scale

  2. B

    Economies of scale

  3. C

    Constant returns to scale

  4. D

    Diminishing marginal product

17
Choose one
1 point

At a given output, a firm's ATC is 1111 dollars per unit and its AVC is 77 dollars per unit. What does the 44-dollar-per-unit gap represent?

  1. A

    Marginal cost

  2. B

    Variable cost

  3. C

    Average fixed cost

  4. D

    Total fixed cost

18
True or false
1 point

A firm can face rising short-run marginal cost while still experiencing long-run economies of scale as it adopts a larger, more efficient plant.

  1. A

    True

  2. B

    False

19
Written response
1 point

A firm's total cost rises from 740740 dollars for 8080 units to 800800 dollars for 9090 units. What is the marginal cost of the additional output, in dollars per unit?

20
Written response
1 point

As a firm expands, coordination difficulties make its LRAC rise. What scale concept describes this change?