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AP Micro
Week 6 Practice Quiz: Q – T, #25 – 29
Questions 1-2 are based on the table below, which
gives cost information for a perfectly competitive firm.
Average
Average
Fixed
Variable
Marginal
Quantity Costs
Costs
Costs
0
1
$100.00
$55.00
$55.00
2
$50.00
$45.00
$35.00
3
$33.33
$50.00
$60.00
4
$25.00
$55.00
$70.00
5
$20.00
$60.00
$80.00
6
$16.67
$65.00
$90.00
1. The average total cost to the firm of producing 2
units of output is
A. $35.00
B. $85.00
C. $95.00
D. $100.00
E. $130.00
2. If the product price is $85, how many units of
output must the firm produce in order to maximize
profits?
A. 0
B. 3
C. 4
D. 5
E. 6
3. Which of the following is true about a firm’s
average variable cost?
A. It will rise if marginal cost is less than average
variable cost.
B. It will never equal the firm’s marginal cost.
C. It will decline when the firm’s marginal
product declines.
D. It will be negative if marginal revenue
declines.
E. It will equal average total cost when fixed
costs are zero.
4. Given the cost and demand schedules depicted
above, if the firm increased output from q1 to q2, it
would
A. Earn a normal profit
B. Experience an increase in profits
C. Experience a decline in profits
D. Increase revenues but not costs
E. Increase costs but not revenues
5. The opportunity cost of owning a business is equal
to which of the following?
I.
The economic profits earned in the
business
II. The accounting profits earned in the business
III. The profits that could be earned in another
business using the same amount of resources
A. I only
B. II only
C. III only
D. I and III only
E. I, II, and III
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AP Micro
Number of
Sandwiches
Number of Workers
Produced per Day
1
80
2
150
3
200
4
240
5
250
6
230
7
200
6. Given the production information in the table
above, how many workers would be employed if
the wage rate were $20.00 per day and if
sandwiches sold for $0.50?
A. 1
B. 2
C. 4
D. 5
E. 7
7. In the short run, which of the following is true of a
firm’s average total cost of production?
A. It is equal to marginal cost plus average variable
cost.
B. It is equal to marginal cost plus average fixed
cost.
C. It is equal to average fixed cost plus average
variable cost.
D. It always increases when a firm increases
production.
E. It is zero if the firm shuts down.
Week 6 Practice Quiz: Q – T, #25 – 29
Number of Workers
0
1
2
3
4
5
Bushels of Apples
Picked
0
4
9
15
20
24
8. The table above shows the short-run production
function for picking apples. Based on the
production data, which of the following statements
about the marginal product of the fifth worker is
true?
A. It is the maximum that can be attained.
B. It is greater than the marginal product of the
first worker due to increasing returns.
C. It is greater than the combined marginal
products of all the other workers.
D. It is less than the marginal product of the third
worker due to diminishing returns.
E. It is rising due to increasing marginal returns.
9. If a firm’s average total cost decreases as the firm
increases its output, the firm’s marginal cost must
be
A. greater than the average variable cost
B. less than the average fixed cost
C. less than the average total cost
D. decreasing
E. negative
10. When total utility is at its maximum, marginal
utility is
A. increasing
B. negative
C. equal to zero
D. at a maximum
E. at minimum
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AP Micro
Week 6 Practice Quiz: Q – T, #25 – 29
13. Marginal cost is defined as the
A. change in total cost resulting from producing an
additional unit of output
B. change in total cost resulting from using an
additional unit of input
C. difference between total cost and total variable
cost
D. difference between total variable cost and total
fixed cost
E. difference between average total cost and
average variable cost divided by output
11. The graph above shows the cost curves for a
competitive firm that produces 20 units of output.
What are the total cost and the total fixed cost of
producing 20 units of output?
Total Cost
Total Fixed Cost
A. $10
$0
B. $120
$100
C. $120
$20
D. $200
$100
E. $200
$20
12. Which of the following best describes the
relationship between the average total cost curve
and the marginal cost curve in the short run?
A. If the average total cost curve is rising, the
marginal cost curve is above the average total
cost curve.
B. If the average total cost curve is rising, the
marginal cost curve is below the average total
cost curve.
C. If the average total cost curve is above the
marginal cost curve, the marginal cost curve is
rising.
D. If the average total cost curve is below the
marginal cost curve, the marginal cost curve is
falling.
E. If the average and marginal cost curves
intersect, the marginal cost curve is at a
minimum.
14. Which of the following best explains why the
short-run average total cost curve is U-shaped?
(A) Spreading total fixed costs over a larger
output, and constant returns
(B) Spreading total fixed costs over a larger output,
and eventually diminishing returns
(C) Increasing total fixed costs and increasing
returns
(D) Increasing average variable costs and
decreasing returns
(E) Decreasing average variable costs and
increasing returns
15. When marginal product exceeds average product,
which of the following must be true?
(A) Average product is increasing.
(B) Average product is decreasing.
(C) Marginal product is increasing.
(D) Total product is decreasing.
(E) Total product is at its maximum.
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AP Micro
16. True statements about the theory of the firm in the
short run and long run include which of the
following?
I. All input costs are fixed in the short run.
II. All input costs are variable in the long run.
III. At least one input price is fixed in the short
run.
(A) I only
(B) II only
(C) III only
(D) I and II only
(E) II and III only
Week 6 Practice Quiz: Q – T, #25 – 29
19. Which of the following statements about a firm's
production function are true?
I. When total product is at its maximum,
marginal product is zero.
II. When total product rises, marginal product is
rising.
III. When marginal product is greater than average
product, average product is rising.
IV. When marginal product is less than average
product, average product is falling.
(A) I and II only
(B) II and III only
(C) II and IV only
(D) I, III and IV only
(E) I, II, III and IV
20. If the average variable cost of producing five units
of a product is $100 and the average variable cost
of producing six units is $125, then the marginal
cost of producing the sixth unit is
(A) $125
(B) $2
(C) $250
(D) $350
(E) $750
17. On the graph above, the onset of diminishing
marginal returns occurs beyond
(A) Point A
(B) Point B
(C) Point C
(D) Point D
(E) Point E
18. Average fixed cost is shown as the distance
between
(A) marginal cost and average variable cost.
(B) marginal cost and average total cost.
(C) average variable cost and average total cost.
(D) average total cost and the horizontal axis.
(E) marginal cost and the horizontal axis.
21. The shapes of the marginal product curve and the
total product curve are best explained by the
(A) law of demand.
(B) law of supply
(C) principle of diminishing marginal utility
(D) least-cost rule
(E) law of diminishing returns
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AP Micro
Use the information in the table below to answer
questions 22 and 23.
Units of Labor
Output
0
0
1
8
2
18
3
26
4
32
5
36
6
38
7
36
22. The marginal product of the fourth unit of labor is
(A) 84
(B) 32
(C) 8
(D) 6
(E) 4
23. The average product of the second unit of labor is
(A) 26
(B) 18
(C) 10
(D) 9
(E) 8
Week 6 Practice Quiz: Q – T, #25 – 29
26. Referring to the graph above, which shows the cost
curves for a perfectly competitive firm, what is the
fixed cost of producing an output of 100?
(A) $2
(B) $10
(C) $12
(D) $120
(E) $200
27. When a firm is earning an accounting profit, which
of the following is true?
(A) P = ATC
(B) TR > TC
(C) TR > total explicit costs
(D) TR > total implicit costs
(E) P > ATC
24. If average cost is decreasing, marginal cost must
be
(A) increasing
(B) decreasing
(C) above average cost
(D) below average cost
(E) equal to average cost
25. If a firm is earning 0 economic profit, what must
be true of the firm's accounting profit? It is
(A) zero.
(B) negative.
(C) positive.
(D) increasing.
(E) less than economic profit.
Using the above graph, match the letter for each curve
with the corresponding label below:
28. FC (Fixed Cost)
29. MC (Marginal Cost)
30. AVC (Average Variable Cost)
31. ATC (Average Total Cost)