CLEP Microeconomics chapter practice4 questions

16 Short-Run Costs

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 4

A firm has total fixed cost of 120 and total variable cost of 280 when producing 20 units. Average total cost is

Total cost is 120+280=400, and ATC=400/20=20$.
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C. $20

Total cost is 120+280=400, and ATC=400/20=20$.

Question 2

Question 2 of 4

A cost schedule lists 500 at 40 units and 545 at 45 units. Which entry belongs in the marginal-cost column for this five-unit interval?

Cost increases by 45 while output increases by five units, so marginal cost is 9 per unit.
Show answer and explanation

A. $9 per unit

Cost increases by 45 while output increases by five units, so marginal cost is 9 per unit.

Question 3

Question 3 of 4

As output rises, average fixed cost will

The same fixed cost is divided across more units, causing average fixed cost to decline continuously.
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E. continually fall

The same fixed cost is divided across more units, causing average fixed cost to decline continuously.

Question 4

Question 4 of 4

Why does marginal cost normally rise after some output level in the short run?

When marginal product falls, each additional unit of output requires more variable input, raising marginal cost.
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B. Diminishing marginal product eventually sets in.

When marginal product falls, each additional unit of output requires more variable input, raising marginal cost.

Quiz complete