Q: If a firm's total cost increases from $$500 to 550$ when output increases from 50$ to 55$ units, what is the marginal cost (MC) of producing each additional unit?

$$MC = \\frac{550 - 500}{55 - 50} = \\frac{50}{5} = 10$$

Question 1

Suppose the United States produces wheat and cars. If the U.S. can produce more wheat per worker than any other country, but another country can produce wheat at a lower opportunity cost, which statement is correct?

Accepted Answer

The U.S. has an absolute advantage in wheat but not a comparative advantage.

Question 2

Country A can produce 10 tons of steel or 20 tons of corn with the same resources. Country B can produce 8 tons of steel or 16 tons of corn. What is Country A's opportunity cost of producing 1 ton of steel?

Accepted Answer

$$2$$ \text{ tons of corn}$

Question 3

Which of the following is an example of a U.S. import?

Accepted Answer

A U.S. consumer buys a car manufactured in Japan.

Question 4

If the world price of a good is lower than the domestic price and a country allows free trade, what will happen to domestic consumer surplus?

Accepted Answer

It will increase because consumers can buy at a lower price.

Question 5

A country imposes a quota on imported shoes. Which of the following is a likely effect?

Accepted Answer

Domestic shoe prices rise, benefiting domestic producers.

Question 6

Which of the following best describes 'economies of scale'?

Accepted Answer

Long-run average cost decreases as output increases.

Question 7

A bakery increases its output from 100 to 120 loaves per day by hiring one more worker. What is the marginal product of labor (MPL) for this worker?

Accepted Answer

$$20$$ \text{ loaves}$

Question 8

If a firm's total cost increases from $$500 to 550$ when output increases from 50$ to 55$ units, what is the marginal cost (MC) of producing each additional unit?

Accepted Answer

$$MC = \frac{550 - 500}{55 - 50} = \frac{50}{5} = 10$$

Question 9

Which of the following is an example of positive technological change?

Accepted Answer

A factory reorganizes its assembly line to produce more cars with the same number of workers.

Question 10

Suppose a firm has total fixed costs of $$200$$ and produces $$50$$ units. What is the average fixed cost (AFC)?

Accepted Answer

$$AFC = \frac{200}{50} = 4$$

Question 11

If the average total cost (ATC) is $$15$$ and the average variable cost (AVC) is $$10 at a $$certain output, what is the average fixed cost (AFC)?

Accepted Answer

$$AFC = ATC - AVC = 15 - 10 = 5$$

Question 12

Which of the following best explains why countries do not fully specialize in the production of goods for which they have a comparative advantage?

Accepted Answer

Increasing opportunity costs and differences in consumer preferences.

Question 13

A firm’s marginal product of labor (MPL) begins to decrease as more workers are hired. What is this phenomenon called?

Accepted Answer

Diminishing marginal returns.

Question 14

If a country moves from autarky to free trade and the world price is below the domestic equilibrium price, what will happen to domestic production and imports?

Accepted Answer

Domestic production decreases and imports increase.

Question 15

Suppose a firm’s total cost (TC) is $$1,000$$ when producing $$100$$ units. What is the average total cost (ATC)?

Accepted Answer

$$ATC = \frac{1,000}{100} = 10$$

Question 16

Which of the following is NOT a source of comparative advantage?

Accepted Answer

High tariffs on imports.

Question 17

If a firm’s marginal product of labor (MPL) increases, what happens to marginal cost (MC)?

Accepted Answer

Marginal cost decreases.

Question 18

A country imposes a tariff on imported steel. Which of the following is a likely result?

Accepted Answer

Domestic producer surplus increases, but consumer surplus decreases.

Question 19

Which of the following best describes 'constant returns to scale'?

Accepted Answer

Long-run average cost remains unchanged as output increases.

Question 20

A firm’s average variable cost (AVC) is $$8$$, average fixed cost (AFC) is $$2$$, and output is $$100$$ units. What is the total cost (TC)?

Accepted Answer

$$TC = (AVC + AFC) \times Q = (8 + 2) \times 100 = 1,000$$

Comparative Advantage, International Trade, and Production Costs: Study Guide for ECON 201

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