Question 1

Which of the following best describes the relationship between Average Total Cost (ATC), Average Variable Cost (AVC), and Average Fixed Cost (AFC)?

Accepted Answer

$$ATC = AVC + AFC$$

Question 2

If the marginal cost curve crosses the average total cost curve at $$Q = 80$$, what does this point represent?

Accepted Answer

The minimum point of the average total cost curve

Question 3

Suppose a firm's total fixed cost is $$100$$ and its average total cost at a quantity of $$10$$ units is $$50. $$What is the total variable cost at this output level?

Accepted Answer

$$400$$

Question 4

As output increases, what happens to the distance between the ATC and AVC curves?

Accepted Answer

The distance gets smaller and smaller

Question 5

If marginal cost is below average total cost, what will happen to average total cost as output increases?

Accepted Answer

Average total cost will decrease

Question 6

At a quantity of $$100$$, the average fixed cost (AFC) is $$2. $$What is the total fixed cost (TFC)?

Accepted Answer

$$200$$

Question 7

Which cost curve is always downward sloping as output increases?

Accepted Answer

Average Fixed Cost (AFC)

Question 8

If a firm is producing zero output, its total cost equals:

Accepted Answer

Fixed cost

Question 9

Given the following data: Total Cost (TC) = $$300$$, Quantity (Q) = $$20$$, and Total Fixed Cost (TFC) = $$100$$, what is the Average Variable Cost (AVC)?

Accepted Answer

$$10$$

Question 10

Which of the following statements is TRUE regarding the marginal cost (MC) curve?

Accepted Answer

The MC curve intersects both the ATC and AVC curves at their minimum points

Question 11

If the average variable cost (AVC) at $$Q = 50 is$$ $$8$$ and the average fixed cost (AFC) is $$2$$, what is the average total cost (ATC)?

Accepted Answer

$$10$$

Question 12

A firm’s total cost increases from $$500 to$$ $$540$$ when output increases from $$100 to$$ $$110$$ units. What is the marginal cost of producing the 110th unit?

Accepted Answer

$$4$$

Question 13

Which of the following best explains why the ATC curve is U-shaped?

Accepted Answer

Decreasing average fixed costs at low output and increasing marginal costs at high output

Question 14

If a firm’s total fixed cost is $$120$$ and its average fixed cost at $$Q = 30 is$$ $$4$$, what is the average variable cost if total cost at this output is $$300$$?

Accepted Answer

$$6$$

Question 15

Which of the following is NOT a characteristic of marginal cost?

Accepted Answer

It is always equal to average variable cost

Question 16

If the average total cost (ATC) is $$20$$ and the average variable cost (AVC) is $$15 at a $$certain output, what is the average fixed cost (AFC)?

Accepted Answer

$$5$$

Question 17

A firm’s total cost at $$Q = 0 is$$ $$200. At$$ $$Q = 10$$, total cost is $$500. $$What is the average variable cost at $$Q = 10$$?

Accepted Answer

$$30$$

Question 18

Which of the following best describes the behavior of average fixed cost as output increases?

Accepted Answer

It decreases continuously

Question 19

If a firm’s marginal cost is rising and above average total cost, what is happening to average total cost?

Accepted Answer

Average total cost is rising

Question 20

Suppose a firm’s total cost function is $$TC = 100 + 5Q + Q^2$. What is the marginal cost when Q = 10$?

Accepted Answer

$$25$$

Graphing Costs in Microeconomics: Cost Curves and Their Relationships

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