Q: Which formula is used to calculate marginal cost (MC)?

$$MC = \frac{\text{change in TC}}{\text{change in Q}}$$

Question 1

Which of the following best describes the economic definition of 'technology' in the context of production?

Accepted Answer

The process a firm uses to transform inputs into outputs, including skills, organization, and methods.

Question 2

A pizzeria manager attends a seminar and learns a new technique for spreading dough, which increases the number of pizzas produced per day with the same resources. This is an example of:

Accepted Answer

A positive technological change.

Question 3

In the short run, which of the following statements is true regarding costs?

Accepted Answer

At least one input is fixed, so some costs are fixed and some are variable.

Question 4

If a firm produces zero output in the short run, what is the relationship between total cost and fixed cost?

Accepted Answer

Total cost equals fixed cost.

Question 5

Which formula correctly represents total cost in the short run?

Accepted Answer

$$TC = FC + VC$$

Question 6

A firm’s opportunity cost of using money to buy equipment instead of keeping it in a savings account earning 5% interest is best described as:

Accepted Answer

An implicit cost.

Question 7

Economic cost is defined as:

Accepted Answer

Implicit costs plus explicit costs.

Question 8

Refer to the table: If hiring a second worker increases output from 200 to 450 pizzas, what is the marginal product of labor for the second worker?

Accepted Answer

250 pizzas

Question 9

The law of diminishing returns states that:

Accepted Answer

At some point, adding more of a variable input to a fixed input causes marginal product to decline.

Question 10

When the marginal product of labor (MPL) is greater than the average product of labor (APL), what happens to APL?

Accepted Answer

APL increases.

Question 11

Which formula is used to calculate marginal cost (MC)?

Accepted Answer

$$MC = \frac{	ext{change in TC}}{	ext{change in Q}}$$

Question 12

If the marginal cost curve is below the average total cost curve, what happens to average total cost?

Accepted Answer

Average total cost decreases.

Question 13

At what point does the average total cost (ATC) curve reach its minimum?

Accepted Answer

When MC = ATC

Question 14

In the long run, which of the following is true about costs?

Accepted Answer

All costs are variable.

Question 15

Which formula represents total cost in the long run?

Accepted Answer

$$TC = VC$$

Question 16

What is the minimum efficient scale?

Accepted Answer

The level of output at which all economies of scale have been exhausted.

Question 17

Which of the following is NOT a cause of economies of scale?

Accepted Answer

Increasing bureaucracy and duplicate work.

Question 18

An isoquant curve shows:

Accepted Answer

All combinations of two inputs that produce the same level of output.

Question 19

The slope of an isoquant is called the Marginal Rate of Technical Substitution (MRTS). Which formula best represents MRTS?

Accepted Answer

$$MRTS = -\frac{\Delta K}{\Delta L}$$

Question 20

To find the optimal combination of labor and capital, a firm should set:

Accepted Answer

$$\frac{MPL}{P_L} = \frac{MPK}{P_K}$$

Chapter 11

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