Test Bank For Managerial Economics International Edition 3rd Edition by Luke M. Froeb

Test Bank For Managerial Economics International Edition 3rd Edition by Luke M. Froeb

CHAPTER 4

1. If AVC=$5 and AFC=15, then ATC=

1. $10
2. $5
3. $15
4. $20

ANS: D

1. Managers undertake an investment only if

1. Marginal benefits of the investment are greater than zero
2. Marginal costs of the investment are less than marginal benefits of the investment
3. Marginal benefits are greater than marginal costs
4. Investment decisions do not depend on marginal analysis

ANS: C

1. Total cost divided by the total number of inputs is called:

1. marginal cost
2. average cost
3. total cost
4. variable cost

ANS: B

Use the following to answer questions 4-8:

Number of Workers

Total Cost

0

1000

1

2200

2

3200

3

4000

4

4600

5

5000

6

5200

7

5600

8

6200

9

7000

10

8000

1. The marginal cost of hiring the 7^th worker is

a) $400

b) $1000

c) $200

d) $0

ANS: A

1. If the firm hires 8 workers, the total amount of fixed costs equal

1. $6200
2. $1000
3. $600
4. $1200

ANS: B

1. If hiring the 4^th worker increases the total product by 50 units and the price of each unit is $15,

1. the firm should not hire the 4^th worker as MB<MC
2. marginal revenue equals $150
3. the firm should hire the 4^th worker as MB>MC
4. the firm should not hire the 4^th worker as MB<TC

ANS: C

1. If the firm hires 5 workers, the average cost equals

1. $10
2. $1000
3. $80
4. Need more information

ANS: B

1. If the firms hires 5 workers, the average variable costs equals

1. $10
2. $100
3. $800
4. Need more information

ANS: C

1. What is the average total cost of hiring the 7^th worker?

1. $400
2. $800
3. $1200
4. $1600

ANS: B

ANS: C

1. A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly and they cost $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. How do the overall costs break down?

1. total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250
2. total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250
3. total variable cost is $5,000; total fixed cost is $14,250; total cost is $19.250
4. total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250

ANS: A