Question 1

Let the average variable cost of production be $20 when 10 units are produced in the first year. In the second year, after the second 10 units have been produced, the average variable cost of production is $12. The slope of the experience curve for this firm is:

Accepted Answer

A)   85%
B)   60%
C)   175%
D)   12%E) A) and C)
F) None of the above

Question 2

Suppose a firm's total cost curve is given by the equation  TC=Q2+2Q+100T C = Q ^ { 2 } + 2 Q + 100TC=Q2+2Q+100  . The firm's marginal cost is  MC=2Q+2M C = 2 Q + 2MC=2Q+2  . At what level of  QQQ 
 does the firm's average cost curve reach a minimum?

Accepted Answer

A)   100
B)   2
C)   10
D)   20 E) A) and C)
F) A) and B)

Question 3

Let a firm's long run total cost be described by the constant elasticity total cost function. The coefficients of the log of the wage and the log of capital in this function should

Accepted Answer

A)   add up to one.
B)   be negative.
C)   be of opposite sign.
D)   of indeterminate sign.E) B) and D)
F) None of the above

Question 4

Suppose  Q=KˉLQ = \sqrt { \bar { K } L }Q=KˉL​  in the short-run. The firm's short-run total cost curve is

Accepted Answer

A)    STC=Q2KˉS T C = \frac { Q ^ { 2 } } { \bar { K } }STC=KˉQ2​ 
B)    STC=wkˉQ+rKˉS T C = \frac { w \bar { k } } { Q } + r \bar { K }STC=Qwkˉ​+rKˉ 
C)    STC=Q2+KˉS T C = Q ^ { 2 } + \bar { K }STC=Q2+Kˉ 
D)    STC=wQ2Kˉ+rKˉS T C = \frac { w Q ^ { 2 } } { \bar { K } } + r \bar { K }STC=KˉwQ2​+rKˉE) A) and C)
F) A) and B)

Question 5

For a firm, let total cost be TC(Q)  = 10Q2 and marginal cost be MC(Q)  = 20Q. Which of the following is an expression for the output elasticity of total cost?

Accepted Answer

A)   ϵTC,Q = 10Q.
B)   ϵTC,Q = 2Q.
C)   ϵTC,Q = 2.
D)   ϵTC,Q = 20Q.E) All of the above
F) B) and C)

Question 6

Suppose a firm's short run total cost curve can be expressed as S  TC(Q) =50Q+10T C ( Q )  = 50 Q + 10TC(Q) =50Q+10  . This firm's short-run marginal cost can be expressed as

Accepted Answer

A)    50+10/Q50 + 10 / Q50+10/Q  .
B)    50Q50 Q50Q  .
C)   50.
D)   10. E) A) and B)
F) A) and C)

Question 7

A long-run total cost curve

Accepted Answer

A)   must be equal to zero when the level of output is zero.
B)   may be greater than or equal to zero when the level of output is zero.
C)   must be decreasing when the level of output is zero.
D)   will be equal to fixed cost, which is greater than zero, when the level of output is zero.E) A) and D)
F) A) and C)

Question 8

The short-run total cost curve

Accepted Answer

A)   shows the minimized total cost of producing a given quantity of output.
B)   shows the outputs that correspond to minimized total cost when at least one input is fixed.
C)   shows the minimized total cost of producing a given quantity of output when at least one input is fixed.
D)   shows the minimized total cost of producing a given quantity of output when all inputs are fixed.E) All of the above
F) A) and D)

Exam 8: Cost Curves

Let a firm's long run total cost be described by the constant elasticity total cost function. The coefficients of the log of the wage and the log of capital in this function should

Correct Answer
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Suppose $Q = \sqrt { \bar { K } L }$ in the short-run. The firm's short-run total cost curve is

Correct Answer
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Let the average variable cost of production be $20 when 10 units are produced in the first year. In the second year, after the second 10 units have been produced, the average variable cost of production is $12. The slope of the experience curve for this firm is:

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The short-run total cost curve

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A long-run total cost curve

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For a firm, let total cost be TC(Q) = 10Q² and marginal cost be MC(Q) = 20Q. Which of the following is an expression for the output elasticity of total cost?

Correct Answer
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Suppose a firm's short run total cost curve can be expressed as S $T C ( Q ) = 50 Q + 10$ . This firm's short-run marginal cost can be expressed as

Correct Answer
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Suppose a firm's total cost curve is given by the equation $T C = Q ^ { 2 } + 2 Q + 100$ . The firm's marginal cost is $M C = 2 Q + 2$ . At what level of $Q$ does the firm's average cost curve reach a minimum?

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Exam 8: Cost Curves

Let a firm's long run total cost be described by the constant elasticity total cost function. The coefficients of the log of the wage and the log of capital in this function should

Correct AnswerverifiedShow Answer

Suppose Q=KˉLQ = \sqrt { \bar { K } L }Q=KˉL​ in the short-run. The firm's short-run total cost curve is

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Let the average variable cost of production be $20 when 10 units are produced in the first year. In the second year, after the second 10 units have been produced, the average variable cost of production is $12. The slope of the experience curve for this firm is:

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The short-run total cost curve

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A long-run total cost curve

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For a firm, let total cost be TC(Q) = 10Q2 and marginal cost be MC(Q) = 20Q. Which of the following is an expression for the output elasticity of total cost?

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Suppose a firm's short run total cost curve can be expressed as S TC(Q) =50Q+10T C ( Q ) = 50 Q + 10TC(Q) =50Q+10 . This firm's short-run marginal cost can be expressed as

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Suppose a firm's total cost curve is given by the equation TC=Q2+2Q+100T C = Q ^ { 2 } + 2 Q + 100TC=Q2+2Q+100 . The firm's marginal cost is MC=2Q+2M C = 2 Q + 2MC=2Q+2 . At what level of QQQ does the firm's average cost curve reach a minimum?

Correct AnswerverifiedShow Answer

Correct Answer
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Suppose $Q = \sqrt { \bar { K } L }$ in the short-run. The firm's short-run total cost curve is

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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For a firm, let total cost be TC(Q) = 10Q² and marginal cost be MC(Q) = 20Q. Which of the following is an expression for the output elasticity of total cost?

Correct Answer
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Suppose a firm's short run total cost curve can be expressed as S $T C ( Q ) = 50 Q + 10$ . This firm's short-run marginal cost can be expressed as

Correct Answer
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Suppose a firm's total cost curve is given by the equation $T C = Q ^ { 2 } + 2 Q + 100$ . The firm's marginal cost is $M C = 2 Q + 2$ . At what level of $Q$ does the firm's average cost curve reach a minimum?

Correct Answer
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