1) Average cost curves have the same shape as

A) Marginal cost curves.

B) Total fixed cost curves.

C) Total cost curves.

D) Average fixed cost curves.

2) Where marginal cost is less than average cost,

A) Marginal cost must be falling.

B) Marginal cost must be rising.

C) Marginal cost may be rising, falling, or constant.

D) Opportunity cost must have been excluded from the calculation of marginal cost.

3) Marginal Cost

A) And the average cost curve are U-shaped.

B) Is the increase in total cost resulting from production of one additional unit of output.

C) Is the cost of the marginal unit of output.

D) All of the answers are correct.

4) Total fixed cost

A) Declines as output increases.

B) Increases as output increases.

C) Is always 0.

D) Remains constant even if the firm shuts down.

5) Marginal cost is the

A) Change in total cost resulting from the production of one more unit of output.

B) Change in total cost resulting from the purchase of one more unit of the variable input.

C) Difference between total fixed cost and total variable cost.

D) Difference between total cost and total expenditure.

6) Which of the following is a variable cost for an airline?

A) Insurance

B) Property taxes

C) Rent of airport space

D) Jet Fuel

7) Variable costs increase when output rises.

A) True

B) False

8) The typical average cost curve

A) Is horizontal.

B) Continually increases as output increases.

C) Continually declines as output increases.

D) First declines to a minimum and then increases as output increases.

9) Which of the following formulas defines average cost?

A) AC = TC - Q

B) AC = TC/Q

C) AC = MPP/Q

D) AC = MRP = MFC

10) The marginal cost curve shows the per-unit cost associated with various levels of output.

A) True

B) False