1/ You will use the chart below for the next few questions. You do not need to fill out the entire thing to answer them (especially the average columns), but it might be good practice.

Q	TC	FC	VC	MC	ATC	AFC	AVC
10				NA	12.00	2.00
11	128
12			116
13				13
14	165
15				17
16			180

Based on the chart above, what are fixed costs?

2/ Based on the chart above, what is the total cost when Q = 12?

3/ Based on the chart above, what is the VC of the 13th unit?

4/ based on the chart above, what is the MC of the 12th unit?

5/ In the chart above, what would happen to MC if FC increased by $10?

Multiple choices

a. it would not change

b. it would increase by $10

c. It would increase by less than $10

6/ What is a fixed cost?

Multiple choices

a. A cost that doesn't change as Q changes.

b. A cost that never changes

c. The cost of the next unit produced

d. TC / Q

7/ What does it mean to say a firm has increasing returns to scale or economies of scale?

Multiple choices

a. ATC falls as the firm produces more output

b. The firm is large

c. The firm is small

d. TC falls as the firm produces more output

e. MC is very high

8/Suppose a firm has very high FC and low MC. Which is true about the firm's average costs?

Multiple choices

ATC will probably fall as Q increases.

ATC will probably rise as Q increases

VC will be relatively high

AFC will be constant.

9/ What does marginal cost measure?

Multiple choices

the change in cost when output increases by 1 unit

the costs that do not change when Q increases

costs that change when Q increases

the cost per unit of output, or TC/Q

10/ Suppose ATC stays the same as the firm produces more output. What does this tell us about MC?

Multiple choices

MC must be equal to ATC

MC must be increasing

Nothing - the two are not related

MC must be lower than ATC

MC must be staying the same but it could be higher or lower than ATC

11/ What is the difference between explicit and implicit costs?

Multiple choices

Explicit costs occur when a firm actually pays for something, while implicit costs involve opportunity costs but no exchange of money.

Explicit costs change as the firm produces more output, but implicit costs do not.

Implicit costs are higher than explicit costs.

Implicit costs only occur in the long run.

An efficient firm will not have any explicit costs.

12/ What is the relationship between accounting profits and economic profits?

Multiple choices

Economic profit will be lower if a firm has any implicit costs.

economic profit is larger if a firm has any explicit costs

Accounting profits are less accurate than economic profits.

They are the same in the short run but not in the long run

13/ T/F: Average fixed costs stay the same as a firm produces more output