Practice Questions
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In a perfectly competitive market, a firm maximizes its profit when it produces at a level where marginal cost equals which of the following?
A firm maximizes profit when it produces until the cost of making one more item (marginal cost) equals the money it earns from selling that item (marg...
If a company increases its production level from 100 to 150 units and the total cost rises from $1,000 to $1,200, what is the marginal cost of producing the additional 50 units?
Marginal cost is the extra cost to produce one more unit. Other options are incorrect because This answer might come from thinking the cost increase i...
How do economies of scale affect the position of the supply curve in a market?
Economies of scale mean that as companies make more products, they can lower their costs. Other options are incorrect because This answer suggests tha...
In the context of calculating marginal costs, how does an increase in production levels affect the short-run average cost if the average cost is decreasing?
When average costs are going down, it means producing more is cheaper. Other options are incorrect because This option suggests that making more items...
In the context of short-run production, how does the concept of marginal cost relate to marginal utility when considering the allocation of resources?
When production costs go up, it can make products more expensive for consumers. Other options are incorrect because This answer suggests that costs al...
What is the definition of marginal cost in economics?
Marginal cost is the extra cost of making one more item. Other options are incorrect because This answer talks about average cost, not extra cost; Thi...
What is the marginal cost if a company's fixed costs are $1000 and producing one additional unit of a product increases total costs from $5000 to $5050?
Marginal cost is the extra cost of making one more item. Other options are incorrect because This answer might come from thinking about total costs in...
What happens to the marginal cost of producing an additional unit when variable costs increase?
When variable costs go up, it costs more to make each extra item. Other options are incorrect because Some might think that costs go down when making ...
A company produces 100 units of a product at a total cost of $400. If the total cost to produce 101 units is $404, how would you classify this change in cost?
Marginal cost is the extra cost of making one more unit. Other options are incorrect because Fixed costs do not change with production levels; Average...
Marginal Cost : Total Cost :: Additional Unit Cost : ?
Average cost is what you pay for each unit when you divide total costs by the number of units. Other options are incorrect because Fixed costs are exp...
A bakery produces 50 loaves of bread daily, and the cost to produce each loaf is $3. If the bakery decides to produce one more loaf, which costs $3.50 to make, what is the marginal cost of that additional loaf? How should the bakery consider this information when deciding to increase production?
The marginal cost is the extra cost of making one more loaf. Other options are incorrect because This answer confuses total cost with marginal cost; T...
Which of the following statements correctly describe marginal costs and their implications for production decisions? (Select all that apply)
Other options are incorrect because Marginal cost means the cost of making one extra item; Some people think that costs always go down when you make m...
A company produces widgets at a cost of $100 for 10 widgets. If the cost to produce the 11th widget is $12, what is the marginal cost of producing the 11th widget?
The marginal cost is the extra cost to make one more item. Other options are incorrect because This answer might come from thinking about the average ...
If a company notices that its marginal cost of production increases significantly after producing 100 units, which of the following is the most likely underlying cause?
When a company produces more, it may use its resources too much. Other options are incorrect because Some might think that raising prices makes produc...
When a firm calculates the cost of producing one additional unit of a good, this is referred to as the __________ cost.
Marginal cost is the extra cost of making one more item. Other options are incorrect because Average cost is the total cost divided by the number of i...
If a company produces 100 units at a total cost of $400 and decides to produce 101 units at a total cost of $404, what is the marginal cost of the 101st unit?
The marginal cost is the extra cost to make one more unit. Other options are incorrect because Some might think that making one more unit doesn't chan...
Arrange the steps involved in calculating marginal costs in the correct order: A) Determine the total cost of production for the current level of output B) Identify the additional cost incurred for producing one more unit C) Subtract the total cost of production from the new total cost after increasing output D) Use the marginal cost to make decisions about pricing and resource allocation
First, you find the total cost of making what you have. Other options are incorrect because This option starts with identifying the extra cost before ...
Master Calculating Marginal Costs
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