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MBA 505 Chapter 7 Quiz
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1. If the average variable cost (AVC) is falling, then
a. average fixed cost (AFC) is rising.
b. marginal cost (MC) must be falling.
c. marginal cost (MC) must be rising.
d. marginal cost (MC) lies below average variable cost (AVC).
e. marginal cost (MC) lies above average variable cost (AVC).
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2. Marginal cost (MC) is
a. equal to average variable cost (AVC) at the minimum point
on the MC curve.
b. equal to average total cost (ATC) at the extreme point on the MC
curve.
c. decreasing when average variable cost (AVC) is decreasing.
d. greater than average total cost (ATC) when ATC is increasing.
e. greater than average variable cost (AVC) when MC is increasing.
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Q
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AFC
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AVC
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1
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20
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20
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2
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10
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17
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3
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7
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16
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4
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5
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15
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5
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4
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17
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6
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3
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20
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3. Refer to the table above. What is the average total cost (ATC) of
producing 6 units?
a. $17
b. $20
c. $23
d. $27
e. $40
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4. What is the total fixed cost (TFC) for this product?
a. $10
b. $20
c. $23
d. $27
e. $40
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5. What is the total variable cost (TVC) for producing 2 units of this
product?
a. $20
b. $60
c. $120
d. $27
e. $34
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6. Average fixed cost (AFC) is
a. constant as output rises.
b. decreases as output rises.
c. increases with rising output and then declines.
d. intersects the average variable cost (AVC) curve at the point of
minimum AVC.
e. equals marginal cost (MC) at the minimum MC point.
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7. Total fixed cost (TFC) is
a. constant as output rises.
b. decreases as output rises.
c. increases with rising output and then declines.
d. intersects the average variable cost (AVC) curve at the point of
minimum AVC.
e. equals marginal cost (MC) at the minimum MC point.
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8. How can you find the minimum point on the average variable cost
(AVC) curve?
a. It is where the AVC crosses the average total cost (ATC)
curve.
b. It is where the AVC crosses the demand curve.
c. It is where the AVC crosses the marginal cost (MC) curve.
d. It is where the AVC crosses the marginal revenue (MR) curve.
e. It is where the AVC crosses the average fixed cost (AFC) curve.
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Answers
1d, 2d, 3c, 4b, 5e, 6b, 7a, 8c.
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