1 If a firm buys a specialized metal stamping machine that will last 4 yearsfor $125,000 and cannot resell it, the sunk cost is$0$31,250$125,000$93,7502 Variable costs area production expense that does not vary with output.a production expense that changes with the quantity of output produced.equal to total cost divided by the units of output produced.the amount by which a firm's cost changes if the firm produces one moreunit of output.3 Suppose the total cost of producing T-shirts can be represented as TC50 + 2q. The marginal cost of the 5th T-shirt is1012604 A firm's cost curve is determined bycongressional laws.whether the firm hires engineers or not.natural laws.the firm's production function.5 Isocost linesrepresent the combinations of inputs that have the same marginal cost.represent the combinations of inputs that have the same total cost.are the inverse of the isoquant lines.represent supply and demand for inputs at a given cost.6 A cost function has economies of scale ifaverage fixed costs fall as production increases.total costs fall as production increases.the average total cost falls as production increases.it is less expensive to produce goods jointly rather than separately.

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1 If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it, the sunk cost is $0 $31,250 $125,000 $93,750

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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Question

1 If a firm buys a specialized metal stamping machine that will last 4 years
for $125,000 and cannot resell it, the sunk cost is
$0
$31,250
$125,000
$93,750
2 Variable costs are
a production expense that does not vary with output.
a production expense that changes with the quantity of output produced.
equal to total cost divided by the units of output produced.
the amount by which a firm's cost changes if the firm produces one more
unit of output.
3 Suppose the total cost of producing T-shirts can be represented as TC
50 + 2q. The marginal cost of the 5th T-shirt is
10
12
60
4 A firm's cost curve is determined by
congressional laws.
whether the firm hires engineers or not.
natural laws.
the firm's production function.
5 Isocost lines
represent the combinations of inputs that have the same marginal cost.
represent the combinations of inputs that have the same total cost.
are the inverse of the isoquant lines.
represent supply and demand for inputs at a given cost.
6 A cost function has economies of scale if
average fixed costs fall as production increases.
total costs fall as production increases.
the average total cost falls as production increases.
it is less expensive to produce goods jointly rather than separately.

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