Question

1. If the average product of 14 workers is 50 bushels of wheat and the average product of 15 workers of wheat is 55 bushels of wheat, then the marginal product of the 15th worker was ___________ bushels of wheat.

2. Which of the following is most likely to be a fixed cost for a bakery firm?

A. Wages paid to workers

B. Paying for ingredients from a food supplier

C. The monthly electricity bill

D. Paying rent each month for an unowned building

3. Suppose that when the level of output for the firm increases from 28 to 29 units, its total costs increase from $120 to $155. What is the firm's marginal cost per unit?

4. If average variable costs are increasing while average total costs are decreasing, then

A. marginal cost must lie between average variable and average total costs

B. marginal cost must equal average variable cost

C. marginal cost must equal average total cost

D. fixed costs must be zero

5. If fixed costs of a firm increase, what will happen?

A. total costs will increase, and total variable costs will increase

B. average total costs will increase, and average variable costs will decrease

C. average total costs will increase, and average variable costs will not change

D. total variable costs will increase, and average variable costs will increase

Answer 1

Ques1: Average Product of 14 workers is 50 bushels of wheat.

Hence, Total Product of 14 workers = 14 * 50 = 700 bushels of wheat

Average Product of 15 workers is 55 bushels of wheat.

Hence, Total product of 15 workers = 15 * 55 = 825 bushels of wheat.

The marginal product is the change in the total product due to the employment of an additional worker.

Marginal Product = Total product of 15 workers - Total Product of 14 workers

= 825 - 700

= 125 bushels of wheat.

Ques2: Paying rent each month for the unowned building is the fixed cost for the bakery firm as it does not vary with the level of output produced or sold by the bakery. It always remains constant. Hence, Option D is correct.

Ques3: Total Cost of 28 units = $120

Total Cost of 29 units = $155

Marginal cost = Total cost of 29 units - Total cost of 28 units

= $155 - $120 = $35

Ques4: Option A is correct. The marginal cost must lie between AC and AVC

Ques5: C is correct. As the 's fixed cost increases the l cost will also increase. This is because Total Cost is the sum of the Fixed cost and variable cost. Since total cost will increase, the age Cost will also increase keeping variable cost unchanged.