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Quiz 2 - Theory of Production and Cost: TC TFC+TVC Afc TFC/Q Avc TVC/Q Atc TC/Q MC TC/ Q TC / Q

This document contains a quiz on the theory of production and cost. It provides information on returns to scale, average and marginal costs. It also includes a table showing the total fixed costs, total variable costs, total costs and other metrics for a call center with varying levels of labor/workers from 1 to 8. The table is used to analyze the relationship between inputs like labor and outputs like phone calls handled.

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20 views2 pages

Quiz 2 - Theory of Production and Cost: TC TFC+TVC Afc TFC/Q Avc TVC/Q Atc TC/Q MC TC/ Q TC / Q

This document contains a quiz on the theory of production and cost. It provides information on returns to scale, average and marginal costs. It also includes a table showing the total fixed costs, total variable costs, total costs and other metrics for a call center with varying levels of labor/workers from 1 to 8. The table is used to analyze the relationship between inputs like labor and outputs like phone calls handled.

Uploaded by

Tinat00t
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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QUIZ 2 – THEORY OF PRODUCTION AND COST

1. When a company’s long-run average cost increases with increasing output, that company is
experiencing diseconomies of scale.
2. When returns to scale is decreasing, total output is increasing.
3. When a return to scale is negative, average product is decreasing.
4. It is the total product divided by the number of inputs. Average Product
5. The shape of marginal cost is U-shaped.
6. TRUE or FALSE: In the long run, all inputs are variable. TRUE
7. TRUE or FALSE: The costs of fixed inputs can only be adjusted in the long run. FALSE
8. Production at Julia’s call center shows the following relationship between the number of
workers and the number of phone calls handled (per day).

LABOR TFC TVC TC AFC AVC ATC MC


TC = TFC+TVC AFC = TFC/Q AVC= TVC/Q ATC= TC/Q MC = TC/ Q −
TC /Q

1 55 6 55+6 = 55/1 = 55 6/1 = 61/1 = 6


61 6 61

2 55 20 55+20 = 55/2 = 27.5 20/2 = 75/2 = 14


75 10 37.5

3 55 25 55+25 = 55/3 = 18.33 25/3 = 80/3 = 5


80 8.33 26.67

4 55 33 55+33 = 55/4 = 13.75 33/4 = 88/4 = 8


88 8.25 22

5 55 67 55+67 = 55/5 = 11 67/5 = 122/5 = 34


122 13.4 24.4

6 55 109 55+109 = 55/6 = 9.17 109/6 = 164/6 = 42


164 18.17 27.33

7 55 123.5 55+123.5 = 55/7 = 7.86 123.5/7 = 178.5/7 = 14.5


178.5 17.64 25.5
8 55 155 55+155 = 55/8 = 6.88 155/8 = 210/8 = 31.5
210 19.38 26.25

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