Question Details

Which of the following is true with regards to a long-run cost function



1.	Economies of Scope refers to situations where per unit costs are:
a.	Unaffected when two or more products are produced
b.	Reduced when two or more products are produced
c.	Increased when two or more products are produced
d.	Demonstrating constant returns to scale
e.	Demonstrating decreasing returns to scale

	

2.	Economies of scale exist whenever long-run average costs:
a.	Increase as output is increased
b.	Remain constant as output is increased
c.	Decrease as output is increased
d.	Decline and then rise as output is increased
e.	None of the above
	

3.	Which of the following is true with regards to a long-run cost function?
a.	The shape of the firm- long-run cost function is important in decisions to expand the scale of operations
b.	The long-run average cost curve is U-shaped
c.	The long-run average cost curve is flatter than the short-run average cost curve.
d.	The curve consists of the lower boundary of all the short-run cost curves
e.	All of the above


4.	If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is:
a.	10.2
b.	102
c.	37.1
d.	371
e.	321

	
5.	Suppose that total cost is cubic:  TC = 200 + 5Q - 0.4Q2 + 0.001Q3
a.	Fixed cost (FC) is $200
b.	Variable cost (VC) is 5Q - 0.4Q2 + 0.001Q3
c.	Average variable cost (AVC) is 5 - 0.4Q + 0.001Q2
d.	Marginal cost (MC) is 5 - 0.8Q +.003Q2
e.	All of the above are correct



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