MBA 701 Module 4 Self Assessment
MBA 701 Module 4 Self Assessment
Question 1
The short run is defined as a period of time where
some of a firm's inputs are fixed
In the short-run at least one input is fixed.
Question 2
Your company produces Splagnards, a popular line of hats for Chinchillas. When you
started the company and were its only employee, you could produce 30 Splagnards daily.
After you hired the second through sixth employees, your total daily output became 35, 45,
60, 70, and 75 Splagnards, respectively. Given this production pattern, you would conclude
that diminishing returns
set in with the second employee
Second employee gives only an MP of 5 (35-30) as opposed to 30 of 1 (30-0)
Question 3
The phenomenon of marginal product decreasing as employees are added to production is
referred to as
diminishing returns
I f at least one input is fixed, and one input increases, eventually the MP of each input will
decrease
Question 4
With two employees, TP = and AP = .
Select one:
120; 60
Two employees: TP=120, AP=60
Question 5
With three employees, AP = and MP = .
Select one:
50; 30
Three employees:AP=50, MP=30
Question 6
With four employees, TP = and AP = .
165**; 41 .25
Four employees: TP=165, AP=41 ,25
, Question 7
In economics, a cost which must be paid regardless of the level of output production is
called
fixed cost
Fixed cost refers to a cost that does not change with an increase or decrease in the number
of goods or services produced or sold. Fixed cost does not change regardless the level of
output.
Question 8
When a technology improvement increases the output per employee, then the cost per unit
of output will
decrease
Since the number of employee remain the same and output increases, technological
improvement will result to cost per unit output to decrease.
Question 9
What is total variable cost when 200 units of output are produced?
$450
Question 10
At which unit of output (among those in the table) is average total cost minimized, and what
is its (minimum) value at that unit?
Minimum occurs at 400 units, where ATCATC = $8
Average Total Cost = Total cost/Output
When Output =100; Average total cost = 2,300/100 = $23
When output =200; Average total cost = $2,450/200 = $12.25
When output = 300, average total cost = $2,700/300 = $9
When output = 400, average total cost = $3,200/400 = $8
Average total cost is the lowest when the output is 400 and at this point the average total
cost is $8.
Answer: Minimum occurs at 400 units; where ATC= $8.
Question 11
Marginal product is maximized (for the data represented in this table) when employees
produce the unit of output.
200th
Marginal cost of nth unit = (Total cost of n units - Total cost of n-1 units)/(Difference in
output)
Marginal cost of 100th unit = (2,300 - 2,000)/(1 00 - 0) = 300/100 = $3
Marginal cost of 200th unit = (2,450 - 2,300)/(200 - 100) = 150/100 = $1 .50
MBA 701 Module 4 Self Assessment
Question 1
The short run is defined as a period of time where
some of a firm's inputs are fixed
In the short-run at least one input is fixed.
Question 2
Your company produces Splagnards, a popular line of hats for Chinchillas. When you
started the company and were its only employee, you could produce 30 Splagnards daily.
After you hired the second through sixth employees, your total daily output became 35, 45,
60, 70, and 75 Splagnards, respectively. Given this production pattern, you would conclude
that diminishing returns
set in with the second employee
Second employee gives only an MP of 5 (35-30) as opposed to 30 of 1 (30-0)
Question 3
The phenomenon of marginal product decreasing as employees are added to production is
referred to as
diminishing returns
I f at least one input is fixed, and one input increases, eventually the MP of each input will
decrease
Question 4
With two employees, TP = and AP = .
Select one:
120; 60
Two employees: TP=120, AP=60
Question 5
With three employees, AP = and MP = .
Select one:
50; 30
Three employees:AP=50, MP=30
Question 6
With four employees, TP = and AP = .
165**; 41 .25
Four employees: TP=165, AP=41 ,25
, Question 7
In economics, a cost which must be paid regardless of the level of output production is
called
fixed cost
Fixed cost refers to a cost that does not change with an increase or decrease in the number
of goods or services produced or sold. Fixed cost does not change regardless the level of
output.
Question 8
When a technology improvement increases the output per employee, then the cost per unit
of output will
decrease
Since the number of employee remain the same and output increases, technological
improvement will result to cost per unit output to decrease.
Question 9
What is total variable cost when 200 units of output are produced?
$450
Question 10
At which unit of output (among those in the table) is average total cost minimized, and what
is its (minimum) value at that unit?
Minimum occurs at 400 units, where ATCATC = $8
Average Total Cost = Total cost/Output
When Output =100; Average total cost = 2,300/100 = $23
When output =200; Average total cost = $2,450/200 = $12.25
When output = 300, average total cost = $2,700/300 = $9
When output = 400, average total cost = $3,200/400 = $8
Average total cost is the lowest when the output is 400 and at this point the average total
cost is $8.
Answer: Minimum occurs at 400 units; where ATC= $8.
Question 11
Marginal product is maximized (for the data represented in this table) when employees
produce the unit of output.
200th
Marginal cost of nth unit = (Total cost of n units - Total cost of n-1 units)/(Difference in
output)
Marginal cost of 100th unit = (2,300 - 2,000)/(1 00 - 0) = 300/100 = $3
Marginal cost of 200th unit = (2,450 - 2,300)/(200 - 100) = 150/100 = $1 .50
