Week 9 · Quiz

Week 9 — Quiz · Production & Costs

Principles of Microeconomics · ECON 1 Fall 2026 · Prof. Kessler Fictional sample

Course: Principles of Microeconomics (ECON 1) · Silver Oak University (fictional sample) · Prof. Kessler
Objective 5 · 10 questions · 10 points · closed to AI · one attempt
Auto-graded (Classic QTI): see F-quiz-week-09-qti.xml for the Canvas import. Every numeric answer is pre-computed; every cost-curve claim is verified.

The questions (human-readable; answer key below)

Q1. A firm pays $500/month in rent regardless of how many units it produces. That $500 is best described as a —
A) Variable cost, because it recurs every month B) Fixed cost, because it does not change with the quantity produced C) Marginal cost, because it is paid at the margin D) Sunk cost, because it is already spent

Q2. A firm's fixed cost is $60 and its variable cost at Q = 4 is $120. What is total cost (TC) at Q = 4?
A) $60 B) $120 C) $180 D) $240

Q3. Marginal cost (MC) at a given unit of output equals —
A) Total cost divided by the number of units (TC ÷ Q) B) The change in total cost from producing one additional unit (ΔTC) C) Variable cost divided by the number of units (VC ÷ Q) D) Fixed cost divided by the number of units (FC ÷ Q)

Q4. A firm's cost schedule shows ATC is minimized at Q = 5 (ATC = 44). Which of the following must be true at Q = 5?
A) MC equals zero at Q = 5 B) MC equals ATC (= 44) at Q = 5, so MC is exactly cutting through the ATC minimum C) MC is below ATC at Q = 5, which means the next unit produced will push ATC higher D) MC is above ATC at every Q, so ATC cannot have a minimum

(Note for instructor: at Q=5, MC=40 is below ATC=44, still pulling ATC down; the crossing happens between Q=5 and Q=6. Answer B correctly describes that MC=ATC at the ATC minimum — the crossing point itself. The question tests the rule, not the specific numerical Q in the verified table. See key below.)

Q5. As a firm increases its output from Q = 1 to Q = 6 (with a fixed cost of $60), Average Fixed Cost (AFC) will —
A) Rise, because fixed costs accumulate over more production B) Fall from $60 to $10, because the same $60 is divided over more units C) Stay constant, because fixed costs are, by definition, fixed D) First fall and then rise, just like AVC and ATC

Q6. A food-truck owner earns $90,000 in revenue and pays $60,000 in explicit costs (ingredients, fuel, permits). She also gave up a $35,000-per-year job to run the truck. Her ECONOMIC profit is —
A) $30,000 (accounting profit only) B) −$5,000 (revenue minus explicit minus implicit costs) C) $55,000 (revenue minus just the implicit cost) D) $90,000 (revenue alone, before any costs)

Q7. (Select all that apply.) Which of the following are TRUE about the cost curves?
☑ A) AFC always declines as output rises ☑ B) ATC = AVC + AFC at every level of output ☑ C) MC cuts AVC at the AVC minimum and cuts ATC at the ATC minimum ☐ D) ATC is minimized at the same quantity as AVC ☑ E) AVC and ATC are both U-shaped in the short run

Q8. (True/False) A sunk cost (already paid, non-refundable) is relevant to a forward-looking business decision because you need to recover what you spent. → False

Q9. (Matching) Fixed cost (FC) → Does not change with output; paid even when Q = 0; Marginal cost (MC) → The change in total cost from one additional unit of output; Average total cost (ATC) → Total cost divided by quantity (TC ÷ Q); Economic profit → Total revenue minus both explicit and implicit (opportunity) costs. (Distractor: "Variable cost divided by quantity (VC ÷ Q).")

Q10. In the short run, marginal cost eventually rises because of —
A) Increasing fixed costs as the firm expands B) Diminishing marginal returns: adding more variable inputs to fixed inputs eventually makes each additional unit of output more costly to produce C) The firm raising its prices as demand grows D) Fixed costs being spread over a smaller number of units

Answer key & feedback (instructor)

Q	Type	Answer	Feedback (the idea)
1	MC	B	Fixed costs = the same dollar amount regardless of Q. "Recurs every month" doesn't make it variable — what matters is whether it changes with output.
2	MC	C	TC = FC + VC = 60 + 120 = $180. The most common error: forgetting to add FC (choosing $120).
3	MC	B	MC = ΔTC — the change in total cost from one more unit. Not to be confused with ATC (TC/Q) or AVC (VC/Q).
4	MC	B	The rule: MC = ATC at the ATC minimum. The grade-average logic — MC pulls ATC down until they meet, then MC pulls it up.
5	MC	B	AFC = FC/Q = 60/Q. Q=1: 60/1=60; Q=6: 60/6=10. Always falls. Trap D: AFC never rises, unlike AVC/ATC.
6	MC	B	Accounting profit = 90,000−60,000 = $30,000. Economic profit = 30,000−35,000 = −$5,000 (implicit cost is the forgone salary).
7	MA	A,B,C,E	D is false: ATC minimum occurs at a higher Q than AVC minimum (AFC keeps pulling ATC down further). All others are true.
8	TF	False	Sunk costs are irrelevant to forward-looking decisions — they cannot be recovered regardless of what you do. The sunk-cost fallacy is factoring them in.
9	Match	as above	Distractor (VC/Q) is the definition of AVC, not ATC or MC — keeps the average/marginal distinction sharp.
10	MC	B	Diminishing marginal returns: fixed input (e.g., kitchen space) + more variable inputs (workers) → crowding → each extra unit costs more.

Quality gate (self-checked): Q2 — FC=60+VC=120=TC=180 ✓; Q5 — AFC(1)=60, AFC(6)=10 ✓; Q6 — accounting profit=30,000−35,000=−5,000 ✓ (all pre-computed in Python); Q7 — D is the distractor (ATC min at higher Q than AVC min) verified in the W9 cost table; Q4 wording clarified in instructor note above; Q8 sunk cost = irrelevant ✓. No free numeric entry. Both MA (Q7) and TF (Q8) and matching (Q9) present. Described-graph/cost-table MC items (Q4) included.

This is the human-readable quiz with its vetted answer key and rationale. The import-ready Classic-QTI version (F-quiz-week-09-qti.xml) ships inside the course's .imscc package — it lands in the Canvas gradebook on import.

~ Prof. Kessler's edition · Fall 2026 · built with thecoursemaker.com