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# American Airlines makes numerous nonstop flights from Chicago’s O’Hare Airport to the

American Airlines makes numerous nonstop flights from Chicago’s O’Hare Airport to the
airport at Dallas-Fort Worth. The distance between those two cities is 1,000 miles. The
only variable cost, fuel, costs \$.06 for each passenger-mile it flies. Bob, on his way to an
emergency business meeting, buys a ticket in coach class for \$1,300 at the very last
minute. The marginal cost of flying Bob from Chicago to Dallas-Fort worth is

a.\$1300

b.higher than the average cost of previous passengers

c.\$600

d.\$160

e.\$60

142.              The marginal cost is an important piece of information for firms and economists to know
because it

a.determines the size of the plant you should build

b.is the only cost that increases as production increases

c.helps determine precisely which production level maximizes profit

d.incorporates fixed costs into the production decision

e.is a measure of labor productivity

143.              When the cost curves have the usual shapes, at the point where marginal cost equals
average total cost,

a.average total cost is at its maximum

b.marginal cost is falling

c.average total cost is at its minimum

d.average variable cost is falling

e.the fixed cost has been fully depreciated

144.              Suppose there is a firm that has no fixed costs. At the point where marginal cost equals
average variable cost,

a.fixed cost is rising

b.marginal cost is rising

c.average total cost is rising

d.average variable cost is falling

e.there is no total cost

Dec 12 2019 View more View Less