Question

The reason why, beyond some output level, the short-run
variable and short-run total cost curves begin to increase at an
increasing rate, or equivalently, the short-run marginal cost curve
begins to rise is

Select one:

a. increasing returns to scale

b. diminishing marginal product

c. decreasing returns to scale

d. diminishing marginal rate of technical substitution

Answer #1

Ans-) Option B is Correct.

Explanation- As we know in short run there is two types of cost involved fixed and variable cost. Fixed cost remains same and don't change in short run, where as variable cost can be change in short run.So, when changes is made to production due to change in only one factor keeping fixed factors same this situation is know as Law of variable Proportion or also Returns to a Factor.

It has 3 stages- a) Increasing return to a factor (b) Diminishing return to a factor (c) Negative return to a factor.

Shape of Variable Cost and average variable cost and also marginal cost is due to law of variable proportion.

Other options are incorrect because Return to Scale works in long run.

A cost-output relation for a specific plant and operating
environment is the:
Select one:
a. short-run cost curve.
b. long-run total cost curve.
c. long-run marginal cost curve.
d. long-run average cost curve.
A firm's capacity is the output:
Select one:
a. maximum that can be produced in the long-run.
b. level where short-run average costs are minimized.
c. level where long-run average costs are minimized.
d. maximum that can be produced in the short-run.
Average cost declines as output...

1. Long run average costs rise as output (q) increases
Select one:
a. Economy of Scale
b. Decreasing Returns to Scale
c. Increasing Returns to Scale
d. Constant Returns to Scale
e. Diseconomy of Scale
2.
A production function where the MRTS is constant at all points.
Isoquants are straight lines.
Select one:
a. Production Function
b. Isoquant
c. Perfect Substitutes Production Function
d. Isocost Line
e. Technology Function
f. Fixed-Proportions Production Function
3.
A production function with L-shaped isoquants...

The short-run average product of a variable input has an inverse
relationship with the:
Answers:
a) average fixed cost.
b) average total cost.
c) average variable cost.
d) total cost.
The short-run marginal cost:
Answers:
a) intersects the maximum points of the average variable cost
and the average total cost curves.
b) is defined as the difference between total cost and total
variable cost.
c) falls for a time, but then begins to rise when the point of
diminishing returns...

Which of the following is true in constructing the long-run
average cost curve?
a.
Short-run average total cost curves are used.
b.
Marginal costs curves are summed at each output level.
c.
Short-run average variable cost curves are summed at each
output level.
d.
Short-run average fixed cost curves are summed at each output
level.
There are _____ different areas identified by the textbook in
moving along a long-run average cost curve.
a.
two
b.
three
c.
five
d.
four...

Total cost is calculated as _____.
Select one:
a.
average fixed cost plus average variable cost
b.
fixed cost plus variable cost
c.
the additional cost of the last unit produced
d.
marginal cost plus variable cost
e.
marginal cost plus fixed cost
--------------------------------------------------------------------------------------
The law of diminishing marginal returns states that:
Select one:
a.
long-run average cost declines as output increases.
b.
if the marginal product is above the average product, the
average will rise.
c.
as units of...

Fixed costs include:
Select one:
a. variable labor expenses.
b. output-related energy costs.
c. output-related raw material costs.
d. variable interest costs for borrowed capital.
If a total product curve exhibits increasing returns to a
variable input, the cost elasticity is:
Select one:
a. equal to one.
b. greater than one.
c. unknown, without further information.
d. less than one.
f the productivity of variable factors is decreasing in the
short-run:
Select one:
a. marginal cost must increase as output...

The vertical distance between the average total cost and the
average variable cost curves is:
a.
constant with respect to output.
b.
decreasing with respect to output.
c.
increasing with respect to output.
d.
equal to total fixed costs.
e.
none of the above.
1 points
QUESTION 11
The point at which the SRAC curve is tangent to the LRAC
curve:
a.
represents the most efficient wa to use a given plant.
b.
is always the output where MC=AC....

1. Is the basic difference
between the short run and the long run that the law of diminishing
returns applies in the long run, but not in the short run?
2. Draw a typical
production function and explain its shape. Below that diagram, draw
an average product schedule and marginal product schedule. Indicate
the relationship between the two diagrams.
##3 Explain why the
marginal product of labour initially increases as more workers are
hired and then eventually...

Short run cost curves:
a. Explain why the marginal cost curve intersects the average
total and variable cost curve at their respective minimum
values:
b. At what point on the ATC will a perfectly competitive firm
always produce in the long run:
c. The supply curve for a perfectly competitive firm is the same
as one of the cost curves based on a specific criterion. State both
the curve and the criterion:

Question 12
The long-run average
cost curve will be upward-sloping when the firm has:
constant returns to
scale.
marginal returns to
scale.
economies of scale
diseconomies of
scale
Question 13
A production function
that is characterized by increasing returns to scale cannot be
affected by diminishing marginal product.
True
False
Question 14
A firm always operates at some point on its long-run average
total cost curve in both the long run and the short run.
True
False
Question 15
In...

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