Question

Eventually we would expect to see diminishing _______ as more of a variable input is added to fixed inputs.

a.	variable costs	b.	returns
c.	total costs	d.	total revenues

_________ cost is the resulting cost change when output is increased by one unit.

a.	Fixed	b.	Marginal
c.	Average	d.	Total

______ costs are variable in the short run, and ______ costs are variable in the long run.

a.	no; all	b.	no; some
c.	some; some	d.	some; all

In an industry with firms earning economic profits, what will be true of entering firms?

a.	They will increase the profits of all the other firms.	b.	They each will earn economic losses.
c.	They will have no effect on profits in the industry.	d.	They will tend to move the industry to normal profits for all firms.

Answer 1

Q1 Answer is B. Returns.
When we add more variable input then marginal output or returns of inputs decreases which is called diminishing marginal returns.
Q2 Answer is B. Marginal
Change in cost when one more unit is produced is called marginal cost.
Q3 Answer is D. Some: All
In long run all inputs are variable and in short run some inputs are variable and some are fixed.
Q4 Answer is D.
Entry of new firms will increase the supply and decrease the price for all firms and profits of all firms will decrease to normal in long run.

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