Question

1:

MC increases because

	a.	labor is paid overtime wages when volume increases.
	b.	in the short run, MC always increases.
	c.	the law of diminishing returns takes effect.
	d.	MC naturally increases as firms nears capacity

2:

The marginal cost (MC) will intersect the average variable cost curve (AVC):

	a.	when the average variable cost (AVC) curve is rising
	b.	where average variable cost curve (AVC) equals price.
	c.	at the minimum point of the average variable cost (AVC) curve
	d.	the two will never intersect

3:

Economies of Scale are created by greater efficiency of capital and by:

	a.	longer chains of command in management
	b.	better wages for labor
	c.	smaller plant sizes
	d.	increased specialization of labor

4:

If a firm's rent increases, it will affect its cost structure in the following way

	a.	AVC will increase
	b.	MC will increase
	c.	TFC will increase
	d.	None of the above

5:

For the given cost functions, find MC and ATC,
TC = 20,000 +10Q

	a.	ATC = $10 & MC = $(20,000/Q) + 10
	b.	MC = $10 & ATC = $(20,000/Q) + 10
	c.	ATC = $10,000 & MC = $10
	d.	None of the above

Answer 1

Q1) MC is marginal cost ,its is the change in total cost arise when one additional unit of quantity is produced . MC first decrease after reaching minimum point increase . MC decrease due to the increase in efficiency and increase due to decrease in efficiency . That is due to the law of diminishing returns .

Correct answer is C.

Q2) MC will intersect AVC at the minimum point of AVC

Correct answer is C

Q3) Economic of scale take place due to the increase in efficiency of capital and labour . Efficiency of labour take place due to increase in specialisation of labour

Correct answer is D

Q4) Rent in the fixed cost it does effect the productivity level. Increase in rent increase total fixed cost . TFC increase

Correct answer is C

Q5 ) please refer the imag correct answer is B