Question

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D. Average prodact of lahor Avernge variable cost 4. The law of A. Marginal cost will eventually decrease C. Marginal froduct will eventually decresse D. MC will eventually increase 5. which ef the likming eestsdomw chang' whe. oept change. İ" the short A. Avernge variabile costs B. Tetal Variable costs C. Average fised costs D. Total Fised costs ? 6. When warginal cost (MC) is less them average variable eost AVC) A. AVC is ccentan B. AVC is falling C. AVC is rising D. AVC is at its minimum 7. The average fised ent (AFC) eurve A. Is U-shaped as a resuk of diminishing retuns B. Declines as long as ourput increases C. Is ienersectod at its minimum peint by marginal coot D. Imersects the marginal cost curve at its minimum point & Eeosomic eost A. Includes both implicit and explicit costs C. Includes only implicit costs D. Includes sone of the above 9. If the entire outpet of a market is prodeced by a siagle seller, the r A. Is a monapoly B, Faces perfectly inclastic demand C. Can charge any wants D. Is producing a new product price it wants and net lose oustomens as are competitive fims are price frms are price takens. A. Takers Taicrs, but C. Males, as ae compectitive fr

Answer 1

4. The law of diminishing returns implies that productivity of company will start decreasing with every increase of input. Therefore, the correct answer is

C) Marginal product will eventually decrease

5. Total fixed costs are constant costs of production incurred by a company such as building rent, interest payments, government taxes etc. It does not change with the change in output level. therefore, the correct answer is

D). Total Fixed costs

6. Average variable cost (AVC) is total variable cost divided by total output or quantity. The Total variable cost of a firm depends on multiple factors such as wages, number of workers, raw material costs etc. Marginal cost is the cost of production of an additional unit. When marginal cost is less than average total cost or average variable cost, the average variable cost is declining.   Therefore, the correct answer is

B) AVC is falling

7. The Average fixed cost curve declines as output increases because increase in output absorbs total fixed cost that reduces average fixed cost of production. The correct answer is

B. Declines as long as output increases

8. Economic costs is summation of the accounting cost and opportunity cost. Accounting or explicit costs are the cost that has been incurred or shown in the accounting book such as rents, wages, interests etc. Opportunity cost or implicit cost actually refers to monetary loss of not considering alternative such as specific technology in production process.

Therefore, the correct answer is

A. Includes both implicit and explicit costs

9. In a monopoly market, there is a single producer that controls the output and price of products in the entire market. Therefore, the correct answer is

A. Is a monopoly.

10. Monopolists are firms producing differentiated products in a market and therefore, individually set price of their products and therefore, price makers. But competitive firms are producing identical or homogeneous products and therefore, compete with each other and has to accept the prices set by market factors. Therefore, the competitive firms are price takers. The correct answer is

C. Makers, but competitive firms are price takers.