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Which
of the above marginal cost curves reflects the existence of diminishing
marginal product?
a. A
b. B
c. C
d. D
92. If marginal cost is rising,
a. average
variable cost must be falling.
b. average
fixed cost must be rising.
c. marginal
product must be falling.
d. marginal
product must be rising.
93. Diminishing marginal product suggests that
the marginal
a. cost
of an extra worker is unchanged.
b. cost
of an extra worker is less than the previous worker’s marginal cost.
c. product
of an extra worker is less than the previous worker’s marginal product.
d. product
of an extra worker is greater than the previous worker’s marginal product.
94. Diminishing marginal product suggests that
a. additional
units of output become less costly as more output is produced.
b. marginal
cost is upward sloping.
c. the
firm is at full capacity.
d. All
of the above are correct.
95. The average fixed cost curve
a. always
declines with increased levels of output.
b. always
rises with increased levels of output.
c. declines
as long as it is above marginal cost.
d. declines
as long as it is below marginal cost.
96. Average total cost is very high when a small
amount of output is produced because
a. average
variable cost is high.
b. average
fixed cost is high.
c. marginal
cost is high.
d. All
of the above are correct.
97. Total cost necessarily rises due to
(i) rising
marginal cost.
(ii) falling
marginal cost.
(iii) increasing
marginal product.
a. (i)
only
b. (i)
and (ii)
c. (ii)
only
d. None
of the above are correct.
98. The efficient scale of the firm is the
quantity of output that
a. maximizes
marginal product.
b. maximizes
profit.
c. minimizes
average total cost.
d. minimizes
average variable cost.
99. When marginal cost is less than average total
cost,
a. marginal
cost must be falling.
b. average
variable cost must be falling.
c. average
total cost is falling.
d. average
total cost is rising.
100. When marginal cost exceeds average total cost,
a. average
fixed cost must be rising.
b. average
total cost must be rising.
c. average
total cost must be falling.
d. marginal
cost must be falling.
