Answer to Question #52921 in Microeconomics for Yana

Question

1. Which of the following explains most accurately why the firm's short - run marginal cost curve will eventually rise?
a. As more of the variable factor is used, its price will rise.
b. When diminishing marginal returns set in, it will take ever - larger quantities of the variable
resources to produce an additional unit of output.
c. As the variable factor is used more intensely, its marginal product will rise, causing an
increase in marginal costs.
d. As the size of the firm increases, the operational efficiency of the firm declines, causing an
increase in marginal costs.
.
2. When marginal cost is below average total cost:
a. total cost is falling.
b. total cost is rising.
c. average total cost is falling.
d. average fixed cost is rising.
e. total variable cost is falling

Answer 1

1. Which of the following explains most accurately why the firm's short - run marginal cost curve will eventually rise?
b. When diminishing marginal returns set in, it will take ever larger quantities of the variable resources to produce an additional unit of output.
2. When marginal cost is below average total cost:
c. average total cost is falling.