Answer to Question #52924 in Microeconomics for Yana

Question

If a firm's long-run average cost curve is rising, it is experiencing:
a. a constant return to scale.
b. economies of scale.
c. diseconomies of scale.
d. none of these.

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.

Answer 1

If a firm's long-run average cost curve is rising, it is experiencing:
c. diseconomies of scale.
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.