micro2 1) Law of diminishing marginal product suggests costs wil A) B) inc. at a
ID: 1102550 • Letter: M
Question
micro2 1) Law of diminishing marginal product suggests costs wil A) B) inc. at a dec rate inc at a constant rate C) inc. at an inc rate D) hold constant throughout the production run 2) A firms supply is directly related to its A) B) Total Cost Average Total Cost C) Average Variable cost D) Marginal cost 3) If the MR-10 and the MC-12 A) Increase the quantity produced B) Maintain the current level of production D) Earn positive profits C) Decrease the quantity produced 4) What effect of a price increase causes you to buy less quantty of all types goods? A) Income effect B) Substitution effect C) Crowding out efflect D) Doppler efflect D) You need income and Prices to analyze effectiv C) Price of eggs increased 5) If the MU'S of bacon exceeds the MUrS of sausage, and you have money for one more nem, then you A) Maintain current combination of goods CBuy more sausage B) Buy more Bacorn 6) What can be determined by looking at this graph? A) Price of Peppers increased B) Price of peppers decreased D) Price of eggs decreased 7) Which condition finds the profit maximizing quantity? A) TR TC C) MR MC D) Profit Parallel shifts in the budget constraint usually represent a change in what? A) B) 8) Income The price of a related good C) D) The price of a substitute good The quantity you can purchase of the cheap What criteria is used when deciding whether to produce, or shutdown? A) TR2 TC 9) C) MR MC D) Profit20 10) What single word could best be used to describe what is happening according to the Law of Diminishing Marginal Utility? C) Happier D) Boredom A) Excitement B) Dislike Refer to the graph for #11-$13: 11) This firm is earning MC A) +profit B) proft c) zero proft d) capital stock What quantity best describes the optimal quantity A) 10 B) 1 12) C) 20 Should this firm operate? A) B) C) D) 13) No, profitis negative No, TR is less than TC Yes, MR is more than MC Yes, TR is more than VC 10 20Explanation / Answer
1)
The law of diminishing marginal product means that as the input is increased, output increases but at decreases rate. It means that marginal product starts decreasing when marginal cost starts rising at increasing rate.
Hence The law of diminishing marginal product means that cost increases at increasing rate.
Therefore option C is the correct answer.
Increases at increasing rate.
2)
In perfect competition, the portion of the marginal cost curve which is above the intersection of the average variable cost curve is the supply curve.
It means MC is related to the firm supply curve. In other words, a firm decide whether to supply more or less based on the marginal cost which additional cost of producing one more unit of output.
Hence option D is the correct answer.
3.
A firm profit maximizing condition is at a point where MR and MC are equal.
MR=10 ad MC=12
Therefore the firm starts reducing production until MR becomes equal to MC
If MR is less than MC, the firm starts reducing production until MR becomes equal to MC.
Hence option C is the correct answer.
( 4)
Income effect cause to increase the consumption of more goods and services when real income increase and vice-versa.
So when the price of a goods increases, it reduces real income of the consumer, so the person will start consuming less of all goods.
Hence option A is correct answer.
Income effect
* according to Chegg guidelines i have solved first four question.
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