13) 13) 2 4 0 Output In the figure, curves 1, 2, 3, and 4 represent the: A) MC,

Question

13) 13) 2 4 0 Output In the figure, curves 1, 2, 3, and 4 represent the: A) MC, AFC, AVC, and ATC curves respectively B) ATC, AVC, AFC, and MC curves respectively C) ATC, MC, AFC, and AVC curves respectively D) MC, ATC, AVC, and AFC curves respectively 14) Economies and diseconomies of scale explain: 14) A) why the firm's long-run average total cost curve is U-shaped. B) the profit-maximizing level of production. C) the distinction between fixed and variable costs. D) why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point. 15) Diseconomies of scale arise primarily because: A) the short-run average total cost curve 15) rises when marginal product is increasing. B) bevond some point marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital). efficient productive techniques available enterprise. employ the most C) firms must be large both absolutely and relative to the market to D) of the difficulties involved in managing and coordinating a large business mutual interdependence 16) 16) In which of the following market structures is there clear-cut B) Monopolistic competition. D) Oligopoly with respect to price-output policies? A) Pure monopoly C) Pure competition

Explanation / Answer

13) D. 1 represent MC, 2- ATC, 3-AVC and 4-AFC

14)A. Economies of scale means AC decreases when Q increases and diseconomies of scale means AC increases when Q increases. Thus AC is U shaped.

15)B. Because of law of variable proportion

16)D. Oligopoly where firms are mutually dependent in price and output

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