38. Suppose the marginal cost curve in the short run first decreases, then reach

Question

38. Suppose the marginal cost curve in the short run first decreases, then reaches a minimum and then increases. If we are at an output where marginal cost is increasing, then: A) marginal product of the input(s) must be increasing. B) average variable cost must be increasing. C) average total cost must be increasing. D) marginal product of the input(s) must be decreasing. 39. If marginal cost is equal to average total cost, then: A) average total cost is increasing. B) average total cost is at its maximum. C) average total cost is at its minimum. D) marginal cost is increasing. 40. When an increase in the firm's output reduces its long-run average total cost, it achieves: A) economies of scale. B) diseconomies of scale. C) constant returns to scale. D) variable returns to scale.

Explanation / Answer

38. Correct option: (b) and (c)

39. Correct option: (c)

Reason: MC equals ATC at the point ATC is at its minimum

40. Correct option: (a) economies of scale

Reason: Economies of scale occurs when increasing output leads to reduced input costs.

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