10. Other things being equal, when marginal productivity rises: A. average fixed
ID: 1130602 • Letter: 1
Question
10. Other things being equal, when marginal productivity rises: A. average fixed cost must rise. B. marginal cost must fall. C. average variable cost must rise. D. total cost must fall. 1. If the marginal revenue of the next widget a firm produces is $100 and its marginal cost is $110, a firm should: A. reconsider past production decisions. B. decrease production. C. increase production. D. hold production constant. 12. A perfectly competitive firm facing a price of $14 decides to produce 100 widgets. If its marginal cost of producing the last widget is S12 and it is seeking to maximize profit, the firm should: A. produce more widgets B. produce fewer widgets. C. continue producing 100 widgets. D. shut down. 13. Suppose that the firms in the perfectly competitive oat industry are currently receiving a price of $3 per bushel for their product. The minimum possible average total cost of producing oats in the long run is $5 per bushel. Other things being equal, it follows that A. the price of oats will be S5 in the long run. B. the price of oats will be somewhere between $3 and $5 in the long run. C. the price of oats will be $3 in the long run. D. it is not possible to determine the price of oats in the long run from the information given. 14. The higher the concentration ratio in a given industry, the: A. closer the industry is to a perfectly competitive market structure. B. larger the market shares of the smallest four firms in the industry C. closer the industry is to an oligopolistic or monopolistic type of market structure. D. smaller the market shares of the largest four firms in the industry.Explanation / Answer
Q 10
Other things constant when marginal productivity rises marginal cost should fall
Hence option B is the answer.
Q11
Marginal Revenue less than Marginal Cost is loss making argument hence firm needs to cut down its expenditure so as to achive optimum level of production
Hence Option B
Q12
For Perfectly competitive firm Price equals Marginal Cost
Hence It should produce more widgets to match the Marginal Cost to Price so as to maximize the profit
Hence Option A
Q 14
Due to higher concentration ratio few firm produce most of the output hence market can be oligopolistic or monopolistic
Hence option C
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