TRUE OR FALSE ____ 16. The law of diminishing marginal returns provides an expla
ID: 1199878 • Letter: T
Question
TRUE OR FALSE
____ 16. The law of diminishing marginal returns provides an explanation for why Average Cost eventually increases as output is expanded in the short run.
____ 17. The marginal product is the increase in output per additional unit of input.
____ 18. As output increases, marginal cost increases, reaches a maximum, and then falls.
____ 19. The marginal product curve rises when the marginal cost curve rises.
____ 20. If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level.
Explanation / Answer
16. The statement is True. The law of diminishing marginal returns provides an explanation for why Average Cost eventually increases as output is expanded in the short run.
17. The statement is True. The marginal product is the increase in output per additional unit of input.
18. The statement is False. The output decreases when the marginal cost increases. It reaches a maximum and then falls.
19. The statement is False. The marginal product curve shows rise when the marginal cost curve falls. The decrease in the marginal cost curve is equal to increase in th marginal product curve.
20. The statement is True. If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level.
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