1) A firm’s marginal cost of production will increase with a rise in the output
ID: 1222587 • Letter: 1
Question
1) A firm’s marginal cost of production will increase with a rise in the output level due to:
decreasing returns to scale.
constant returns to scale.
economies of scale.
constant returns to factors.
2) The optimal level rule posits that:
if the price is more than the marginal cost, an increase the production quantity will lower the level of profit.
a firm should increase its production when the average total cost curve is rising.
if the marginal revenue is equal to the marginal cost, the firm is maximizing revenue.
if the marginal cost of the input exceeds the marginal revenue product, profit can be improved by decreasing the use of the input.
3) A typical derived demand curve for labor shows the relationship between:
the marginal revenue product and quantity of labor.
the wage rate and the quantity of labor demanded.
the average revenue earned by the firm and the rate of labor usage.
the marginal product of labor and the quantity of labor being used.
4) While hiring a new worker, a firm will pay a little higher wage than the prevailing market rate if:
the expected marginal revenue is positive.
the market demand for a new worker is low.
the labor market is less competitive.
the supply of workers is very high.
Explanation / Answer
1) A firm’s marginal cost of production will increase with a rise in the output level due to:
* diminishing returns to scale.
2) The optimal level rule posits that:
* if the marginal revenue is equal to the marginal cost, the firm is maximizing revenue.
3) A typical derived demand curve for labor shows the relationship between:
* the wage rate and the quantity of labor demanded.
4) While hiring a new worker, a firm will pay a little higher wage than the prevailing market rate if:1) A firm’s marginal cost of production will increase with a rise in the output level due to:
* the expected marginal revenue is positive.
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