1/If your plant is operating in the positively-sloped portion of a long-run aver

Question

1/If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:
A/decreased input prices.
B/improved utilization of by-products.
C/specialization of resources.
D/limited decision-making capacity.

2/At the long-run quantity of output, where the LRAC curve is at its lowest point, it is tangent to the ________ of the corresponding short-run average total cost curve.
A/minimum
B/maximum
C/right of the minimum
D/left of the minimum

3/Suppose a firm is using labor and capital and obtaining the maximum possible output for a given total cost. If the price of labor increases, all other things unchanged, then the firm will:
A/shift funds out of labor into capital.
B/adjust factor utilization until the ratios of marginal product to price are equal for the two factors.
hire less labor, which will result in an increase in labor's marginal product , and hire more capital, leading to a C/fall in the marginal product of capital.
D/do all of the above.

4/The law of diminishing marginal returns assumes that there:
A/is at least one variable and one fixed factor of production.
B/are no variable factors of production.
C/are no fixed factors of production.
D/are no fixed costs.

Explanation / Answer

A/decreased input prices. A/minimum B/adjust factor utilization until the ratios of marginal product to price are equal for the two factors. hire less labor, which will result in an increase in labor's marginal product , and hire more capital, leading to a A/is at least one variable and one fixed factor of production.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.