11 May EXPLAIN WHY THE MARGINAL COST CURVE INTERSECTS AVERAGE TOTAL COST AT THE POINT OF MINIMUM AVERAGE TOTAL COST.
When the firm increases output and the costs rise proportionately, then the
long-run average cost curve is ________ and the firm is experiencing ________.
A)
horizontal; constant returns to scale
B)
downward sloping; constant returns to scale
C)
upward sloping; diseconomies of scale
D)
downward sloping; economies of scale107)
Diminishing marginal returns imply that marginal cost is rising. 108)
The marginal cost curve always intersects the average total cost curve at the
minimum of average total cost. 109)
If the marginal cost is increasing over a given output range, the average total
cost must increase. 110)
If the average total cost is increasing over a given output range, the average
total cost must be smaller than the marginal cost. 111)
Assuming that labor is the only variable input with a fixed production
facility, explain the relationship between the marginal product of labor and
the marginal production cost. 112)
Explain why the marginal cost curve intersects average total cost at the point
of minimum average total cost. 113)
Draw a graph showing a short-run average variable cost curve, a short-run
average total cost curve, and a short-run marginal cost curve. Briefly explain
the shape of each curve and how they relate to each other. 5.3 Production and Cost in the Long Run1)
The long-run average cost of production is defined asA)
total cost divided by the quantity of output the firm chooses when at least one
factor is fixed.B)
total cost divided by the quantity of output the firm chooses when it can
choose a production facility of any size.C)
the quantity produced by a firm that can choose any size production facility.D)
the quantity produced by a firm when at least one factor is fixed. 2)
In the long-run, diminishing returns wouldA)
not exist because no input is held constant.B)
not exist because all inputs are held constant.C)
still exist at a lesser degree because inputs are allowed to vary.D)
exist at a greater degree, because all inputs are allowed to vary. 3)
When the firm increases output and the costs rise proportionately, then the
long-run average cost curve is ________ and the firm is experiencing ________.A)
horizontal; constant returns to scaleB)
downward sloping; constant returns to scaleC)
upward sloping; diseconomies of scaleD)
downward sloping; economies of scale
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