The Toys-R-Danger-Us Toy Company can produce 500 water pistols for a total cost of 1,400 . If the variable cost of producing 500 water pistols is 1,300, then
a. fixed cost must be 100
b. marginal cost must be 1,300
c. marginal cost must be increasing
d. average variable cost must be decreasing
e. average fixed cost must be constant
QUESTION 2As output rises, marginal product eventually diminishes and
a. marginal cost increases
b. average cost falls
c. total cost falls
d. fixed cost is increasing
e. average product is negative
QUESTION 3When a firm is experiencing diminishing marginal returns, marginal cost is
a. rising
b. falling
c. constant
d. rising at first, then falling
e. zero
QUESTION 4What is the relationship between marginal cost and marginal product?
a. The two are not related.
b. When marginal product increases, marginal cost increases.
c. When marginal product increases, marginal cost falls.
d. When marginal product is negative, marginal costs are negative.
e. When diminishing marginal returns set in, marginal costs fall.
QUESTION 5What is true of marginal cost when marginal returns are decreasing?
a. It is negative and increasing.
b. It is negative and decreasing.
c. It is positive and increasing.
d. It is positive and decreasing.
e. It is positive and has a constant slope.
QUESTION 6What is true of marginal cost when marginal returns are increasing?
a. It is negative and increasing.
b. It is negative and decreasing.
c. It is positive and increasing.
d. It is positive and decreasing.
e. It is positive and has a constant slope.
Quick Reply
