Production And Costs

Question 1

Which of the following statements about costs is correct?
A) When marginal cost is less than average total cost, average total cost
is rising.
B) The total cost curve is U-shaped.
C) As the quantity of output increases, marginal cost eventually rises.
D) All of the above are correct.

Answer 1

C) As the quantity of output increases, marginal cost eventually rises.

Question 2

Whenever marginal cost is greater than average total cost,
A) marginal cost is rising.
B) marginal cost is falling.
C) average total cost is rising.
D) average total cost is falling.

Answer 2

C) average total cost is rising.

Question 3

The firm’s efficient scale is the quantity of output that minimizes
A) average total cost.
B) average fixed cost.
C) average variable cost.
D) marginal cost.

Answer 3

A) average total cost.