Mod 3.2: Short-Run Production Costs

When a firm is producing zero output, the total cost equals:

• zero

• the fixed cost

• the variable cost

• the marginal cost

• the average total cost

Marginal cost rises due to:

• increasing average costs

• increasing returns to fixed capital

• increasing human capital

• diminishing marginal returns

• diminishing profits

Which of the following always decreases when the quantity of output increases?

• marginal cost

• average fixed cost

• average variable cost

• average total cost

• average product of labor

Marginal cost can be found at the change in either of which two types of cost when output increases by one? (SELECT 2)

• variable cost

• average variable cost

• average total cost

• total cost

• fixed cost

If marginal product is positive and declining as more workers are hired, then total product is:

• decreasing at an increasing rate

• decreasing at a decreasing rate

• constant

• increasing at an increasing rate

• increasing at a decreasing rate

Diminishing marginal returns always involve:

• rapid expansion of plant size

• variable inputs

• fixed inputs

• too much physical capital capacity

• more resources than necessary