econ

It says that as successive increments of a variable resource are added to a fixed cost, the marginal product of the variable resource will eventually decline.

a short -run horizon phenomena caused by fixed of at least one factor of production such as land, plant, building, and machineries

means that the marginal cost is increasing, and the increasing marginal cost leads to increasing average costs that will result to decreasing profit.

mean that the long-run average costs are constant or does not change in relation to the output. A certain increase in inputs will have same increase in output.

means that the long-run average costs rise. it is an increase in all inputs, let us say 15%, that will result to a less than proportionate increase in output, let us consider less than 15%. It may occur at a very large output.

means that long run average cost falls, if all inputs are increased at the same proportion, output may increase by a larger proportion than the increase in input due to some factors that may lead to lower average costs.

between two products occur if the cost of producing two products jointly is less than the cost of producing those two products separately:

Cost (Q1, Q2) < Cost(Q1) + Cost (Q2)

between two products occur if the cost of producing two products jointly is higher than the cost of producing them separately:

Cost (Q1, Q2) > Cost (Q1) + Cost (Q2)

Diminishing marginal returns is a long-run horizon factors of production can be changed including buildings, size and number of plants and others which means that the marginal cost becomes a variable cost.

• TRUE

• FALSE