Which statements are NOT TRUE about the short term in the production process?

• In the short term, fixed inputs still exist.

• Short-term is a period of not less than a year.

• In the short term, firms have to bear fixed costs and variable costs.

• In the short term, the firm did not have time to make plans to resize the plant.

According to the theory of production costs, in the long term

• all costs are variable costs.

• variable costs always exceed fixed costs.

• fixed costs are higher than variable costs.

• firms have to bear fixed costs and variable costs.

The figure below shows the AP is the average output curve of a firm. If the firm uses an input unit less than Q1, then

• the marginal cost increases.

• the marginal cost decreases.

• the total production decreases.

• the average variable cost decreases.

Answer explanation

The figure below shows the firm's average production curve (AP) and marginal production (MP). The firm's output volume began to decline after the level of labour

• Q1

• Q2

• Q3

• Q4

Answer explanation

The marginal production curve intersects with the average production curve at the point

• AP is zero

• AP is increasing

• AP is decreasing

• AP is maximum

The diagram below shows the total cost (TC) curve, average variable cost (TVC) and fixed cost (TFC) of a firm. At the output level Q, RS is

• fixed cost

• average cost

• marginal cost

• variable cost

Answer explanation

The variable cost of a firm is the cost

• paid to fixed input.

• exists in the short term only.

• increases as the output increases.

• borne by the firm even if the output is zero.

The marginal cost curve will intersect with the average variable cost curve when

• total production is minimum.

• total production is maximum.

• total production is increasing.

• total production is decreasing.

The marginal cost will be equal to the average cost when

• the average cost is declining.

• the average cost is increasing.

• the average cost is at a minimum.

• the marginal cost is at a minimum.

The figure below shows AC is the average cost curve of a firm. If the firm produce output more than Q0, then

• the marginal cost is decreasing.

• the marginal cost exceeds the average cost.

• the marginal cost decreases and then goes up.

• the marginal cost is less than the average cost.

Answer explanation