47. According to the law of diminishing returns, what will happen if all inputs increase k times?
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Output will increase more than k times.
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Output will increase less than k times..
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Output will increase exactly k times.
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The law of diminishing returns says nothing about it.
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None of the above
Cost
Marginal Cost
Average Total Cost
Average Variable Cost
Quantity
48. Student Vasya Pupkin draws the above graph to show the main cost curves.
A) The graph is correct.
B) The axes are marked incorrectly.
C) Marginal cost cannot be negative.
D) Marginal cost cannot be greater than the average total cost.
E) The graph is incorrect, but for a reason not mentioned above.
If marginal cost is negative then the increase in production leads to the decrease in the total costs, thus at current output costs are not minimized
49. Vasya Pupkin makes two statements:
I. A profit-maximizing firm should set marginal cost equal to price only if price equals marginal revenue.
II. A profit-maximizing firm will never produce at a point where its marginal revenue is negative.
A) Both statements are correct.
B) Statement I is correct, but statement II is incorrect.
C) Statement I is incorrect, but statement II is correct.
D) Both statements are incorrect.
I) The general condition for profit maximization is MR=MC, if MR=P then the former transforms to MC=P.
II) The profit-maximization condition is MR=MC so if MC is positive for any Q then profit-maximization firm will never produce where MR<0
50. Vasya Pupkin makes two statements:
I. Short-run average total cost curve always lies above the short-run average variable cost curve.
II. Long-run average total cost curve always lies above the long-run average variable cost curve.
A) Both statements are correct.
B) Statement I is correct, but statement II is incorrect.
C) Statement I is incorrect, but statement II is correct.
D) Both statements are incorrect.