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The firm producing at the minimum point of the AC curve is said to be:

A. Operating under diminishing cost

B. Making optimum use of plant capacity

C. Operating at excess capacity

D. Operating under increasing costs

Correct Answer : B.


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  1. Demand is elastic when the coefficient of elasticity is:
  2. In 1890, Principles of Economics was written by:
  3. Cardinal approach includes arranging:
  4. Chamberline introduces the concept of:
  5. Under monopolistic competition, the products sold by the firms are:
  6. The advantage of using indifference curves rather than marginal utilities is:
  7. In the case of an inferior good, the income effect:
  8. If the commodity is inferior then the increase in income of the consumer results in:
  9. A monopoly producer has:
  10. The engineering production function and engineering costs curves are concerned with the:
  11. In Edgeworth model, prices oscillate between:
  12. The supply curve would probably shift to the right if:
  13. When total product (TP) is maximum:
  14. The budget constraint equation of the firm is:
  15. Under monopoly and imperfect competition MC is:
  16. If production increases under constant returns to scale, the cost will:
  17. The relationship between price effect, income effect and substitution effect is:
  18. By reducing the prices of its products below those of its competitors, a perfectly competitive seller:
  19. In general, most of the production functions measure:
  20. In the case of an inferior commodity, the income-elasticity of demand is:
  21. Which is not an essential feature of a socialist economy?
  22. A vertical supply curve parallel to the price axis implies that the elasticity of supply is:
  23. If two goods are complements then indifference curve (IC) will be:
  24. The model which gives us information about price and output changes in different periods is:
  25. The production function of homogeneous of degree one (n=1) is also called:
  26. Price elasticity of demand is best defines as:
  27. Selling costs are incurred under monopolistic competition to:
  28. The long-run average cost is based on the fact that:
  29. If the slope of the isoquant is equal to the slope of isocost, then isoquant is:
  30. Marginal utility (MU) always: