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The short run cost curve is U shaped because of:

A. The operation of increasing cost

B. The existence of fixed cost

C. The existence of variable cost

D. All of the above

Correct Answer : C.


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  1. At the point where the straight line from the origin is tangent to the TC curve, AC is:
  2. Of the following, which one is a characteristic of monopolistic competition?
  3. In long run, a firm can change:
  4. A fall in demand for the product under monopolistic competition will likely result in:
  5. The production process is:
  6. If production increases under increasing returns to scale, the cost will:
  7. In the long-run competitive equilibrium, the theory predicts that:
  8. The demand of the necessities is:
  9. The difference between average cost and average revenue is:
  10. A straight line, downward-sloping demand curve implies that, as price falls, the elasticity of demand:
  11. A shift in the demand for a product is likely to result from a change in:
  12. Price elasticity of demand can be measured in the following way:
  13. In monopolistic competition, if a firm lowers its price, the rival firms will:
  14. When total product (TP) is maximum:
  15. In the modern theory of costs, the level of production which the firm considers feasible is known as:
  16. Efficient allocation of resources is achieved to a greater extent under:
  17. In 1776, a famous book An enquiry into the nature and causes of the wealth of nation was written by:
  18. MC is given by:
  19. Under the law of variable proportions, the average and the marginal product of the variable factor would…
  20. The right of individuals to control productive resources is known as:
  21. Under monopolistic competition, the firms compete alongwith:
  22. J.R.Hicks was:
  23. The largest possible loss that a firm will make in the short run is:
  24. In an indifference curve diagram, when the price of a product increases, the decline in quantity demanded…
  25. The Prisoners Dilemma was presented by A.W.Tucker in:
  26. Total variable costs in equation form are:
  27. In which case the elasticity shown by the different points of a curve is the same?
  28. A firm can never produce in the middle area of input space, in case of:
  29. Marginal cost curve cuts the average cost curve:
  30. In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain: