With the expansion of output, the short run average cost curve, beyond a point, starts rising because:
Average fixed cost increases sharply
More production yields lower per unit price
The law of variable proportions applies to short run production
Sales expenses become much larger
Correct Answer :
C. The law of variable proportions applies to short run production
Related Questions
Production indifference curve (isoquant) is a curve which shows:
Equal level of output
Unequal level of outputs
Equal level of inputs
Unequal level of inputs
Capital and Development Planning is the work of:
S.Chakravarty
J.S.Mill
A.C.Pigou
F.W.Taussig
In second degree price discrimination, monopolist takes away :
All of the consumer surplus
All of the producer surplus
Some part of the consumer surplus
None of them
The supply curve for the short-run competitive firm is the same as:
Marginal cost curve
Average variable cost curve
That part of the marginal cost curve which equals or is greater than AVC
Average total cost curve
If by doubling all inputs in the long run output is less than double, it is a case of:
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Variable returns to scale
If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity of demand is:
Perfect elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
When a competitive firm is in equilibrium in the long-run, its output is such that:
Costs per unit of output are lowest
Total profits are highest
Marginal cost is lowest
Profit per unit of output is zero
We can obtain consumers demand curve from:
Income Consumption Curve (ICC)
Engels Curve
Price Consumption Curve (PCC)
Production Possibility Curve (PPC)
Any expansion in output by a firm in the short period will always reduce the:
Average variable cost
Average fixed cost
Both average fixed and variable cost
None of the above
An indifferent curve shows:
That how many utils are obtained from consuming different bundles of commodities
Different collections of two commodities the consumer considers to be of equal value
That if price increases there will be an increases in demand
None of the above
If under perfect competition, in the short period, price does not cover the average cost completely, the firm will even then stay in the market as long as:
The average fixed cost is covered
The average variable cost is covered
Some profit is earned
The entrepreneurs enjoy producing
The reserve capacity in administration is advocated on the ground that demand for a product will:
Decrease in the future
Increase in the future
Remain constant
None of the above
The vertical demand curve for a commodity shows that its demand is:
Highly elastic
Perfectly inelastic
Fairly elastic
Moderately elastic
Under Bandwagon effects, people use those goods which are used by their:
Friends
Relatives
Family
All of them
Which of the following formulae explain the term average revenue?
Total units /No. of Revenues
Total Revenue/No. of Units
Marginal Revenue × Units
Total Units/ Price
The total revenue curve for monopolist is the shape of:
Circle
Rectangle
Parabola
None of the above
If less is demanded at the same price or same quantity demanded at a lower price, it is a case of:
Contraction of demand
Decrease in demand
Increase in demand
Extension of demand
7.In an economy based on the price system the decision on what shall be produced is made by:
Government
Consumer
Producer
Stock holder
The demand curve of a firm in monopolistic competition is:
Negatively sloped
Vertical
Horizontal
Positively sloped
The main contribution of Alfred Marshal is in the field of:
Research in mathematical economics
Economics of labor
Theory of production
Theory of demand
Of the following commodities, which has the lowest price-elasticity of demand?
Car
Salt
Tea
House
The game theory was basically presented by:
Ricardo
Marshal
Neomann and Morgenstern
Karl Marx
In the range of excess capacity, the average costs are:
Maximum
Minimum
Equal to one
Equal to zero
Which of the following is an implicit cost of production?
Wages of the labor
Charges of electricity
Interest on owned money capital
Payment for raw materials
Which is not a central problem of an economy?
What to produce
How to produce
How to maximize private profit
For whom to produce
A price is a ratio of exchange between:
Money and exchange
Quantity and production
Production and consumption
Money and quantity
The normal long-run average cost curve is influenced by the:
Principle of diminishing returns
Economies and diseconomies of large scale production
Principle of constant return to scale
All of the above
A loss bearing firm will continue to produce in the short run so long as the price at least covers:
Average variable cost
Average fixed cost
Average variable cost + average fixed cost
Marginal costs
Identify the author of The Principles of political Economy and Taxation:
Alfred Marshal
J.S.Mill
David Ricardo
A.C.Pigou
When total product falls:
MP is positive
MP is negative
MP is falling
MP is rising