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QUESTION 4 Assuming each unit of variable inputs cost the same, marginal cost will increase as output increases if O Variable cost is rising. Total cost is rising Marginal physical product is rising. Marginal physical product is falling QUESTION 5 In the short run, when a firm produces zero output, total cost equals: O fixed costs. variable costs O zero. O average total cost. QUESTIO Economic cost includes: O Only the value of resources used to produce a good for which a monetary payment is made The value of all resources used to produce a good. O Only implicit costs. Only explicit costs. QUESTION 7 If an industry exhibits economies of scale: O Factory size makes no difference, lowest cost production will always be achieved It would be better to produce at several small factories It would be better to produce at one large factory O minimum ATC is higher at a large factory than at a small one. QUESTIONS The best measure of the economic cost of any activity is The amount you would have to pay to do it. O The economics cost plus the accounting cost. The most valuable opportunity you give up to do it O Only explicit costs. QUESTION 9 Explain the Law of Diminishing Marginal Returns. Why does it happen?
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