Economics: Microeconomic Analysis - Reading 17: Output and C states, returns, process, holding, resources

mayanfang1

Q1. The law of diminishing returns states that for a given production process, as more and more of a resource (such as labor) are added, holding the quantities of other resources fixed:

A)   output increases at a decreasing rate.

B)   cost declines at a decreasing rate.

C)   cost declines at an increasing rate.

Q2. The law of diminishing returns states that at some point:

A)     as less of a resource are devoted to production, holding the quantity of other inputs constant, the output will decrease, but at an increasing rate.

B)     as more of a resource is devoted to production, holding the quantity of other inputs constant, the output will increase, but at a decreasing rate.

C)     as more of a resource is devoted to production, holding the quantity of other inputs constant, at some point output will begin to decrease.

Q3. Which of the following is least accurate with regard to the long-run and the short-run?

A)   In the short run, only plant size is fixed.

B)   Long-run cost curves pertain to plants of different sizes.

C)   In the long-run, all costs are variable.

Q4. Based on the concept of diminishing returns, as the quantity of output increases, the short-run marginal costs of production eventually:

A)    fall at a decreasing rate.

B)    rise at a decreasing rate.

C)    rise at an increasing rate.

mayanfang1

答案和详解如下：

Q1. The law of diminishing returns states that for a given production process, as more and more of a resource (such as labor) are added, holding the quantities of other resources fixed:

A)   output increases at a decreasing rate.

B)   cost declines at a decreasing rate.

C)   cost declines at an increasing rate.

Correct answer is A)

The law of diminishing returns states that for a given production process, as more and more resources (such as labor) are added holding the quantities of other resources fixed, output increases at a decreasing rate. This occurs because, at some point, adding more workers results in inefficiencies.

Q2. The law of diminishing returns states that at some point:

A)     as less of a resource are devoted to production, holding the quantity of other inputs constant, the output will decrease, but at an increasing rate.

B)     as more of a resource is devoted to production, holding the quantity of other inputs constant, the output will increase, but at a decreasing rate.

C)     as more of a resource is devoted to production, holding the quantity of other inputs constant, at some point output will begin to decrease.

Correct answer is B)

At low levels of output, increasing marginal returns will exist corresponding to the downward sloping portion of the marginal cost curve. As marginal costs begin to increase diminishing marginal returns will occur.

Q3. Which of the following is least accurate with regard to the long-run and the short-run?

A)   In the short run, only plant size is fixed.

B)   Long-run cost curves pertain to plants of different sizes.

C)   In the long-run, all costs are variable.

Correct answer is A)

In the short-run, labor is major variable cost. Plant size, in addition to technology and equipment, are fixed.

Q4. Based on the concept of diminishing returns, as the quantity of output increases, the short-run marginal costs of production eventually:

A)    fall at a decreasing rate.

B)    rise at a decreasing rate.

C)    rise at an increasing rate.

Correct answer is C)

The law of diminishing returns states that as more variable resources are a production process combined with a fixed input, output will eventually increase at a decreasing rate. In the short run, as the quantity produced rises, costs rise at an increasing rate.

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