The law of diminishing marginal returns implies that, in the short run:
A. output must fall beyond a certain point.
B. price must fall beyond a certain point.
C. the marginal product of the variable input must eventually decrease.
D. wages of workers must eventually increase.
Answer: C
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In monopolistic competition, excess capacity results from
A) the presence of a large number of buyers. B) the mobility of firms into and out of the industry. C) imperfect information about price. D) product differentiation.
A public good is
A) a good that is rivalrous and nonexcludable. B) a good that is rivalrous and excludable. C) a good that is nonrivalrous and excludable. D) a good that is nonrivalrous and nonexcludable.
The ___________ curve facing a perfectly competitive firm is perfectly elastic.
A. average total cost B. marginal cost C. supply D. demand
When marginal costs are increasing:
A. a firm is experiencing diminishing returns. B. average cost is always increasing. C. average cost is always decreasing. D. marginal costs are always greater than average costs.