Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3
Refer to Table 8.3. From the information in the given table,
A. the firm is in the long run.
B. the difference between total cost and total variable cost decreases as output increases.
C. the firm eventually experiences diminishing returns to its variable input.
D. the marginal cost curve intersects the average total cost curve between 3 and 4 units of output.
Answer: C
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If a firm decreases its plant size and finds that its long-run average costs have decreased, then
A) the firm should reduce its plant size even more. B) its labor is more productive in a smaller plant. C) its diseconomies of scale are less. D) the firm is now profitable.
Railroad competition was the primary cause of canal failures
Indicate whether the statement is true or false
The above figure shows a perfectly competitive firm. If the market price is $20 per unit, the firm
A) will definitely shut down to minimize its losses. B) will stay open to produce and will make zero economic profit. C) will stay open to produce and will incur an economic loss. D) will stay open to produce and will make an economic profit. E) might shut down but more information is needed about the fixed cost.
A manufacturer that is trying to avoid the "double marginalization problem" can do so by encouraging competition rather than protecting retailers through exclusive territories, and controlling final product price through resale price maintenance
contracts. Indicate whether the statement is true or false