Law of Diminishing Marginal Product

Q.

The total output is at its maximum when marginal output is

1. zero

2. increasing

3. decreasing

4. constant

Q. Total cost is the sum total of marginal costs.

1. True
2. False

Q. When the marginal product falls, the average product __________.

1. also rises
2. also falls
3. falls more rapidly
4. rises more rapidly

Q. Average variable cost tends to fall, stabilize and rise as output increases.

1. True
2. False

Q. Which is the best definition of the marginal firm?

1. The firm with the largest profit.
2. The firm with the lowest costs.
3. The firm which makes only normal profit.
4. The firm which equates its marginal cost with marginal revenue.

Q. In the short run, when the total product decreases and the marginal product becomes negative, it is known as ___________.

1. stage of negative returns
2. stage of diminishing returns
3. stage of increasing returns
4. stage of constant returns

Q. Marginal product will equal average product when ______.

1. average production is constant
2. average production is rising
3. average production is falling
4. all of the above

Q. With which of the following is the concept of marginal cost closely related to?

1. economic cost
2. opportunity cost
3. fixed cost
4. variable cost

Q. A firm maximizes its total profit when _________.

1. TC > TR
2. TR = TC
3. MR = MC
4. AR = AC

Q. Marginal cost is __________________.

1. the change in cost following a managerial decision
2. the change in output resulting from one dollar change in cost.
3. the change in average cost following a one-unit change in output
4. the change in cost following a unit change in output

Q. If a firm's cost of raw material decreases then _________.

1. marginal cost curve will shift downward
2. marginal cost curve will shift upward
3. market price will go down
4. market price will go up