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Economics
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12 Dec 2019

The law of diminishing returns explains why

a. long run supply curves are downward sloping
b. total product is a straight line
c. short-run MC and AVC curves are U-shaped
d. the production possibilities curve is bowed out
e. monopolies have a guaranteed profit margin

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Related questions

The law of (diminishing or increasing) returns determines the shape of all cost curves: marginal, average, and total. In the short run, diminishing return, technology results in a U-shaped AC curve. What is the main implication on the firm with U-shaped AC curve? Moreover, from EAT ch 5, what should be the shape of AC and MC in the short run? Why? Please specifically explain.

Consider the various short-run cost curves.
(a) why is the total variable cost curve TVC shaped the way it is? In explaining, go back to the most basic assumptions about what happens when a firm produces output in the short run.
(b) When marginal cost MC is at its minimum value, what can we say about the nature of the marginal product of labor (MPL) curve(I.E., is it upward sloping or downward-sloping)? What is the logical basis for your conclusion?
(c) When average variable cost AVC is at its minimum value, what can we say about the nature of the marginal product of labor (MPL) curve (I.E., is it upward sloping or downward-sloping)? What is the logical basis for your conclusion?
(d) Suppose that, for a particular type of firm, the MPL is not diminishing, but it's also not increasing. What does the MCcurvefor this firm look like? Why might it make sense to think of the firm's capital being, say, a computer network, that multiple workers can use at the same time without slowing down the network?

1. the marginal cost curve is

A. Downward sloping to reflect the bowed out PPF.

B. Downward sloping as marginal benefits increase.

C. Upward sloping because marginal cost falls as more of a good or service is produced.

D. Upward sloping to reflect the increasing opportunity cost of producing one more unit.

E. U-shaped to reflect the bowed out PPF.

2. Allocative efficiency occurs

A. Anywhere inside or on the production possibilities frontier.

B. When the total cost of production is minimized

C. At all points on the production possibilities frontier.

D. At only one point on the production possibilities frontier.

E. At the points where the production possibilities frontier crosses the horizontal or vertical axis.

3. Auditors working for a large accounting firm are often away from the office. When they are in the office, they are allowed to use any desk that is available. Which method is used to allocate desks?

A. lottery

B. first-come, first-served

C. Command

D. Contest

E. Sharing equally


4. The marginal cost of a good or service

A. Can be calculated from the marginal benefit of that good or service.

B. decreases as more of the good or service is produced.

C. Can be derived from the production possibilities frontier.

D. Graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.

E. None of the above answers is correct.

5. The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

A. Marginal benefit.

B. Total benefit.

C. Marginal cost

D. Total cost.

E. Price.

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