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Questions and Answers
Which of the following is true about the short run in production decisions?
Which of the following is true about the short run in production decisions?
- The manager can change the size of the plant.
- The manager can only change production levels by hiring more or less labor and purchasing more or less raw material. (correct)
- The manager can choose to operate in any size plant with any amount of capital equipment.
- The manager has no control over production decisions in the short run.
What happens to the average variable cost when SMC is less than AVC?
What happens to the average variable cost when SMC is less than AVC?
- It remains constant
- It rises
- It falls (correct)
- It is not affected
Which of the following is considered a sunk cost in production?
Which of the following is considered a sunk cost in production?
- Variable costs
- Quasi-fixed costs
- Avoidable costs
- Fixed costs (correct)
What is the MRTS?
What is the MRTS?
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What is the difference between avoidable costs and sunk costs in production?
What is the difference between avoidable costs and sunk costs in production?
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What happens to the marginal product of labor and capital as labor is substituted for capital?
What happens to the marginal product of labor and capital as labor is substituted for capital?
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