For a fiRm That Faces Diminishing Returns, the Short-Run Marginal

question 47

Multiple Choice

For a firm that faces diminishing returns, the short-run marginal cost curve is _____.

• A) horizontal
• B) U-shaped
• C) vertical
• D) downward sloping at all levels of output

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Definitions:

Business Activity

Collective commercial, industrial, or professional operations within an economy, indicative of its overall economic health.

MPC

Marginal Propensity to Consume, a measure in economics that indicates the proportion of additional income that a household is likely to spend on consumption rather than saving.

Full Employment GDP

Refers to the maximum level of output that an economy can produce without causing inflation, when unemployment is at its natural rate.

Equilibrium GDP

Equilibrium GDP is the level of real GDP where aggregate demand equals aggregate supply, indicating a state of economic balance without excess demand or supply.