Because the Marginal Product of a Variable Resource at First

question 377

Multiple Choice

Because the marginal product of a variable resource at first increases and then decreases as the output of the firm is increased,

• A)total cost at first increases at a decreasing rate and then increases at an increasing rate.
• B)total variable cost at first increases at an increasing rate and then increases at a decreasing rate.
• C)average total cost at first increases and then diminishes.
• D)average fixed cost will rise beyond the point of diminishing returns.

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Definitions:

Consumer Surplus

The discrepancy between the maximum price consumers are ready to spend on a good or service and their actual expenditure, reflecting the consumer's gain.

Government Policy

Actions and strategies designed and implemented by government bodies to achieve specific societal goals.

Producer Surplus

The difference between the amount a producer is paid for a good versus the minimum amount they would be willing to accept for the good.

Government Policy

Official strategies or principles that a government adopts and implements to guide decisions and achieve rational outcomes.