Which of the Following Explains Most Accurately Why the Firm's

question 179

Multiple Choice

Which of the following explains most accurately why the firm's short-run marginal cost curve will eventually rise?

• A) As more of the variable factor is used, its price will rise.
• B) When diminishing marginal returns set in, it will take ever-larger quantities of the variable resources to produce an additional unit of output.
• C) As the variable factor is used more intensely, its marginal product will rise, causing an increase in marginal costs.
• D) As the size of the firm increases, the operational efficiency of the firm declines, causing an increase in marginal costs.

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Definitions:

Unemployment Shifts

Refers to changes in the unemployment rate due to economic fluctuations, policy changes, or other external factors.

Fed Chooses

When mentioned in economic contexts, "Fed Chooses" likely refers to the decision-making processes of the Federal Reserve, the central banking system in the United States, regarding monetary policy.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Natural Rate

The long-term rate of an economic variable, such as unemployment or interest, that is not influenced by cyclical or short-term factors.