If the Productivity of Variable Factors Is Decreasing in the Short-Run

question 26

Multiple Choice

If the productivity of variable factors is decreasing in the short-run:

• A) marginal cost must increase as output increases.
• B) average cost must decrease as output increases.
• C) average cost must increase as output increases.
• D) marginal cost must decrease as output increases.

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Definitions:

Price

The amount of money required to purchase a good or service, determined by various market and economic factors.

Scarce Resources

Essential inputs that are available in limited quantities for the production of goods and services, leading to the problem of allocation.

Law of Demand

Economic principle stating that, ceteris paribus, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa.

Unlimited Wants

The economic concept that human desires and needs are endless and vary in nature, leading to constant demand for goods and services.