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1
What is the significance of the maximum point on the total product curve?
A)It is the point where the increase in output begins to slow down.
B)It is the point where diminishing returns sets in.
C)It is the point of maximum marginal product.
D)It is the point where marginal product becomes zero.
2
If marginal product is declining, which of the following statements is correct?
A)Average product must be falling.
B)Average product could be rising or falling.
C)Marginal cost must be falling.
D)Average variable cost must be rising.
E)Average variable cost must be falling.
3
All of the following statements, except one, are correct. Which is the exception?
A)If the marginal cost curve shifts down, then the average total cost curve will also shift down.
B)If the marginal cost curve shifts down, then the average variable cost curve will also shift down.
C)The average fixed cost curve will be unaffected by a shift in the marginal cost curve.
D)If the marginal product curve shifts up, then the marginal cost curve will shift up.
E)If the marginal product curve shifts up, then the average product curve will shift up.
4
Which of the following statements would be true about a firm that is operating under conditions of excess capacity?
A)The firm's average total cost would be at a minimum.
B)The firm's average total cost would not be at a minimum.
C)The firm's average total cost may or may not be at a minimum, but the firm would not be at capacity output.
D)The firm would not be at capacity output, but its average total cost would be at a minimum.
E)The firm would need to reduce output to achieve minimum average total cost.





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