Economics - Study Mode
[#76] Which of the following cost curves is never U-shaped?
Correct Answer
(D) Average fixed cost curve
Explanation
Solution: Average fixed cost curve is never U-shaped. The average fixed costs AFC curve is downward sloping because fixed costs are distributed over a larger volume when the quantity produced increases.
[#77] The classical theory explained interest as a reward for
Correct Answer
(C) Saving
Explanation
Solution: The classical theory explained interest as a reward for Saving. According to the classical theory, interest is the price paid for saving of capital. Like the value of other things, the price of saving is determined by its demand for and supply of savings.
[#78] When a competitive firm achieves long run equilibrium, then,
Correct Answer
(D) All of the above
Explanation
Solution: When a competitive firm achieves long run equilibrium, then, P=MC, MR=MC and P=ATC.
[#79] What best explains a shift in market supply curve to the right?
Correct Answer
(B) A new technique makes it cheaper to produce the good
Explanation
Solution: A new technique makes it cheaper to produce the good best explains a shift in market supply curve to the right. A rightward shift in the supply curve, say from a new production technology, leads to a lower equilibrium price and a greater quantity.
[#80] Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?
Correct Answer
(A) Cost of raw material
Explanation
Solution: Total costs in the short-term are classified into fixed costs and variable costs. Cost of raw material is a variable cost. Variable costs vary based on the amount of output, while fixed costs are the same regardless of production output.