In perfect competition, the average revenue curve of a firm is
Below the marginal revenue curve
Downward sloping
The marginal revenue curve
Convex to the origin
Correct answer is C
For a perfectly competitive firm, the average revenue curve is a horizontal, or perfectly elastic, line. It is the same as a marginal revenue curve which is also a horizontal line at the market price, implying perfectly elastic demand.
A cost of production that is positively related to output is the
Total fixed cost
Average fixed cost
Variable cost
Social cost
Correct answer is C
Variable cost has a positive relationship with output in such a way that if a firm produces more output, the variable cost will be greater, and if a firm produces no output, then the variable cost will be zero. The variable cost depends on the level of output.
The short-run in production is the time period when
Techniques of production can easily be changed
All factors of production are vaiable
At least a factor is fixed while others are variable
Variable factors cannot be changed
Correct answer is C
The short-run production phase refers to a production cycle in which at least one factor of production is fixed.
When an increase in inputs leads to a more than proportionate increase in output, there is
Decreasing returns to scale
Increase in marginal product
Increasing retums to scale
Constant retums to scale
Correct answer is C
Increasing returns to scale happens when the output increases in a greater proportion than the increase in input.
What happens when a minimum price is imposed in a market?
Shortage occurs
Surplus occurs
Market maintains its equilibrium
Many firms will close down
Correct answer is B
A minimum price is when the government doesn't allow prices to go below a certain level. At this point, suppliers will be willing to supply more in the market because they are certain to sell above a particular price. This will lead to a surplus in the market.
The minimum price policy has been used in agriculture to increase farmer's income.