6) If a factory has a short-run capacity constraint (e-g, an auto plant can only

ID: 1109253 • Letter: 6

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6) If a factory has a short-run capacity constraint (e-g, an auto plant can only produce 800 cars per day at maximum capacity), the marginal cost of production becomes at the capacity constraint. 6) A) zero B) infinite C) highly elasticD) less than the average variable cost 7)Which of the following is the user costefcapital? 7) A) interest rate - depreciation B) interest rate × value of capital-depreciation C) implicit cost of capital+explicit cost of capital D) economic depreciation+ (interest rate(value of capital)

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B) INFINITE

The marginal cost of production becomes infinite at the capacity constraint.

C) implicit cost of capital + explicit cost of capital

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6) If a factory has a short-run capacity constraint (e-g, an auto plant can only

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