88. A firm becomes more capital intensive if it increases the ratio of capital t

Question

88. A firm becomes more capital intensive if it increases the ratio of capital to labor. A) True B) False 89. The slope of a long-run average cost curve exhibiting diseconomies of scale is: A) zero. B) infinite. C) positive. D) negative. Use the following to answer question 90: Total output per period Total product 0 Li Units of labor per day 90. (Exhibit: Total Product) Between points A and B the marginal product of labor is: A) increasing. B) zero. C) falling D) infinite. 91. The curve that shows the additional cost of each additional unit of output is called the: A) average cost curve. B) total cost curve C) marginal product curve D) marginal cost curve

Explanation / Answer

88.

A.True

With increase in capital per worker, the setup is becoming capital intensive, rather labor intensive.

89.

C.Positve

Since, under the diseconomy of scale, average cost is increasing, hence the slope is positive.

90.

C.Falling

In this section, MPL is falling.

91.

D.Marginal cost curve

Additional cost required to produce one additional unit of output is called marginal cost and the associated curve is marginal cost curve.

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