2 pts Question 12 Diminishing marginal returms implies 617 O dearessing average

Question

2 pts Question 12 Diminishing marginal returms implies 617 O dearessing average variable costs decreasing marginal costs O increasing marginal costs O decreasing average fied costs Question 13 2 pts Firms that are "breaking even" are O eaming zero economic profits eaming less than a normal rate of seun O shuting down in the short nun O All of the above ane comect Question 14 2 pts In the short un all fems that ean a loss will shut doan t cument firms are earming a proft, new fires will enter the industry frms act to mirimizs losses or maximize prots Question 15 2 pts

Explanation / Answer

12. The diminishing marginal returns is a situation in which the marginal product of the firm decreases as you increase the variable input. The one consequence of thediminshing marginal returns is that there will be increasing marginal costs to the firm. The marginal cost is the additional cost incurred by the firm by producing an extra unit of the output.

ANS: Increasing marginal cost.

13. The 'break even' is a situation is where there is no profits or loss to the firm, that is the total revenue and the total cost of the firm are equal. When the firm is break even there is zero economic profit

Ans: Earning zero economic profit.

14. In short run, if the firms are earning profits this will attract new firms into the market and the market supply curve will shift outward. So this reduce the profits of the existing firms and the firms zero economic profits in the long run.

Ans: If the current firms are earning a profit, new firms will enter the industry.

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