1) Which of the following commodity bundles is an example of joint products? Ski
ID: 1221248 • Letter: 1
Question
1) Which of the following commodity bundles is an example of joint products?
Skimmed milk and butter
Golf clubs and golf balls
Shoe and shoe polish
Meat and fish
2) A firm increases all its factors of production by 12 percent. The output increases by 10 percent. In the future, the firm is most likely to experience:
diseconomies of scale.
increasing returns to scale.
constant economies of scale.
increasing returns to factors.
3) The scale of a business is its target production level when:
the business is able to effectively resize its operations in the long run.
the business is operating at the minimum point on its average variable curve.
the business is earning positive economic profit.
the business is using capital-intensive mode of production.
4) All costs involved in the long-run production decisions are considered:
opportunity costs.
accounting costs.
variable costs.
fixed costs.
5) To sustain in a perfectly competitive market, a firm should:
charge a price equal to its average variable cost.
have a long-run average cost curve which is falling throughout.
operate close to its capacity level.
produce where the price is greater than the marginal cost.
6) At very low production volumes, it is likely that:
the resources will be efficiently used.
the variable cost will form a major portion of the total cost.
the average fixed cost will be low.
the average cost will be high.
7) In the short run, _____ do not increase with the quantity of output being produced.
marginal costs
fixed costs
variable costs
implicit costs
Explanation / Answer
(1) Skimmed milk and butter are joint products.
(2) Diseconomies of scale.
Increase in output is less than the increase in factors of production, which means that ceteris paribus, increase in output will give rise to more than proportionate rise in costs. So, as output rises, average total cost rises more than proportionately.
(3) the business is operating at the minimum point on its average variable curve.
(4) Variable costs.
The difference between short run and long run is that, in long run all costs are assumed to be variable.
(5) have a long-run average cost curve which is falling throughout.
(6) Average cost will be high.
Even when production volume is low, fixed costs do exist and therefore, total cost is high, causing high average cost.
(7) Fixed costs.
In short run, fixed costs are assumed to remain unchanged.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.