Question

13. We have learned that the Marginal Cost Curve equaled the Supply Curve. However, the actual

short-run supply curve technically starts at the point where the market price (or total revenue), and the

Marginal Cost curve intersects with the Average Variable Cost curve.

True – Bubble A

False – Bubble B

14. Do you know what the Long-Run Average Total Cost looks like? As you move from the left to the

right along the Long-Run Average Total Cost curve, at first you’ll have constant returns (more

efficiency), then diseconomies of scale, then economies of scale.

True – Bubble A

False – Bubble B

15. If we increase inputs (e.g. labor, capital) by 10 percent and get a 100 percent increase in output,

then not only are we enjoying economies of scale, but we are probably receiving increases in the

marginal product of labor.

True – Bubble A

False – Bubble B

16. Spending money on ‘employee training’ to increase productivity is always a great example of a

‘sunk cost.’

True – Bubble A

False – Bubble B

Answer 1

13.

True

SR supply curve is the AVC curve from the point where P or MR cuts at the AVC curve.

14.

False

First, it is economy of scale, then constant return to scale and them diseconomy of scale.

15.

False

It is economy of scale only. Marginal product of labor is considered when capital is fixed and it happens in short run only.

16.

True

It is sunk cost, because increase in productivity is not guaranteed due to spending on training.