Calculate Marginal Cost And Diminishing Marginal Returns

Question

1. When the quantity of unicycles is 40, the price is $16 and the marginal cost is $16. Which of the following statements is true?

A) The firm is making economic losses.
B) The firm is making a normal rate of profit.
C) The firm will become a monopoly.
D) The firm is making economic profits.

2. If the firm is experiencing diminishing marginal returns, when more of a resource is added:

A) marginal costs decline.
B) profits begin to drop.
C) output begins to drop.
D) marginal costs increase.

Summary

These multiple choice questions belong to Economics. The 1st question is about marginal cost and the 2nd question is about diminishing marginal returns.

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