Author Question: Three hundred firms supply the market for paint. For fifty of the firms, their short-run average ... (Read 74 times)

berenicecastro · **on:** Jul 1, 2018

Three hundred firms supply the market for paint. For fifty of the firms, their short-run average variable costs are minimized at 10 and short-run total costs are minimized at 15.

For the remaining firms, the short-run average variable costs and short-run average total costs are minimized at 20 and 25, respectively. If each firm has a U-shaped marginal cost curve then the short-run market supply curve is A) U-shaped too
B) kinked at 10
C) kinked at 15
D) kinked at 20
E) kinked at 25

Question 2

The situation pictured in Figure 6.2

A) is one of increasing marginal returns to labor.
B) is one of increasing marginal returns to capital.
C) is consistent with diminishing marginal product.
D) contradicts the law of diminishing marginal product.
E) shows decreasing returns to scale.