Chapter 10 - Answers to Questions for Review 1. The law of...

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Answers to Questions for Review 1. The law of diminishing returns implies that eventually the VC curve will slope upward. 2. As soon as diminishing returns set in, the MC curve will slope upward. 3. Book publishing. 4. If MC is less than average costs (total or variable), then each additional unit produced should lower average cost. If MC is more than average costs (total or variable), then each additional unit produced should increase average cost. 5. We have decreasing returns. 6. If MC was greater for one activity, then one could lower total cost by shifting some production. Answers to Chapter 10 Problems 1. Quantity Total Fixed Variable ATC AVC AFC MC of output cost cost cost ___________________________________________________________ 0 24 24 0 -- -- -- _____ ______________________________________________________________ 16 1 40 24 16 40 16 24 _____ ______________________________________________________________ 34 2 74 24 50 37 25 12 _____ ______________________________________________________________ 34 3 108 24 84
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This homework help was uploaded on 04/08/2008 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.

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Chapter 10 - Answers to Questions for Review 1. The law of...

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