If the marginal revenue is less than the marginal cost then to profit maximize a firm should
Reduce output
Increase output
Leave output where it is
Increase costs
The law of diminishing returns assumes
There are no fixed factors of production.
There are no variable factors of production .
Utility is maximised when marginal product falls.
Some factors of production are fixed .
_______ increases and decreases with the volume of output .
Fixed cost
Variable cost
Total cost
Money cost
The profit per sale is a measure of
Cash flow
Profitability
Feasibility
Liquidity
If law of diminishing return is in operation average cost
Decreases
Increases
Remains constant
Decreases slowly .
Total revenue equals
Price plus the quantity
Price multiplied by the quantity sold
Price divided by the quantity sold
Price minus the quantity sold
In the short term a firm will produce provided the revenue.
Covers fixed costs
Covers variable costs
Covers total costs
Covers sales
In the long term a firm will produce the revenue covers
Fixed costs
Variable costs .
Total costs
Sales
The average variable cost curve .
Is derived from the average fixed costs .
Converges with the average cost as output increases .
Equals the total costs divided by the output .
Equals revenue minus profits .
According to the law of diminishing returns.
The marginal product eventually falls as more units of a variable factor are added to a fixed factor .
Marginal utility falls as more units of a product are consumed .
The total product falls as more units of a variable factor are added to a fixed factor .
The marginal product eventually increases as more units of a variable factor are added to a fixed factor.
