Question

	In the short-run, in comparing the change in total variable cost (TVC) and total cost (TC) associated with an additional unit of output,
	Answers: a) the change in TC is greater than the change in TVC. b) no generalization can be made because of change in TFC. c) both are equal to MC. d) the change in TVC is greater than the change in TC.

	The short-run marginal product of a variable input has an inverse relationship with the:
	Answers: a) total variable cost. b) average variable cost. c) total fixed cost d) marginal cost.

Answer 1

1. Option C.

• In the short run, in comparing the change's in total variable cost and total cost associated with an additional unit of output, both TVC and TC are equal to marginal cost of producing an additional unit of output.
• In short run when atleast one of the factor of production is fixed, the slope of the marginal cost curve equals to that of the total cost and the total variable cost.
• This is because in the short run, both the total cost and total variable cost are incurred by the production of an additional unit of output by fixing atleast one of its factors of production.

2. Option D.

• The short run marginal product of a variable input has a inverse relationship with the marginal cost due to the law of diminishing marginal product.
• The law of diminishing marginal product states that when one more additional input is added after a certain point, the marginal product of variable inputs starts to decline.
• This will increase the marginal cost of the production as it is having an inverse relationship with marginal product of an input.