The short-run average cost curve is U-shaped mainly due to: MCQ with Answer and Explanation

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The short-run average cost curve is U-shaped mainly due to:

A. economies of scale

B. external economies

C. constant returns to scale

D. the law of variable proportions

Answer: Option D

Solution (By JKSSB Mock Tests)

In the short run, U-shaped average cost arises from the law of variable proportions.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'menu cost' of inflation refers to:

A. cost of food

B. cost of borrowing

C. cost to firms of changing prices frequently

D. cost of printing new currency

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Correct Answer: Option C

Explanation:
Menu cost is the cost firms incur in updating prices during inflation.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is NOT a type of elasticity of demand?

A. Price elasticity

B. Supply elasticity of demand

C. Cross elasticity

D. Income elasticity

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Correct Answer: Option B

Explanation:
Elasticity of demand includes price elasticity, income elasticity and cross elasticity. Elasticity of supply is a separate concept relating to supply response.

This question belongs to: Economy GK Economy Set 1

Question #3

The 'International Monetary Fund' headquarters is in:

A. Geneva

B. Paris

C. Washington D.C.

D. New York

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Correct Answer: Option C

Explanation:
IMF headquarters is in Washington D.C.

This question belongs to: Economy GK Economy Set 1

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