Which of the following is a feature of the short-run cost curves?
A. Marginal cost is always constant
B. Average fixed cost declines continuously as output increases
C. All costs are variable
D. There are no fixed costs
Answer: Option B
Solution (By JKSSB Mock Tests)
Average fixed cost falls continuously with an increase in output because total fixed cost is spread over a larger number of units; the AFC curve is a rectangular hyperbola.
Explanation:
Search-and-matching theory explains frictional and structural unemployment as the result of imperfect information and the costly process of matching heterogeneous workers with heterogeneous jobs.
Explanation:
Under monopolistic competition, firms produce less than the optimum output (excess capacity) and earn only normal profits in the long run due to free entry and exit.
Explanation:
Technology primarily affects aggregate supply. Aggregate demand is determined by consumption, investment, government spending and net exports.
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