ECS1501
ECS1501 ASSIGNMENT
04 SEMESTER 02 -
2025 ECS1501
694833
9/30/ 2025
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Distribution of this document is illegal R13,625 per year?
,4.1 Which one of the following statements is correct?
[1] the short run is a time period of less than one year.
[2] the short run is a period of time during which the quantity of at least one
input is fixed and the quantities of the other inputs can be varied.
[3] the short run is a period of time during which the quantities of all inputs can
be varied, but labour is held constant.
[4] the long run is a period of time during which the quantities of all factor
inputs are fixed.
Explanation:
The short run is defined as the period during which at least one of the inputs
is fixed. An example would be a firm which has a factory in which certain
machinery has been installed and which can only vary its inputs of labour, raw
materials, etc. (PAGE 146 Prescribed Textbook)
2
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,4.2 Which of the following statements is correct?
[1] implicit costs are monetary payments for the factors of production and other
inputs bought or hired by the firm.
[2] economic cost minus explicit cost is equal to implicit cost.
[3] the economic costs of production are equal to opportunity costs, which in
turn are equal to explicit costs.
[4] economic or excess profit is equal to total revenue minus implicit costs.
Explanation:
Economic cost of production (opportunity costs) = explicit costs + implicit costs
Therefore, Economic cost – Explicit costs = Implicit costs
3
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, 4.3 Which of the following is not true about the law of diminishing returns?
[1] initially, when more people are employed, people can specialise and total
product increases.
[2] after specialisation, every additional labourer will contribute less than
previous labourers.
[3] if you employ too many people, they will get in each other’s way and become
counterproductive.
[4] when you employ more people, you will always increase total product.
Explanation:
As the quantity of labour is increased, the initial benefits are gradually
exhausted. All the possible savings from the division of labour have been gained
and the addition of more labour brings no more savings of this kind. It is at this
point that diminishing returns begin to set in.
If still more units of labour are added, the workers may get into each other’s
way, slowing down instead of speeding up the work.
4.4 Which of the following cost curves does not have a shape that is explained
by the law of diminishing returns?
[1] the total cost
[2] the average total cost
[3] the average fixed cost
[4] the average variable cost
Explanation:
AFC is L-shaped. In other words, as TP increases from zero, it starts at a very
high value and then keeps on declining until the maximum TP is reached.
4
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Distribution of this document is illegal R13,625 per year?
ECS1501 ASSIGNMENT
04 SEMESTER 02 -
2025 ECS1501
694833
9/30/ 2025
Downloaded by: sashenchet | Want to earn
Distribution of this document is illegal R13,625 per year?
,4.1 Which one of the following statements is correct?
[1] the short run is a time period of less than one year.
[2] the short run is a period of time during which the quantity of at least one
input is fixed and the quantities of the other inputs can be varied.
[3] the short run is a period of time during which the quantities of all inputs can
be varied, but labour is held constant.
[4] the long run is a period of time during which the quantities of all factor
inputs are fixed.
Explanation:
The short run is defined as the period during which at least one of the inputs
is fixed. An example would be a firm which has a factory in which certain
machinery has been installed and which can only vary its inputs of labour, raw
materials, etc. (PAGE 146 Prescribed Textbook)
2
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Distribution of this document is illegal R13,625 per year?
,4.2 Which of the following statements is correct?
[1] implicit costs are monetary payments for the factors of production and other
inputs bought or hired by the firm.
[2] economic cost minus explicit cost is equal to implicit cost.
[3] the economic costs of production are equal to opportunity costs, which in
turn are equal to explicit costs.
[4] economic or excess profit is equal to total revenue minus implicit costs.
Explanation:
Economic cost of production (opportunity costs) = explicit costs + implicit costs
Therefore, Economic cost – Explicit costs = Implicit costs
3
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Distribution of this document is illegal R13,625 per year?
, 4.3 Which of the following is not true about the law of diminishing returns?
[1] initially, when more people are employed, people can specialise and total
product increases.
[2] after specialisation, every additional labourer will contribute less than
previous labourers.
[3] if you employ too many people, they will get in each other’s way and become
counterproductive.
[4] when you employ more people, you will always increase total product.
Explanation:
As the quantity of labour is increased, the initial benefits are gradually
exhausted. All the possible savings from the division of labour have been gained
and the addition of more labour brings no more savings of this kind. It is at this
point that diminishing returns begin to set in.
If still more units of labour are added, the workers may get into each other’s
way, slowing down instead of speeding up the work.
4.4 Which of the following cost curves does not have a shape that is explained
by the law of diminishing returns?
[1] the total cost
[2] the average total cost
[3] the average fixed cost
[4] the average variable cost
Explanation:
AFC is L-shaped. In other words, as TP increases from zero, it starts at a very
high value and then keeps on declining until the maximum TP is reached.
4
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Distribution of this document is illegal R13,625 per year?
