- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 1. Supply Analysis: Cost, Marginal Return, and Productivity
CFA Practice Question
Which statement(s) is (are) true? An increase in productivity ______
II. shifts the marginal product and cost curves downward.
III. shifts the average product and cost curves upward.
IV. shifts the average product and cost curves downward.
I. shifts the marginal product and cost curves upward.
II. shifts the marginal product and cost curves downward.
III. shifts the average product and cost curves upward.
IV. shifts the average product and cost curves downward.
Correct Answer: None of these statements are true.
An increase in productivity shifts the average and marginal product curves upward and the average and marginal cost curves downward.
User Contributed Comments 8
| User | Comment |
|---|---|
| Sabs | Does this not depend on where you are in the curve? If diminishing marginal returns then cost curves move upwards |
| AUAU | tricky Q. |
| boddunah | good one. tricky. chose ii as an answer ,but wrong. thought it was marginal cost and average cost. did not look at "product" part in marginal product. |
| indrasenareddy | can some one please eleaborate. Marginal product sounds very abstract. can it be equated with marginal revenue. what is diff btw productivity and marginal product. |
| JohnnyWu | Knew something wasn't right. |
| thekobe | the relationship between marginal product and cost curves is inverse, thus none of the answers makes sense |
| kondagadu | they should alteast have the option none of the above to reflect the choices we get in the exam |
| schweitzdm | kondagadu, I believe there are no questions on the CFA exam that have answers such as "all of the above" or "none of the above." (Someone please correct me if I'm mistaken!) This is a basic question. For questions that are more like the exams, check the 'review question' area. |