CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 74 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 74
Topic #: 1

[All CIMAPRA17-BA1-1 Questions]

Which of the following influences explains why the average costs of a firm will rise in the short run?

ADiseconomies of scale

BRising unit costs

CDiminishing marginal returns

DDiminishing returns to scale

Show Suggested Answer

Suggested Answer: B

by Donette at Aug 29, 2023, 10:42 PM

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Felix

4 days ago

I was a bit confused between B) Rising unit costs and C) Diminishing marginal returns, but I agree that C) is the better choice. The law of diminishing returns definitely explains the rise in average costs.

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Katheryn

9 days ago

Hmm, I think C) Diminishing marginal returns is the correct answer. As the firm produces more, it's natural for the average costs to rise in the short run due to this phenomenon.

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