1.Do you agree or disagree with each of the following statements? Explain your reasons.

a. For a competitive firm facing a market price above average total cost, the existence of economic profits means that the firm should increase output in the short run even if price is below marginal cost.

b. If marginal cost is rising with increasing output, average cost must also be rising.

c. Fixed cost is constant at every level of output except zero. When a firm produces no output, fixed costs are zero in the short run.