1) If the marginal product of labor equals the average product of labor, then the

• A.marginal product is still increasing.
• B.average product is still increasing.
• C.marginal product is maximized.
• D.average product is maximized.

2) The version of the law of diminishing returns that applies to production

• A.applies only in the short run.
• B.implies that as we add more workers, our output decreases.
• C.applies in the short and long run.
• D.is true only when all inputs are variable.

3) A firm will begin to experience diminishing returns at the point where

• A.marginal cost increases.
• B.marginal product increases.
• C.marginal cost decreases.
• D.Both B and C are correct.

3) The explanation for why marginal cost is positive and rising in the short run is ________ marginal product of labor in the production process.

• A.a zero
• B.an increasing
• C.a constant
• D.a diminishing

4) At the point where total product is maximized, marginal product

• A.and average product are positive.
• B.and average product are negative.
• C.is positive, but average product is negative.
• D.is zero, but average product is still positive.

5) In the short run

• A.existing firms can exit an industry.
• B.all firms have costs that they must bear regardless of their output.
• C.existing firms do not face limits imposed by a fixed input.
• D.new firms can enter an industry.