1. Unlike the marginal cost concept, the incremental cost concept: a. does not focus on individual managerial decisions. b. is not relevant for optimal output determination. c. embodies sunk costs. d. can involve multiple units of output. 2. According to the law of diminishing returns, over some range of output: a. total product will decrease as the quantity of variable input employed increases. b. marginal product will decrease as the quantity of variable input employed increases. c. marginal revenue will decrease as the quantity of output increases. d. every production Jnction exhibits diminishing returns to scale. 3. The demand curve for a unique product without substitutes is: a. upward sloping. b. downward sloping c. horizontal. d. vertical. 4. The level of competition in a given market tends to increase if: a. minimum efcient scale of rms increases. b. the number of substitutes increase. c. signicant barriers to exit are imposed. d. the number of potential entrants decreases. 5. A monopolist maximizes prots by producing a level of output where: a. P = AC. b. P > MC. c. P (1 MC. (1. P = MC. 6. A covert, informal agreement among rms in an industry to x prices and output levels is called: a. a cartel. b. oligopoly. c. monopolistic competition. d. collusion. 7. By itself; a reduction in import tariffs (taxes) will: a. reduce quantity demanded. b. enhance domestic competition. c. enhance the prots of domestic competitors. [1. reduce import competition 3. Aperactly functioning cartel results in a: a. monopoly equilibrium. b. oligopoly equilarium. c. perfectlycompetitive equilibrium d. monopolistically competitive equilibrium 9. Learning involves: a. movements along a single LRAC curve. I). movements along a single SRAC curve. c. shifts in SRAC curves over time. d. shifts in LRAC cun=es over time. 10. A union with an exclusive contract to supply labor enjoys: monopsony in the labor market. monopoly in the labor market. oligopoly in the labor market. oligopsorry in the labor market. F'F'P'P' 11. A rm's capacity is the output: a. maximumthat can be produced in the long-run I). level where shortrun average costs are minimized c. level where long-run average costs are minimized d. maximum that can be produced in the short-run. 12. The relation between output and the variationin all inputs taken together is the: a. ctor productivity of a production system. b. law of diminishing returns. c. returnsto scale characteristic ofa production system. d. returns to factor characteristic of a production system. 13. lCosts that do not vary across decision alternatives are: a. implicit. b. explicit. c. sunk. d. economic. 14. If the productivity of variable factors is decreasing in the shortmu: a. marginal cost must increase as output increases. b. average cost must decrease as output increases. c. average cost must increase as output increases. [1. marginal cost must decrease as output increases