1

Which key principal explains the positively sloped portion of the short-run

marginal cost curve?

2.

What is happening to marginal cost as marginal product is rising?

3.

Comment on the following statement:

Assume a firm’s short-run marginal cost is less than the short-run average cost. If the

firm increases its output level, will the firm’s average cost increase or decrease?

Explain relative to marginal cost.