1. (2 points)Can a perfectly competitive business survive? Before a single plane was built, Boeing spent as much as $5 billion on the 777 including billions for its carbon-composite wing. Once designed, planes can then be made at relatively low cost.
   1. If Boeing sells planes at marginal cost, will it be able to recoup its investment?

1. If companies that invest in fixed costs cannot survive, can we have a productive economy?
2. (2 points)If practice makes perfect, do supply curve slope up?As Adam Smith had predicted, most production processes are characterized by learning by doing with increasing efficiency over time and with the experience. In the production of liberty ships during World War II, for example (see the graph to the left), the labor required to build a ship fell by as much as two thirds over less than four years because experience allowed workers and engineers to become better at building ships and to figure out better ways to organize production.
   1. Draw marginal cost curves for firms where productivity increases with output. Does the supply curve slope up?