3.If the marginal revenue of the last widget the firm produces is $50 and its marginal cost is $35,

a firm should:

A.reconsider past production decisions.

B.decrease production.

C.increase production.

D.hold production constant.

4.Spam (junk e-mail) is a major annoyance for many people who use the internet. However,

spammers sometimes have to send thousands of messages to get even one response that pays

money. Given this information:

7.Refer to the graph above. Why does the distance between curves II and III get smaller as

quantity increases?

A.Because marginal cost is increasing

B.Because average variable cost is increasing

C.Because average fixed cost is declining

D.Because average fixed cost is increasing

8.Refer to the graph above. Marginal cost is minimized when output equals:

A.6 units.

B.12 units.

C.21 units.

D.25 units.