6. The marginal product of the variable input

1. is always positive.
2. typically falls then rises.
3. is equal to the total product divided by the total amount of the variable input employed.
4. None of these are correct.

7. If the production function for some device is q = L + K and there's a labor-saving technical change which could be the new production function for this device?

1. q = L + 5K
2. q = 5 * (L + K)
3. q = 5L + K
4. All of these are possible.

8. Which of the following is true about a monopoly?

1. It will always earn economic profit
2. It will always produce the same as a perfectly competitive firm
3. It will always be subject to government regulation
4. Its demand curve is generally less elastic than in more competitive markets
5. None of these are correct.

9. When a firm has the power to establish its price

1. P=MR
2. P=MC
3. P>MR
4. P

10. Suppose the market demand is given by Q=16-(1/2)P. Find the P and Q that correspond to the unit elastic region of the demand curve.

1. P=8; Q=0
2. P=16, Q=8
3. P=32, Q=16
4. P=32, Q=8
5. None of these.

11. The relationship between MC and AC can best characterized as:

1. when AC increases, MC starts to increase.
2. when MC increases, AC starts to increase.
3. when MC decreases, AC decreases.
4. when MC exceeds AC, AC increases.