7. The owners of a firm find that for each worker they hire, the additional output increases by the same amount. What is the shape of the firm's marginal cost curve?

a. It is increasing with a constant slope.

b. It is decreasing with a constant slope.

c. It is flat.

d. It cannot be determined with the information given.

12. In a market with firms experiencing large economies of scale, we will likely see which of the following?

a. Costs for individual firms will increase as those firms scale up in size.

b. Government subsidies will be necessary to ensure the survival of firms

c. Most of the firms will tend to be large.

d. Newcomers will easily be able to enter and compete against large established firms.

16. The Andersen family operates a bakery that sells donuts. Last year, most production was done by hand. This year, the family was able to move into a larger facility with specialized and automated production equipment. What is most likely the result? The firm experienced _______ and average costs _______.

a. economies of scale, decreased

b. economies of scale, increased

c. constant returns to scale, remained the same

d.diseconomies of scale, increased