Q1. Suppose Sam is a store owner. Which of the following are examples of implicit costs? Select all that apply.

A. The wages Sam pays to his employees.

B. The salary Sam could earn if he worked for a law firm.

C. The wholesale costs incurred by Sam from manufacturers of his goods.

D. Rental income received if Sam chooses to rent out the building.

Q2. If a firm can increase production without changing long-run average total cost, then which of the following is true?

A. The firm experiences economies of scale.

B. The firm experiences diseconomies of scale.

C. None of the answers.

D. The firm experiences constant returns to scale.

Q3. When Kayla produces nothing, she incurs a total cost of $50. When she produces one widget, she incurs a total cost of $70. When she produces two widgets, she incurs a total cost of $85. Which of the following statements is true?

A. Kayla's marginal cost is decreasing.

B. Kayla's production exhibits constant returns to scale.

C. Kayla's average variable cost is increasing.

D. Kayla's production exhibits diseconomies of scale.