QUESTION 1

i. In the long run, a firm has

A. None of above

B. At least one fixed input

C. The ability to adjust its plant size

D. Insufficient time to enter or leave the market

ii. The relationship between a series of short-run average cost (SRAC) curves and the long-run average cost (LRAC) curve is such that __________.

A. Some of the SRAC curves are tangent to the LRAC, and lie above it.

B. Some of the SRAC curves are tangent to the LRAC, and lie below it.

C. The SRAC and LRAC curves do not meet at any point

D. All SRAC curves are tangent to LRAC, and lie above it

iii. An example of implicit cost for a firm is the __________.

A. None of the above

B. Payment for resources used in production by the firm

C. Foregone payment in terms of salaries and wages to the owners of the firm

D. Payment of salaries and wages to workers by the firm

iv. The AFC curve is the ___________.

A. AVC curve that shifts downwards.

B. None of above.

C. ATC curve that shifts downwards

D. MC curve that shifts downwards