Author Question: Suppose all firms have constant marginal costs that are the same for each firm in the short run. In ... (Read 61 times)

humphriesbr@me.com · **on:** Jul 1, 2018

Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:

A) perfectly inelastic, fixed costs
B) perfectly inelastic, zero
C) perfectly elastic, fixed costs
D) perfectly elastic, zero

Question 2

If input prices are constant, a firm with increasing returns to scale can expect

A) costs to double as output doubles.
B) costs to more than double as output doubles.
C) costs to go up less than double as output doubles.
D) to hire more and more labor for a given amount of capital, since marginal product increases.
E) to never reach the point where the marginal product of labor is equal to the wage.