Consider the following statements when answering this question.
I. A technology with increasing returns to scale will generate a long-run average cost curve that has economies of scale.
II. Diminishing returns determines the slope of the short-run marginal cost curve, whereas returns to scale determine the slope of the long-run marginal cost curve.
A) I is true, and II is false.
B) I is false, and II is true.
C) Both I and II are true.
D) Both I and II are false.
Question 2
The marginal product of labor for Acme, Inc is 15. The average product of labor is 25, and the price of labor is 10. Assuming that Acme, Inc is a competitor in its output and input markets, the marginal revenue product of labor:
A) is 10.
B) is 150.
C) is 250.
D) is 375.
E) cannot be determined with the information provided.
