# solution

When a factory is operating in the short-run. a. It cannot alter variable costs b Total cost and variable costs are usually the same c. Average fixed costs rises as output increases d. It cannot adjust the quantity of fixed inputs 10. True or False: The marginal cost curve always intersects the ATC curve at the minimum of the ATC a Tree b. False 11. True or False: If the marginal cost curve exceeds the AVC curve, then the AVC must be rising a True False 12. If the LAC curve is rising, then what can we say about the returns to scale in production? a. Increasing returns to scale b. Decreasing returns to scale c. Constant returns to scale 13. Suppose you own two cotton plants with the following marginal cost and average total cost curves (subscripts 1 & 2 denote plant #1 and plant #2, respectively MC -0.4Q.. ATC -0.20 MC-2 +0.20.. ATC -2 +0.10. What is the least costly way of producing 8 units of output? a 0, & 0. =0 b. Q.-0&Q28 c. 0. 4 & 4 d. 0.-2& 0, 6 e. Q. 6 & O 2 14. How much did it cost to produce the output selected in question 813) from plant #l? a S1280 b. \$7.20 \$3.20 d S0.80 e. SO 15. How much did it cost to produce the output selected in question 13) from plant 2? a \$22.40 b. \$15.60 c. \$9.60 16. What is the total cost to produce units of output? S12.80 b \$16.40 \$11.60 d \$10.40 c. \$22.40

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