Problem 1. When the slope of the average product curve equals zero:
- total product is maximized.
- returns to the variable input are increasing.
- marginal product equals average product.
- marginal product equals zero.
- Average product is very high but less than zero
Problem 2. At the point at which P=MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its AC = $110. This firm should:
- shut down immediately.
- Continue operating in the short run
- try to take advantage of economies of scale.
- try to increase its advertising and promotion.
- Not enough information to tell
Problem 3. Assume that the prices of cars manufactured in the U.S. increases due to an increase in quality. Which of the following should happen if the same number of cars is produced?
- real GDP should increase but nominal GDP should stay the same
- nominal GDP should increase
- the GDP-deflator should decrease
- real GDP and the GDP-deflator should decrease
- all of the above