1. Which of the following statements is FALSE?
A) AC = TC/Q
B) A firm that produces 100 units at a total cost of $500 has an average cost of $5 per unit.
C) Firms will earn positive profits if price exceeds average cost.
D) When marginal cost is below average cost, average cost is rising.
2. When marginal cost is rising, the average total costs:
A) could be rising or falling.
B) must be rising.
C) must be falling.
D) must be constant.
3. Which statement about cost is correct?
A) Marginal cost is constant.
B) Marginal cost is always falling.
C) Average total cost is U-shaped.
D) Average total cost always declines.
4. When the level of production is relatively low, the average cost per unit of output would ________ if output increased.
A) increase
B) decrease
C) either increase or decrease depending on marginal cost
D) remain constant