1. Define marginal cost. Why does marginal cost eventually increase as total product

increases?

2. What is the relationship between the long-run average cost curve and the short-run

average cost curves? What do economies of scale and dis economies of scale have on the

shape of the long-run average cost curve?

3. What are the two main differences between the short-run and long-run? Why does

diminishing marginal product exist in the short-run, but not the long run?

4. Why is marginal revenue equal to both average revenue and price in a perfectly

competitive setting?

5. Why can't a perfectly competitive firm influence industry price?

6. How can the shape of a firm's long-run average cost curve determine the optimal size

of the firm?