I. TRUE 01' FALSE. No points given without a short explanation. l. If a rm has increasing returns to scale then its average costs are decreasing in the output level. 2. rThe supply curve of a competitive rm always coincides with its marginal cost curve. 3. Since a prot-maximizing rm produces the output level solving p = fcty) this implies that it the output price p stays the same in the short and in the long run. the rm would produce the same out-put level. 1. If a quantity tax is imposed on the product of a competitive industry. in the long run all of the tax is paid by the consumers. 5. If a competitive industry consisting of identical rms is in long run equilibrium with free entry and exit and if market demand decreases (with nothing else changing), then in the new long run equilibrium individual rm out-put will decrease