Part I. Say True or False and defend your answer

1. It is possible to have decreasing marginal products for all inputs, and yet have increasing returns to scale. a. True b. False (Circle one) Explain:

2. In order to have a convex isoquants, it is necessary that the marginal product of both inputs must show diminishing returns. a. True b. False (Circle one) Explain:

3. Whenever the average cost is increasing, the marginal cost must be greater than the average cost. a. True b. False (Circle one) Explain: