Q1+2

Returns to scale is a concept because A) Short-run; it's related to the law of diminishing marginal returns B) Short-run; it deals with varying the level of one input while holding other inputs constant C) Long-run: a firm can change its output level only in the long run C D) Long-run; it refers to changes in all of the firm's inputs 2. Which of the following statements is true? A) Competitive firms will respond less to changes in output prices over the long run than they will over the short run because short-run marginal cost is lower than long-run marginal cost B) Competitive firms will respond more to changes in output prices over the long run than the will over the short run because long-run marginal cost is lower than short-run marginal cost C) Competitive firms will respond less to changes in output prices over the long run than they will over the short run because long-run marginal cost is lower than short-run marginal cost D) Competitive firms will respond more to changes in output prices over the long run than the will over the short run because short-run marginal cost is lower than long-run marginal cos 3. Since sunk costs are incurred no matter what, A) They are relevant in deciding how much to produce B) They are essential in the profit-maximizing sales quantity formula C) They can generally be ignored in making economic decisions D) They are considered fixed costs NPV is and