QUESTION 11 Choose the correct statement regarding short-run and long-run costs? (Assume all cost curves have typical shapes, e.g., average total cost and average variable cost are U-shaped.) A firm able to exploit economies of scale will find that marginal cost always falls as output increases over the output range of economies of scale. O Average fixed cost always rises as output increases. The law of diminishing returns implies that the short-run marginal cost curve must eventually decrease with increased output. O Long-run cost curves are generally flatter than short-run cost curves. None of the statements are correct. QUESTION 12 In honor of the 1992 Bronze winning Lithuanian men's basketball team, you have been selling tiedye Skullman t-shirts on eBay. You are currently selling the t-shirts with a "Buy It Now" price of $25 (i.e., there is no bidding, customers can only purchase at this price). Suppose you also know that the demand for your t-shirts is described by Q = 500 - 2P (and inverse demand is described by P = 250 - 0.5Q). If your goal were to maximize revenue, what should you do? O Keep prices at $25 per t-shirt O Increase prices to $50 per t-shirt O Lower price to $20 per t-shirt O Increase prices to $250 per t-shirt O Increase prices to $125 per t-shirt