True or false

1) In the long-run production function, all of the inputs to the production process are allowed to vary.

Answer:

2) All else constant, an increase in the level of competition among firms would be expected to reduce the amount of X-inefficiency that exists in a particular industry.

Answer:

3) Diseconomies of scale are illustrated graphically by an upward shift of the firm's long-run average cost curve.

Answer:

4) "Learning by doing" results in decreased average costs of production and is illustrated by a downward shift of the firm's long-run average cost curve.

Answer:

5) As the price of labor increases relative to the price of capital, the firm will move to a more labor-intensive production method to minimize costs.

Answer:

6) A perfectly competitive market is characterized by a large number of small firms that produce a differentiated product.

Answer:

7) When a firm decides to shut down in the short run, its losses are limited to its fixed costs.