A shift of the marginal-cost curve from $MC_2$ to $MC_1$ in graph (b) would:

a. increase the “going price” above $P_0$.

b. leave price at $P_0$ but reduce this firm’s total profit.

c. leave price at $P_0$ but reduce this firm’s total revenue.

d. make this firm’s demand curve more elastic.

When P = MC = lowest ATC for individual firms, in the market:

a. consumer surplus necessarily exceeds producer surplus.

b. consumer surplus plus producer surplus is at a maximum.

c. producer surplus necessarily exceeds consumer surplus.

d. supply and demand are identical.

Average product in graph (b):

a. rises when it is less than marginal product.

b. is the change in total product divided by the change in the quantity of labor.

c. can never exceed marginal product.

d. falls whenever total product in graph (a) rises at a diminishing rate.

A New production technology for making vitamins is invented by a college professor who decides not to patent it. Thus, it is available for anybody to copy and put into use. The TC per bottle for production of up to 100,000 bottles per day is given in the following table.

$$\begin{array}{cc} \text{Output} & \text{TC} \\ 25,000 & \$50,000 \\ 50,000 & 70,000 \\ 75,000 & 75,000 \\ 100,000 & 80,000 \end{array}$$

a. What is ATC for each level of output listed in the table? b. Suppose that for each 25,000-bottle-per-day increase in production above 100,000 bottles per day, TC increases by $\$5,000$ (so that, for instance, 125,000 bottles per day would generate total costs of $\$85,000$ and 150,000 bottles per day would generate total costs of $\$90,000$). Is this a decreasing-cost industry? c. Suppose that the price of a bottle of vitamins is $\$1.33$ and that at that price the total quantity demanded by consumers is 75,000,000 bottles. How many firms will there be in this industry? d. Suppose that, instead, the market quantity demanded at a price of $\$1.33$ is only 75,000. How many firms do you expect there to be in this industry?

The long-run ATC curve is often called the firm’s:

a. planning curve.

b. capital-expansion path.

c. total-product curve.

d. production possibilities curve.