Answer the following statement(s) true (T) or false (F)

1. In the long run, a competitive firm that experiences decreasing returns must earn negative profits after all factor shares are paid out.
2. Factors that are supplied relatively inelastically earn more rents than those supplied more elastically.
3. Both the competitive firm's demand curve for labor and the monopoly firm's demand curve for labor always slope downwards.
4. When production is subject to increasing returns to scale profit will be positive.
5. If demand for output rises, producers' surplus increases more for factors with elastic supply curves than for other factors.

1. False
2. True
3. True
4. False
5. False

Economics

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