Answer the following questions true (T) or false (F)
1. As output increases, the distance between average total cost and average variable cost increases.
2. In the long run the relevant cost is total cost.
3. If the long-run average total cost curve is downward-sloping, then the firm is experiencing decreasing returns to scale.
1. FALSE
2. TRUE
3. FALSE
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Regulation that is based on allowing prices to reflect only the actual operating cost of production is known as
A) average cost regulation. B) marginal cost regulation. C) rate-of-return regulation. D) cost-of-service regulation.
Which of the following is generally true of a monopolistic competitor operating in the long run?
a. price greater than minimum average total cost b. price equal to marginal revenue c. price equal to marginal cost d. positive economic profits