Answer the following statements true (T) or false (F)

1. Average variable cost (AVC) is calculated by dividing the change in total cost between two levels of output by the change in output.
2. Many tasks can be performed with a range of combinations of labor and physical capital. When considering long-term costs, physical capital and labor can often substitute for each other.
3. The term diseconomies of scale refers to the situation where the cost per unit goes down as the quantity of output goes up.
4. If the quantity of a certain product demanded in the market is much greater than the quantity found at the bottom of the long-run average cost curve, where the cost of production is lowest, the market will have many firms competing.
5. A perfectly competitive firm can sell as large a quantity as it wishes, as long as it accepts the prevailing market price.

1. False
This statement is false. Average variable cost (AVC) is calculated by dividing variable cost by the quantity produced. Marginal cost (MC) is calculated by dividing the change in total cost between two levels of output by the change in output.
2. True
This statement is true. Many tasks can be performed with a range of combinations of labor and physical capital. When considering long-term costs, physical capital and labor can often substitute for each other.
3. False
This statement is false. Diseconomies of scale describes a situation where, as the level of output rises, average costs rise as well. Economies of scale refers to the situation where the cost per unit goes down as the quantity of output goes up.
4. True
This statement is true. If the quantity of a certain product demanded in the market is much greater than the quantity found at the bottom of the long-run average cost curve, where the cost of production is lowest, the market will have many firms competing.
5. True
This statement is true. A perfectly competitive firm can sell as large a quantity as it wishes, as long as it accepts the prevailing market price.