If output is increased in the long-run, average production costs in the presence of internal economies of scale will ________, and in the presence of external economies of scale, will ________

Banks' asset portfolios include state and local government securities because

A) they help to attract business from these government entities. B) banks consider them helpful in attracting accounts of Federal employees. C) the Federal Reserve requires member banks to buy securities from state and local governments located within their respective Federal Reserve districts. D) there is no default-risk with state and local government securities.

Assuming that w and r are both positive, if the long-run expansion path is horizontal, then

A) MPK = 0. B) MRTS is a function of capital only. C) w = r. D) All of the above.