The open areas on a Strategic map may be opportunities termed:

In the above figure, when 2000 bicycles are produced each month, we can see that

A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. B) more bicycles should be produced to reach the allocatively efficient level of output. C) the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. D) Both answers A and B are correct.

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.