Instructions: Unless otherwise stated, all true or false questions require graphical illustration. Properly drawn graphs are worth half of the mark.
(i) If the marginal cost curve lies above the average cost curve, then the average cost curve must be sloping upward
(ii) The short-run cost function is always greater than the long-run cost function
(iii) Increasing returns to scale is incompatible with the law of diminishing marginal product.
(iv) If the average product of an input is falling, then the average product must exceed the marginal product at that input level
(v) If the production function exhibits increasing returns to scale, average cost must be decreasing.
(vii) Knowing a firmís production function is su¢ cient information for determining the firmís e¢ cient combination of inputs?
(viii) If marginal cost is rising, then average cost must also be rising.
(ix) WhenMarginal cost curve attains its minimum, the marginal product is at its maximum
(x) A profit maximizing firm will always minimize cost. No graph is required here.