At your current short-run operating position, the marginal product of labor is 80 units and the weekly cost per unit of labor is $1,200. You sell your output in a perfectly competitive market and the current price is $20 per unit. You should: a. Use more capital and less labor. b. Use more labor and less capital. c. Use less labor. d. Use more labor 8. You operate in a perfectly competitive market and currently your product sells for $5 per unit and you sell 1,000 units monthly in the short run. At your current operating output level MC - $4, TC = $3,250 and FC = $250. Your best strategy would be to: a. Increase production b. Decrease your price to $4 per unit. c. Shut down your operations altogether. d. Reduce production 9. If your cost function is C = 1,000+509 +8Q the average variable cost of producing 12 units of output is a. $229.33 b. $250 c. $150 d. None of the answers are correct. 10. In the long run, a monopoly a. will always carn zero economic profits. b. will never exit the industry. c. may earn positive economic profits due to entry barriers. d. will yield an efficient outcome by minynizing its costs of production. e. Answers band c are both true of monopolies in the long run. 11. If a firm spends $800 to produce 20 units of output and spends $1,200 to produce 40 units, then between 20 and 40 units of output, the marginal cost of production is: a $24 b. $22 CS20 d. $400
