Discuss the relationship between short-run average variablecost and short-run marginal cost.(e) (1 mark) Discuss the relationship between short-run total variablecost, short-run total Öxed cost, and short-run total cost.(f ) (4 marks)Discuss the relationship between short-run average variablecost, short-run average Öxed cost, and short-run average total cost

The short-run marginal and average variable cost curves for a competitive firm are given by MC = 2+2q and AVC = 2+q. The profit-maximizing level of output for a firm is 4 and its total fixed cost is $18. Which of the following must be true about the firm? Group of answer choices The firm is charging a price of $4 and covering its average variable cost, hence it should continue operating in the short-run. The firm is charging $10 and will remain in the industry in the short-run; but it is not covering its total costs and will consider leaving the industry in the long run. The firm is charging a price of $4 and making a short-run loss, hence it should shut down immediately. The firm is charging a price of $10 and making a zero profit, hence it should shut down eventually. The firm is charging a price of $10 and making a positive profit, hence it will remain in the industry in the long-run.

In the short run, if a firm's marginal physical product of labour is decreasing,a) the firm's output must also be decreasing.b) the firm's variable cost must be decreasing.c) the firm’s marginal cost must be increasing.d) the firm’s average variable cost must be decreasing

At every output level, a firm’s short-run average cost (SAC) equals or exceeds its long-run average cost (LAC) because:a. Diminishing returns apply in the short run.b. Returns to scale only exist in the long run.c. Opportunity costs are taken into account in the short run.d. There are at least as many possibilities for substitution between factors of productionin the long run as in the short run.e. Economies of scope only apply in the long run.

Which statement is true?   Long-run average costs are the same or more than short-run average costs.   Long-run average costs equal long-run marginal costs for every level of output.   None of these answers is correct. You Answered  Long-run average costs are increasing due to diminishing marginal product. Correct Answer  Long-run average costs are the lower envelope of short-run average cost curves.

Which of the following must be falling when the short run marginal cost is less than it, and rising when the short run marginal cost is greater than it?  Choose all answers that are correct.Group of answer choicesVariable costFixed costAverage variable costShort run average total cost