. For given input prices, isocosts closer to the origin are associated with

. For given input prices, isocosts closer to the origin are associated with
a) lower costs.
b) the same costs.
c) higher costs.
d) initially lower then higher costs.

36. In the long-run, perfectly competitive firms produce a level of output such that:
a) P = MC.
b) P = minimum of AC.
c) both a and b.
d) none of the above.

37. Economies of scale exist whenever:
a) average total costs decline as output increases.
b) average total costs increase as output increases.
c) average total costs are stationary as output increases.
d) both b and c.

38. Long-term contracts are not efficient if
a) a firm engages in relationship-specific exchange.
b) specialized investments are unimportant.
c) the contractual environment is simple.
d) managers shirk.
e) a and c, only.

39. The demand for labor by a profit-maximizing firm is determined by
a) MPL = MC.
b) VMPL = MC.
c) MPL = W.
d) VMPL = W.

40. The disadvantage of vertical integration is that
a) relationship-specific exchange may cause holdup.
b) long-term contracts may be inflexible.
c) the principal-agent problem causes shirking.
d) firms no longer specialize in what they do best.
e) none of the above.