Which of the following explains most accurately why the firm's short-run marginal cost curve will eventually rise?
a. As more of the variable factor is used, its price will rise.
b. When diminishing marginal returns set in, it will take ever-larger quantities of the variable resources to produce an additional unit of output.
c. As the variable factor is used more intensely, its marginal product will rise, causing an increase in marginal costs.
d. As the size of the firm increases, the operational efficiency of the firm declines, causing an increase in marginal costs.
B
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Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited for growing either fruit. Which of the graphs in Figure 2-3 represents his production possibilities frontier?
A) Graph A B) Graph B C) Graph C D) either Graph A or Graph B E) either Graph B or Graph C
The federal government funds deficit spending by: a. issuing bonds
b. redeeming bonds. c. increasing taxes. d. providing and selling government services.
Assume that the labor market is perfectly competitive. An increase in the productivity of labor
A) causes the marginal factor cost of labor to decrease. B) generates a lower wage rate. C) causes an increase in the demand for labor. D) causes a reduction in the demand for labor since each worker is now more productive.
Refer to the information provided in Figure 15.1 below to answer the question(s) that follow. Below are cost curves for Dom's Barber Shop, a monopolistically competitive firm. 
Figure 15.1 Refer to Figure 15.1. If Dom's Barber Shop is maximizing profit, it is earning a profit of
A. $0. B. $80. C. $120. D. $320.