Use the following graph for a monopolistically competitive firm to answer the next question. (2) (1) (3) (4) Output Marginal revenue and marginal cost intersect at point Multiple Choice a. b. C.

Variable costs usually change as the firm alters the quantity of output produced. True False

Refer to the table below.    Quantity Cost (in dollars) Fixed Costs (in dollars) Total Costs (in dollars) Average Total Costs (in dollars per unit) Average Variable Costs (in dollars per unit) Marginal Costs (in dollars per unit) 0 0 40 40 - - - - - - 1 15 40 55 55 15 15 2 35 40 75 37.5 17.5 20 3 60 40 100 33.3 20 25 4 90 40 130 32.5 22.5 30 5 125 40 165 33 25 35 6 160 40 200 33.3 26.6 40 If this information were used to create a total cost graph, the curve should   Question 6 options:   begin at 40 on the vertical axis and slope upward.   become steeper as quantity increases.   become steeper due to diminishing returns.   reflect all of the above.

“A firm that earns only normal profit is not covering all its costs.” Do you agree or disagree?