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1) Adding a variable input (labor) to a fixed input (capital) will result in an increase in output:
A. Until the marginal product of labor is maximized.
B. Until the average product of labor begins to fall.
C. Until the marginal product of labor begins to diminish.
D. Until the marginal product of labor is becomes 0.
2) As a firm adds labor beyond the point of diminishing returns:
A. Total output is maximized
B. Total output falls
C. Total output continues to rise
D. Total output remains constant
3) ATC and AVC get closer together as quantity produced increases because:
A. Fixed costs are fixed
B. Perfectly competitive firms are price takers
C. Diminishing returns
D. Economies of scale
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