Variable input in the production function

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Write whether each statement is True or False. Please fully explain your answer. No credit will be given for an answer without an explanation.

1. Consider labor as the only variable input in the production function. If there is a diminishing marginal cost of production, the marginal product of labor is increasing.

2. Suppose a firm must pay a fixed sum of annual tax. This tax affected the firm's fixed, average and marginal costs of production.

3. A firm that incurs losses always choose to shut down in the short run.

4. If firms are making positive economic profits in the long run, you would expect to see entry of firms in the industry, but no effect on market equilibrium.

Reference no: EM132414906

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