34. What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do

you suppose that is? Is this relationship the same in the long run as in the short run?

35. It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.

36. Return to Table 7.12. In the top half of the table, at what point does diminishing marginal productivity kick

in? What about in the bottom half of the table? How do you explain this?

37. How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect

the long-run average cost curve of a firm? Can you draw the old curve and the new one on the same axes?

How might such an improvement affect other firms in the industry?

38. Do you think that the taxicab industry in large cities would be subject to significant economies of scale?

Why or why not?

Problems
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