5. Which of the following statements is true? A) When the marginal product increases, the marginal cost decreases. why? B) The marginal product of an input increases as more and more inputs are used. C) The marginal cost curve intersects the average fixed cost curve at its minimum. D) When the marginal cost curve lies above the average cost curve, the marginal cost curve slopes upward, while the average cost curve slopes downward. 6. Which of the following statements is true of a perfectly competitive market? why? A) Firms in the long run tend to earn positive economic profits. B) Firms produce at a point where price is greater than marginal cost. C) The equilibrium price is determined by a few large firms in the market. D) The sum of consumer surplus and producer surplus is maximized at the equilibrium. 7. A firm is seeing a $500 loss in the short run. The fixed cost of operation for this firm is $1,000. What is the best decision for this firm in the short run? why? A) This firm should shut down production. B) This firm should not shut down production. C) There is not enough information provided to answer. D) This firm should produce more than what it is currently producing.