When a company has already paid its rent and is not close to production capacity, which cost

is most relevant when determining whether or not to produce additional units?

1. Average Cost

2. Marginal Cost

3. Sunk Costs

4. None of the above

A small car factory can only produce 100 cars a year. So as the factory approaches its full

manufacturing capacity, which costs should be considered in determining whether or not to

produce additional units?

1. Cost of renting or purchasing additional factory space.

2. Cost of raw materials needed to produce additional units.

3. Both a and b

4. None of the above

Nike sells branded sneakers. If it starts at a quantity of 1, as Nike increases quantity sold, its

marginal revenue will:

1. Increase

2. Decrease