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State whether the following statements are true or false. Give reasons for your answer.

(a) The difference between Average Total cost and Average Variable cost remains constant.

(b) Average product falls only when marginal product is less than average product.

(c) Marginal revenue can never be zero.

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(a) False, because difference between ATC and AVC falls continuously as AFC falls continuously as AFC falls continuously with increase in output.

(b) True, because AP, like an average, fall if the MP, the marginal value, is lower than AP.

(c) False, MR can be zero at a level of output in a market when a firm can sell more only by lowering price.

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