1. Pete’s Pie Shop is a perfectly competitive firm. If the total output of pies in Pete’s Pie Shop increases from 20 per hour to 30 per hour as he hires the second worker, then

A. the average product of the second worker is 10 pies.

B. the marginal product of the second worker is 10 pies.

C. the total product of the second worker is 10 pies.

D. the marginal product of the second worker is 20 pies.

E. the marginal product of the second worker is 30 pies.

2. Every time Pete makes another pie in his shop, he uses $1.20 worth of pastry. For Pete, the cost of pastry is a component of which of the following?

I: Total Variable Costs

II: Total Fixed Costs

III: Marginal Cost

IV: Total Costs

A. I and IV only

B. II and III only

C. II and IV only

D. III and IV only

E. I, III and IV only