A firm recently doubled in size and experienced a reduction in the average total cost of production, as it was able to spread its fixed costs over a larger quantity of output. Which of the following should be the correct strategy of the firm after expansion?
a. The firm should continue to grow slowly to see if sustained growth leads to greater economies of scale.
b. The firm should continue to
grow rapidly to see if rapid growth leads to greater economies of scale.
c. The firm should continue to grow exponentially to see if exponential growth leads to greater economies of scale.
d. The firm should sell off portions of the business to profit from the economies of scale already received.
a
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If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then
A) a shortage will exist. B) a surplus will exist. C) producer surplus is maximized. D) consumer surplus is maximized.
The threat of a strike
a. can serve as an incentive for labor and management to reach an agreement b. destroys incentives for labor and management to reach an agreement c. is usually not taken seriously because employers know the workers will suffer during a strike d. is not taken seriously unless management expects to suffer e. is not taken seriously if public safety is at risk
The marginal rate of return on investment is found by dividing the marginal resource cost per year by the marginal revenue product
a. True b. False
The table below shows the export and import values of automobiles, pharmaceuticals, and clothing in Country A and Country B. Country AExports ($Billions)Imports ($Billions)Automobiles2040Pharmaceuticals3030Clothing400Country BExports ($Billions)Imports ($Billions)Automobiles020Pharmaceuticals4040Clothing4535 Country B has a higher intra-industry trade (IIT) share compared to Country A for
A. only clothing. B. only pharmaceuticals. C. both pharmaceuticals and clothing. D. only automobiles.