Mondo's Microbrewery is growing rapidly. As a result of achieving larger size, the firm realizes it needs to hire quite a few additional employees and upgrade its brewing and bottling equipment, which increases its average costs. The best explanation for these events is that Mondo's Microbrewery is experiencing ________ returns to scale.
A. constant
B. increasing
C. decreasing
D. first decreasing and then increasing
Answer: C
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The marginal propensity to consume is
a. the change in consumption associated with a change in income. b. equal to the marginal propensity to save minus 1. c. equal to 1 minus the marginal tax rate. d. the change in consumption associated with a change in wealth.
A benefit of unions is that they
A) increase firm profits. B) increase the stability of the workforce. C) increase wage inequality. D) restrict the labor market.
Economists view pollution as an economic problem that arises because:
a. private enterprise always minimizes the amount of pollution produced. b. profitable firms rarely pollute. c. as the economy grows, the level of pollution declines. d. firms that pollute do not pay the full social cost of producing their output.
To internalize a negative externality: a. a producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good. b. a producer's costs could be increased by an amount equal to the external cost resulting from the production of a good. c. a producer could receive a subsidy equal to the external cost resulting from the production of a good
d. None of the above are correct.