A firm is said to have excess capacity when it produces the amount of output
A) such that price is greater than marginal cost.
B) such that marginal revenue is greater than marginal cost.
C) smaller than that which minimizes average total cost.
D) larger than that which minimizes average total cost.
C
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A firm can fund an expansion of its operations by
A) paying dividends. B) loaning money. C) buying stock. D) issuing bonds.
A firm could experience diseconomies of scale if
a. One of its inputs is fixed b. Marginal costs are rising c. All of its inputs are variable d. Both A & B
When outcomes are uncertain
A) people always look for the sure thing. B) people are willing to pay risk premiums. C) people often need to be paid a risk premium before they take a certain course. D) none of these choices.
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, demand for inputs causes input prices to rise. It is likely that continued growth will result in:
A. economies of scale. B. reduced fixed costs. C. diseconomies of scale. D. increasing marginal returns.